HMRC letters to businesses affected by MTD for VAT

HMRC have started to send out their first wave of what they are calling “encouragement letters” to businesses within the scope of MTD for VAT. The letters are being sent to businesses which are currently eligible to join the pilot.  They are not being copied to the businesses’ agents.

The first wave is 20,000 letters and following a pause to monitor their impact, a further 180,000 letters will be issued in due course

HMRC will be monitoring how businesses react and respond to the letter.

Association of Taxation Technicians ATT advise HMRC will issue two versions of the letter:

Version 1 explains to the business that the way they keep VAT records and submit their VAT returns to HMRC is changing,  the new way of doing things is called Making Tax Digital.  It goes on to explain which businesses are within scope (mandated) from April 2019 and that they will need to keep their records digitally, either using software or a combination of software and spreadsheets, to submit their VAT returns using MTD compatible software.  It says the business can join early if it wants to.  There is then advice on how to join the new service, with links to help and advice on gov.uk.

Version 2 is shorter.  It says that the VAT system is being modernised and the business needs to get ready for the change now.  It explains which businesses are within scope (mandated) from April 2019 and that they must keep digital records for all VAT transactions and use software to submit their VAT returns to HMRC. This is called Making Tax Digital. There is then advice on how to get the business ready, with links to help and advice on gov.uk.

Disclaimer - All information in this post was correct at time of writing.