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MTD for VAT - commencement rules

MTD for VAT - starting point

Putting it mildly - the recently issued Notice 700/22 (MTD for VAT) is not very concise about the commencement rules.  It states 'With effect from 1.4.19 if your taxable turnover is above the VAT registration threshold you must follow the rules set out in this notice....'  Is that turnover in the 12 months up to 31.3.19?  Or is it anticipated turnover in the 12 months after 1.4.19? 

How do you indicate to HMRC that you need to follow the new rules?  Or do they decide themselves based on your recently declared turnover in the previous four quarters?  If the taxpayer has to indicate the need to comply himself - does the existing VAT portal remain open if he omits to tell them (perhaps because HMRC have never communicated with him directly about MTD).  If so and he continues to (incorrectly) use the VAT portal - does he go penalty free for a year? 

Does the existing VAT portal remain open for VAT registered businesses operating below £85000?

I could go on but I am losing the will to.........

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19th Jul 2018 10:11

Ach - they won't have thought of that.

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By Matrix
19th Jul 2018 10:13

Maybe we should all just use the portal and see what happens.

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19th Jul 2018 10:27

(2) This paragraph applies if, for any month (“the current month”), the value of a taxable person’s taxable supplies, in the period of one year ending with the month before the current month, was less than the VAT threshold. The “VAT threshold” has the meaning given in paragraph 6(9) of Schedule 11 to the Act(7).

(3) Where paragraph (2) applies to a taxable person for the current month and has not ceased to apply for any month prior to the current month then the requirements of regulation 32A shall not apply to that person.

(4) In a case where paragraph (2) ceases to apply to a taxable person, the requirements of regulation 32A shall apply from the beginning of that person’s next taxable period falling on or after the day on which that application ceases.

http://www.legislation.gov.uk/uksi/2018/261/made

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to Wanderer
19th Jul 2018 10:35

So a seasonal business might submit some returns under MTD and some on the current system ?

Interesting......

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to lionofludesch
20th Jul 2018 01:01

lionofludesch wrote:

So a seasonal business might submit some returns under MTD and some on the current system ?

Interesting......

It's based on a rolling year so unlikely, as the peaks and troughs will be covered. Only time there might be a problem is if the taxable person is hovering around the 85k mark.

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to Wanderer
19th Jul 2018 17:37

If in any twelve month period since registration you have exceeded taxable supplies of £85,000 then you are under MTD for VAT and you are in it forever unless you de register or go bust.

I have nothing that the HMRC are not expecting business to work this out. I assume they will be looking at the submitted VAT returns to work it out.

Per the HMRC chap at the IRIS MTD seminars this week, now the VAT notice is out, the HMRC are hoping to write to all business effected with MTD for VAT ASAP. His hope was September but that is certainly not confirmed.

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to david.bransbury
19th Jul 2018 17:44

david.bransbury wrote:

If in any twelve month period since registration you have exceeded taxable supplies of £85,000 then you are under MTD for VAT and you are in it forever unless you de register or go bust.

That's not how I read it.

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23rd Jul 2018 13:22

The turnover test is detailed in section 2.1 with examples in 2.1.1. It is similar to the VAT registration test in that it is based on historic monthly turnover for the previous 12 months but there is one key difference: VAT registration occurs 30 days after the end of the month in which turnover exceeded the threshold whereas MTD starts the first day of the month following exceeding the turnover test. Eg if the rolling 12 months exceeded during November 2019 MTD will start 01/12/19.

Regarding the portal questions: I've submitted very similar questions to HMRC to cover in tomorrow's MTD webinar. There are still spaces in the afternoon session at https://register.gotowebinar.com/register/5343644494769943299?source=Gov and Wednesday morning's session at https://register.gotowebinar.com/register/8346695523737832451?source=Gov. You can submit questions in advance to [email protected].

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to kevinringer
23rd Jul 2018 13:51

I don't think that's correct. The second example says that for businesses who are not registered follow MTD rules for subsequent returns. I take that to mean if you are not registered and exceed the threshold using your date of November 19 then you will register as usual from 1st January and submit returns under MTD rules.

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to Paul Hawes
23rd Jul 2018 15:18

@Paul - yes you've got to be VAT registered to comply with MTD so in your example if the business was not VAT registered it would have to comply with VAT and MTD from 1st January but if it was already VAT registered it would have to comply with MTD from 1st December.

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to kevinringer
23rd Jul 2018 14:18

The VAT notice says

"Only businesses with taxable turnover that has never exceeded the VAT registration threshold (currently £85,000) will be exempt from Making Tax Digital."

The examples are not very helpful. It would be useful to have one that says a business had a taxable turnover in 2008 of £100,000, they are still registered but with a taxable turnover of £50,000 in 2018. They are effected from day one of MTD for VAT.

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to david.bransbury
23rd Jul 2018 14:30

So, potentially, we need records of taxable turnover as far back as 1973.

This gets better.

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to lionofludesch
23rd Jul 2018 15:20

lionofludesch wrote:

So, potentially, we need records of taxable turnover as far back as 1973.

Yes - and businesses are only required to retain records for 6 years so what about 1973 to 2012? I've sent a question to HMRC for this to be covered in tomorrow's webinar.
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to kevinringer
25th Jul 2018 09:02

HMRC did clarify this point in the webinar. They said the guide should have stated 'not' instead of 'never' and that the turnover test only applies from 01/04/19. That means we can ignore historic turnover other than the rolling turnover but there is one question: if we ignore historic turnover does that mean the first period we do the test for is the month to 30/04/19 in which case MTD starts 01/05/19? If so, what happens if the VAT stagger is 31/03, 30/06 etc - does that mean we switch to MTD during a period?

I've submitted these queries to HMRC to include in today's webinar.

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23rd Jul 2018 15:36

only this afternoon I was listening to the farce that is the £11 billion energy meter introduction....with little or no real benefits for anyone except the energy companies (the ones it wasn't intending to benefit).

MTD has the same whiff of farce...with the eventual outcome in no way relating to the original objective.

I guess the question is, is the Revenue's technology able to cope with the changes....or as it seems more likely how many further changes are they going to make to have the poor businesses fit in with what the Revenue system can deal with.

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25th Jul 2018 12:02

Voluntary registered business exceeds MTD threshold part way through their VAT quarter. Do they have to comply with MTD from the start of the following month or the start of the following period?

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to kevinringer
25th Jul 2018 12:17

kevinringer wrote:

Voluntary registered business exceeds MTD threshold part way through their VAT quarter. Do they have to comply with MTD from the start of the following month or the start of the following period?

Or .......... the beginning of the period they're already in.

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