The first batch of HMRC “encouragement letters” to businesses in the MTD for VAT range are starting to drop through letterboxes across the UK. The letters are being sent to plus-£85k businesses that are eligible to join the pilot.
There’s something quaintly ironic about being informed of a major technological development via a missive in a brown envelope delivered by a Royal Mail delivery person in a blue uniform, pulling a golf cart.
There are two versions of the letter for impact-monitoring purposes. The first posting of 20,000 are on their way and the second set of 180,000 will go out next week after a pause to see which version works best.
Slightly different versions
HMRC says: “We are also taking this opportunity to monitor the effectiveness of our letter content so have created two, slightly different, versions of the letter.
The ATT adds: “Since HMRC will be monitoring how businesses react and respond to the different versions of the letter, we have been asked by HMRC not to publish the full text of the letters. However, HMRC recognise that it is important that agents are aware of the letters and what they say, so are happy for us to summarise the content.
“Version 1 explains to the business that the way they keep VAT records and submit their VAT returns to HMRC is changing, and that the new way of doing things is called Making Tax Digital. It goes on to explain which businesses are within scope (mandated) from April 2019, and that they will need to keep their records digitally, either using software or a combination of software and spreadsheets, and submit their VAT returns using MTD compatible software. It says the business can join early if it wants to. There is then advice on how to join the new service, with links to help and advice on gov.uk.
VAT system being modernised
“Version 2 is shorter. It says that the VAT system is being modernised, and the business needs to get ready for the change now. It explains which businesses are within scope (mandated) from April 2019, and that they must keep digital records for all VAT transactions and use software to submit their VAT returns to HMRC. This is called Making Tax Digital. There is then advice on how to get the business ready, with links to help and advice on gov.uk.”
ICAEW research in July revealed that 42 per cent of businesses were unaware that they were required to submit their VAT returns using software or an app from April 2019
The ICAEW says: “Although ICAEW and the other professional bodies have been making members aware of Making Tax Digital (MTD) and its impact on how businesses keep their accounting records and file their VAT returns, neither HMRC nor the government has done very much at all to make businesses themselves aware of what they need to do.”