When must you follow MTD rules?

This means they have to keep digital VAT records, sign up for MTD for VAT and use software compatible with MTD to submit VAT returns.

"You can start following the rules now, unless your business uses the VAT Government Information and National Health Trusts (GIANT) service," the HMRC cautioned in a recent statement. 

Who must follow the rules from 1 April 2019

You must use software to keep digital VAT records from your first VAT return period starting on or after 1 April 2019 if your business:

• has a taxable turnover over £85,000; and
• is not in the deferral group.

You must sign up for MTD at least one week before your VAT return is due.

Who must follow the rules from 1 October 2019

You might be in the deferral group and must use software to keep digital VAT records from your first VAT return period starting on or after 1 October 2019 if your business:

• has a taxable turnover over £85,000;
• is part of a VAT group or VAT division;
• is a trader based overseas;
• is a trust;
• is a not for profit organisation that is not set up as a company;
• uses the annual accounting scheme;
• is a local authority;
• is a public corporation;
• has to make payments on account; or
• uses the VAT GIANT service.

HMRC will send you a letter to tell you that you’re in the deferral group.

You must sign up for MTD at least one week before your VAT return is due.

Who can apply for an exemption

You do not need to apply for an exemption if either:

• you’re already exempt from filing VAT returns online; or
• your business’ taxable turnover is below £85,000.

You can apply for an exemption if you:

• cannot use computers, software or the internet because of your age, a disability or where you live;
• or your business is subject to an insolvency procedure; or
• object to using computers on religious grounds.

Apply for an exemption

To apply for an exemption, call or write to HMRC. You’ll need:

• your VAT registration number;
• your business name and address;
• details of how you currently file your VAT return; and
• the reason you think you’re exempt from MTD.

If you’re applying for an exemption on someone’s behalf, HMRC will need written or verbal authorisation from the business.