Businesses should start engaging with HMRC digitally for VAT

Brian Palmer: there is no excuse for not being set up for Making Tax Digital

HMRC has extended its Making Tax Digital for VAT (MTD-VAT) pilot, meaning that all customers mandated to use the MTD service from April are now able to access the pilot. All Value Added Tax (VAT) registered entities with an annual VAT-able turnover of £85,000 or more will now therefore have the chance to test their accounting systems, prior to them being required to keep a digital record of their VAT transactions from 1 April 2019 onwards.

Under Making Tax Digital businesses are required to keep digital VAT business records and send returns using Making Tax Digital (MTD)-compatible software. Businesses with a taxable turnover below the VAT threshold can also sign up for MTD for VAT voluntarily.

HMRC encourages all businesses to join the pilot saying it will ‘help you prepare for these changes sooner and your feedback will also help to shape the service as it continues to develop.’

Over 3,500 businesses have already joined the pilot scheme according to HMRC with the number of daily sign-ups now exceeding 100. Other VAT businesses that are mandated to join from October 2019 are seeing the pilot scheme gradually open up to include those firms as well.

Clare Sheehan, head of customer readiness for Making Tax Digital, said: “The Making Tax Digital pilot is now available to all businesses who will need to use the service from April. This marks a significant milestone towards our delivery of a modern tax administration.

“We encourage all eligible businesses to join and try out the service before they are mandated to use it.”

Brian Palmer, tax policy expert at the Association of Accounting Technicians (AAT) said: “HMRC is rightly urging ‘as many eligible businesses as possible’ to take part in the pilot ahead of the April mandation. It makes perfect sense to do so. Failing to engage with the pilot puts your or your client’s firm at risk of making mistakes or finding you need to change the way you report figures after the mandation date, potentially meaning you will be non-compliant. Joining the pilot now means you can check any teething problems with the system and for HMRC themselves to have confidence in the system, and for you to train up all relevant staff without any fear or concern of consequences.”

HMRC advises business to contact any agent they use to find out when it may be best for them to join the pilot and to ensure that they have the appropriate software package.

‘If you already use accounting or record keeping software you should also speak to your software provider to find out when it will be updated for MTD,’ says HMRC.

Palmer advises that there are approximately 70 software solutions available for MTD-VAT and these can be found here on the HMRC website.

“So there really is no excuse for not having a solution in place,” he warns.

AAT has produced a detailed guide to help accountants and bookkeepers prepare its clients for the first implementation phase of Making Tax Digital. This is available at




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