Making Tax Digital is a new rule coming in two stages. This Q&A session covers stage one which is for VAT and came into effect in April 2019.

  • When does MTD start? Stage one affects VAT registered businesses with turnovers above £85k with effect from their first VAT Return on or after 01/04/19.
  • How do I join?Your accountant can do it or you can do it yourself. You must join at least 5 working days after your last ‘non-MTD’ VAT Return submission and at least 8 working days before your first MTD submission is due. Follow the process on HMRC website for signing up for MTD.
  • Can I join voluntarily? Yes, but sooner or later all businesses will have to join
  • How do I deregister if my turnover falls below £85,000?  Once you’re in MTD you can’t leave except if you deregister for VAT.
  • My business is new – can I just join MTD straight away? Yes, you can join as soon as you’re VAT registered.
  • Will it mean more VAT or tax is payable?  No. As long as you are doing it correctly, you won’t have to pay more VAT.
  • Will I have to give my records to my accountant more often? Possibly, but VAT is done quarterly so it should be the same.
  • What if my business makes overseas sales? That makes no difference.  You treat them just as you do at the moment.
  • I’m an overseas VAT registered business – selling goods in the UK what does this mean? The UK rules pretty much apply. If your turnover is below £85K, you don’t need to join MTD for VAT yet but if it is over, you must join.
  • When does Stage 2 of MTD actually come in? Stage 2 of MTD is about income tax and corporation tax and submitting mini quarterly Profit and Loss accounts to HMRC. It comes in from April 2021 – at the earliest.