Share this content

Has anyone seen the new rules on MTD exceptions?

This is an answer rather than a question really, but HMRC have now come out with more info.

Didn't find your answer?

You can find the details here:

3.1 Who is exempt from Making Tax Digital

HMRC expect that most customers will be able to meet the legal obligations of Making Tax Digital, but accept that it may not be possible for a small number of customers to do so.

You will not have to follow the rules for Making Tax Digital if HMRC is satisfied that either:

it’s not reasonably practicable for you to use digital tools to keep your business records or submit your VAT Returns because of age, disability, remoteness of location or for any other reason

you or your business are subject to an insolvency procedure

your 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

You do not need to sign up for Making Tax Digital or apply for an exemption if either:

you’re already exempt from filing VAT Returns online

your taxable turnover is below the VAT registration threshold

3.2 Examples of businesses who are exempt

You’ll be exempt if it’s not practical for you to keep records digitally because:

of your location - for example if you cannot get internet access at your home or business premises and it’s not reasonable for you to get internet access at another location

of a disability - for example if you cannot use a computer, tablet or smartphone for the frequency amount of time it takes to keep digital records for your business

You might not be exempt if you:

believe you should be exempt purely because of your age - HMRC will consider how your age and circumstances impact your ability to follow the rules for Making Tax Digital

believe you should be exempt because you’re unfamiliar with the relevant software - HMRC will take into account how much you use or intend to use a computer, tablet smartphone or the internet for other purposes and whether it’s reasonable for you to learn how to use Making Tax Digital software

consider yourself to be a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications - but you’re currently filing online and use a computer or smart device for business or personal use

HMRC will not give you an exemption purely on the basis that reasonable effort, time and cost may be involved in making the transition to Making Tax Digital, for example choosing and buying any new hardware or software or learning to use them.

HMRC will however take effort, time and cost into account in its overall assessment of whether it is practical for you to follow the rules for Making Tax Digital.

Replies (4)

Please login or register to join the discussion.

Replying to stepurhan:
By johnhemming
04th Mar 2019 14:33

Sorry it came out on the developers email today.

Thanks (0)
By fawltybasil2575
04th Mar 2019 14:21

The most important part of John's extract, from the HMRC guidance, is his reference to the exemption (from MTD) which can be applied for where:-

"it’s not REASONABLY PRACTICABLE (emphasis added) for you to use digital tools to keep your business records or submit your VAT Returns . . . . . . . . . . . . . .. . . . . . . . . . . . . . for ANY OTHER REASON (emphasis added)".

Those who consider that the HMRC "spin" on MTD is materially flawed should draw comfort from the availability of applications for exemption on the above grounds.

Howsoever one makes that application, on behalf of the clients (by phone, online or letter) one should decide whether one supplies fulsome information, with that application, or less fulsome information [the former having the greater chance of a prompt HMRC agreement to the application; and the latter having the benefit of stretching out the process if the application is less likely to succeed - your/ your client's judgment call:)].

If HMRC reject the application, then one can request a review: and if such review is unsuccessful, then proceed to Tribunal [perhaps hoping that your client's case will be listed for 2038 if there are sufficient numbers of appeals:)].

Importantly, the client STAYS OUT of MTD unless and until FTT determines that the application is unsuccessful [you should ensure that your client's case (and your/your client's conduct) are not so weak/inept/unreasonable that the FTT exceptionally award costs against the client].

I suspect that, if there are a few early FTT cases found in favour of the taxpayer, HMRC will adopt a more responsible approach to MTD.


Thanks (0)
Replying to fawltybasil2575:
By nodrogbir
04th Mar 2019 15:34

If HMRC were a bit more reasonable then this MTD logic could work easily.
1. All new business must go into MTD
2. Any business can voluntarily sign up.
3. Relax the Rules for those struggling with computers and
Accounting skills.

The current role out will result in poor record keeping for unrepresented taxpayers or inadequate filing of data , reason being that they are forcing people with insufficient notice or education , in other words anything will get filed just to comply .

Thanks (0)
Share this content

Related posts