HMRC has updated its making tax digital VAT Notice 700/22 with more detail on who is exempt from following the rules on MTD for VAT. The notice says taxpayers would have to satisfy HMRC that:
it is not reasonably practicable to use digital tools to keep business records or submit VAT returns because of age, disability, remoteness of location or for any other reason;
their business is subject to an insolvency procedure; or
their business is run entirely by practising members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.
Lack of internet access at a particular location or a disability preventing use of a computer would be factors affecting whether or not it would be ‘reasonably practicable’ to keep records digitally.
Less likely to convince HMRC would be arguments:
based purely on age;
claiming unfamiliarity with the relevant software; or
based on being member of a religious society or order, even though you currently file online and use a computer or smart device for business or personal use.
An agent, friend or family member may ask for exemption on the taxpayer’s behalf, provided they have authority, such as written authorisation sent to HMRC or verbal authorisation in a phone call.
Taxpayers who are exempt from MTD because their taxable turnover is below the VAT registration threshold may still choose to sign up for MTD.
The CIOT’s low incomes tax reform group (LITRG) is ‘disappointed’ that HMRC has only been able to provide guidance on applying for exemption with only a month to go before MTD is due to start. Head of the LITRG team, Victoria Todd, commented: ‘it is unlikely that someone who is denied an exemption will now have sufficient time to either challenge the decision or get themselves ready to go digital by 1 April 2019’.
HMRC has updated its making tax digital VAT Notice 700/22 with more detail on who is exempt from following the rules on MTD for VAT. The notice says taxpayers would have to satisfy HMRC that:
it is not reasonably practicable to use digital tools to keep business records or submit VAT returns because of age, disability, remoteness of location or for any other reason;
their business is subject to an insolvency procedure; or
their business is run entirely by practising members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.
Lack of internet access at a particular location or a disability preventing use of a computer would be factors affecting whether or not it would be ‘reasonably practicable’ to keep records digitally.
Less likely to convince HMRC would be arguments:
based purely on age;
claiming unfamiliarity with the relevant software; or
based on being member of a religious society or order, even though you currently file online and use a computer or smart device for business or personal use.
An agent, friend or family member may ask for exemption on the taxpayer’s behalf, provided they have authority, such as written authorisation sent to HMRC or verbal authorisation in a phone call.
Taxpayers who are exempt from MTD because their taxable turnover is below the VAT registration threshold may still choose to sign up for MTD.
The CIOT’s low incomes tax reform group (LITRG) is ‘disappointed’ that HMRC has only been able to provide guidance on applying for exemption with only a month to go before MTD is due to start. Head of the LITRG team, Victoria Todd, commented: ‘it is unlikely that someone who is denied an exemption will now have sufficient time to either challenge the decision or get themselves ready to go digital by 1 April 2019’.
