There were rumours before the Budget that the VAT registration threshold would be reduced, but the Chancellor has committed to hold it at £85,000 until April 2022. This will provide some certainty to businesses who need to know whether and when they must comply with the Making Tax Digital (MTD) rules.
Currently, only VAT registered businesses with annual turnover above the registration threshold have to sign up to submit VAT returns under the new MTD procedures. This will apply to most businesses for VAT periods starting on and after 1 April 2019. However, a number of complex businesses, such as corporate groups and overseas businesses, have had their start date for MTD for VAT deferred until VAT periods beginning on and after 1 October 2019. If your business uses the annual accounting scheme for VAT you will also enjoy a deferral of MTD.
The MTD for VAT pilot is now open to single companies and sole traders but there are many businesses who can’t sign up to the pilot yet. When your business is eligible to join the MTD for VAT pilot you should receive a letter from HMRC inviting you to join. The first of these letters are being sent out this month.
We can help you sign up to submit VAT returns under MTD but first, you will have to activate your business tax account on gov.uk. If you have not used your business tax account yet we can talk you through the procedure.