VAT News

Making VAT Digital (MVD) Update: Implementation Change for Specific Sectors

17.10.2018

What has changed:

HMRC issued a policy paper yesterday to advise of their decision to delay the mandatory date for digital submission of their VAT Return from the 1 April 2019 to the 1 October 2019.

The roll out of MVD will continue as planned for all unaffected sectors. From the 1 April 2019 businesses must be able to submit their VAT return data to HMRC through an accepted form of bridging software.

Those specific sectors affected by this delay will effectively have a further 6 months to ensure they can meet this digital submission requirement.

Who is affected by this change:

Categories affected:

  • Trusts
  • “Not for Profit” organisations that are not set up as a company
  • VAT Divisions
  • VAT Groups
  • Public Sector entities who have to give additional VAT information with their returns (Government Departments and NHS Trusts) – this refers to the Contracted Out Services Recovery information they need to provide
  • Local Authorities
  • Public Corporations – current presumption is that this includes government owned companies and companies whose shares are publicly traded – needs clarification.
  • Traders based overseas – they may have a UK VAT registration but have no fixed or business establishment here in the UK
  • Those who make Payments on Account
  • Annual Accounting Scheme Users

 

Commentary:

This month the Business Minister Kelly Tolhurst is reported as stating that there will be no further delay to “making tax digital” for small businesses and this current announcement follows that line.

Certainly organisations such as the British Chambers of Commerce have written to the Chancellor to add their voice to the call for a delay to the MVD roll out and we know, from our work across the University, Colleges, Housing Association and Council sector, of the level of concern from such bodies to having the time, IT Systems and VAT resources to be able to deliver the mandatory elements by the 1 April deadline.

Therefore, this delay will be welcome by those affected sectors even if the Small and Medium size business sector largely remains subject to the April deadline.

For us it reflects and acknowledges that MVD is an issue for the more complex organisations and HMRC have recognized this giving a further 6 months to enable the planning and implementation needed within the internal VAT reporting systems to be addressed. Our clients in these affected sectors have certainly started to evaluate the MVD impact and this time extension gives a more realistic lead in time for our clients to resolve the issues that our MVD Evaluation meetings are highlighting.

General Guidance:

You can access the latest policy note here

Begin your MVD Evaluation Project with Centurion Support:

Contact our Sector Specialists:

Universities and Colleges:

Louise Gray, Liz Maher

Housing Associations:

Andrea Brindley, Liz MaherJulie Rawlinson-Smith

Government Departments and Councils:

Louise Gray, Liz MaherJulie Rawlinson-Smith

Corporates:

Andrew Norris, Andrea Brindley, David Bartlett

Charities and Non for Profit:

Liz Maher, Julie Rawlinson-Smith

 

Further to the announcement of a 6 months delay on mandatory digital VAT return submission for Trusts and “Not for Profit” organisations that are not set up as a company there has been useful commentary from the Charity Tax Group (CTG).

Charitable Trusts such as those running Leisure and Cultural Services post transfer from a local authority are an example of those “trusts” which will benefit from the 6 months delay.

A charitable company could still benefit from the extended timescale to MVD implementation but only if they are a part of a VAT Group with their trading subsidiary.

Where there remains a lack of clarity at the moment from HMRC is in respect of Charitable Incorporated Organisations (CIOs) and Scottish Charitable Incorporated Organisations (SCIOs) and whether the 1st October 2019 implementation date will apply to them as well.