Criticism for HMRC
April 1st 2019 is MTD (Making Tax Digital) Day. From this date, HMRC will compel VAT-registered businesses with turnover in excess of £85,000 to maintain their records digitally and to submit their returns online. However, certain groups have launched an attack on the department for failing to issue clear guidelines relating to businesses that might be exempt from the ruling.
The new making Tax Digital regulations apply to nearly all businesses whose turnover exceeds the threshold, currently £85,000. However, certain types of business are to be exempt. Typically, this includes those who find themselves ‘digitally excluded’ due to age, remoteness of location, or disability. But there’s a problem, highlighted by a number of organisations – a lack of clarity regarding the guidelines as to exactly which businesses are exempt.
Leading the charge is the LITRG (Low Incomes Tax Reform Group). Their Head of Team has declared dismay at the unhelpful silence emanating from HMRC.
‘We are very concerned that HMRC have not yet published any detailed information as to how exemption from MTD for VAT may be obtained, with the start date so close.
‘HMRC have said that people should contact the VAT helpline to speak to an adviser if they think they should be exempt.
‘We would like to see more specific guidance which explains what information and evidence HMRC will require from a caller, and what they can do if their application is turned down.’
LITRG is at least relieved at HMRC’s confirmation that those currently exempt from online VAT online filing will remain exempt following the introduction of MTD and won’t have to re-apply for exemption.
However, it seems that for new applications for exemption, there will be additional requirements. This could result in many more applications being forthcoming.
Todd continues, ‘The current requirement to complete nine boxes on a VAT return is very different to maintaining digital records and using the type of software that will be needed to meet the MTD requirements.
‘That means that people who currently manage to file online may struggle to comply with these additional requirements and therefore may meet the “digital exclusion” exemption conditions.
‘Even if they do not qualify for an exemption, they may require additional support from HMRC to manage the digital aspects.’
LITRG is encouraging all businesses wishing to apply for an exemption to contact the VAT helpline as soon as they can.
Todd concludes, ‘It is completely unacceptable that if someone is denied an exemption when they were expecting to get it, they will now have very little time to either challenge the decision or get themselves ready to go digital by 1 April 2019.’
An HMRC spokesperson responded by stating, ‘The exemption rules under MTD mirror the existing VAT online filing exemptions. There is no need to reapply for an exemption for MTD. If a business cannot go digital, it will not be required to do so.’
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This legal information is not the same as legal advice and you may not rely on our post as a recommendation of any particular legal understanding. Please, consult an attorney if you’d like to get advice on your interpretation of this article.