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MTD: Another GIANT deferral announced

In June 2019, we revealed that NHS trusts and government departments had been granted a deferral of their start date for MTD for VAT. We now know those organisations won’t be able to start filing VAT returns under MTD until at least April 2022.

28th Sep 2019
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Public sector entities that are required to provide additional information alongside their VAT return are among the list of businesses that have a deferred start date for MTD.

All the other business in that deferred list are expected to enter the MTD regime for the first VAT period beginning on or after 1 October 2019. However, public sector organisations, such as NHS trusts and government departments that use a special online system known as the GIANT service to submit additional VAT transaction information, will have a further deferral.

In June 2019, HMRC announced that GIANT users would not be able to start using MTD for VAT from 1 October 2019, and instead would be given a different start date to be revealed further down the line. On 27 September 2019, HMRC informed the professional accountancy and tax bodies that the MTD start date for GIANT users would not be before April 2022. 

Unseen policy

The reason given in June 2019 for this delay was that the rules may have to be adjusted following a potential reform of the VAT refund conditions for central government. The structure for that reform was expected to be set out in a policy paper provisionally titled: “VAT Simplification and the Public Sector”. This paper is eagerly awaited, as it was scheduled for release following the Spring Statement on 13 March 2019, but it still hasn’t been published.

HMRC’s announced implies that the review of the VAT rules has still not concluded, or perhaps it has not started. HMRC says the delay to April 2022 is “to allow it to take into account the outcome of the HM Treasury review into the VAT refund rules for central government, which will cover the future reporting requirements for GIANT customers and could lead to changes to those rules.”

The HMRC announcement adds that GIANT customers should continue to submit their VAT returns as they do now. 

MTD acceptance

Meanwhile, for other VAT registered businesses the MTD sign-up and filing processes have generally gone relatively smoothly. HMRC is very pleased with the response so far from the first two stagger groups of businesses with VAT quarters ending 30 June and 31 July.

These businesses were required to submit their quarterly VAT returns under MTD by 7 August and 7 September 2019 respectively. Over one million VAT returns were submitted by the stagger 1 group, which represented an 85% compliance rate.

ASA issues

The area which has caused the most difficulty for tax agents is the agent services account (ASA). HMRC is not happy with the performance of the ASA, and many tax agents are frustrated with the frequent changes and dead-ends in the compliance process. There is certainly much that needs improvement with the ASA before the MTD project can be rolled out to income tax.

MTD for income tax 

It is still not clear when MTD for income tax will be rolled out. The accounting and tax bodies are pushing HMRC for more consultation before MTD for income tax moves anywhere near mandation.

Speaking at the CIOT conference in September 2019, Rebecca Benneyworth suggested that the MTD entry threshold of £10,000 of turnover was unlikely to be in place for unincorporated business before 2030. However, it is possible that certain groups, such as landlords, will have a different MTD mandation threshold.

The problem is that accounting software needs to be available to businesses before MTD can be mandated but without a clear mandation date, the software providers are not willing to develop the new software products.

Replies (10)

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By adamsmith72
29th Sep 2019 20:38

Oh, so what's good enough for the goose ISN'T good enough for the gander, do as I say, not as I do.

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Replying to adamsmith72:
wolfy
By rob winder
30th Sep 2019 10:58

Strangely enough that's exactly what I thought

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By AnnAccountant
30th Sep 2019 09:05

You just like reporting on this because the word "GIANT" gets clicks - before people realise you don't mean "huge" but are talking about a public sector system that no one outside of it needs to know about.

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By johnjenkins
30th Sep 2019 09:56

I still don't think that Income tax (especially quarterly updates) will be ready for at least another 5 years if at all.

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Replying to johnjenkins:
By ireallyshouldknowthisbut
30th Sep 2019 12:02

I think once is registers that the purported aim of this - raising tax revenue - is found to be untrue (I think the amount of tax will if anything go down, due to software auto-coding VAT where there ought not be any) it will be very hard to justify the same lie again.

Moreover most of the "vested interest" in this project are long since gone.

So I quite agree John, this will be the "high tide" of this massive time waster.

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Replying to ireallyshouldknowthisbut:
Hallerud at Easter
By DJKL
03rd Oct 2019 16:21

Not so convinced, we are in a world of new realities vis a vis truth and honesty, the fact that none of this whole process, from MTD for vat onwards, can be justified will likely not even come into consideration.

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By jamiea4f
30th Sep 2019 11:14

Bearing in mind that a lot of things I used to be able to do with HMRC's online shambles (deleting clients for example) I now can't do online, and nobody seems to know why, I'm hoping that MTD will be shelved completely. Another wise use of our taxes....

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By paul.symons
30th Sep 2019 14:33

The Agent Services Account is crucial to us being able to get clients into MTD. The facility does not work properly:it provides nowhere near enough information to enable a professional practice to manage its clients affairs on it. Presently it is an Agent Dis-service Account.

Our professional bodies should put a very clear case to HMRC and HM Treasury that further MTD cannot take place unless the ASA is up to standard: decide at the front end how it is to look and feel, build it, test it, have firms sign up use it for their existing client lists, AND ONLY THEN start on the process of moving towards mandating further taxes into MTD.

I really don't care if the NHS and other government bodies are not going to be ready for MTD because GIANT is not presently compatible. I really do care if I cannot see my clients tax affairs on an HMRC website.

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By AndrewV12
02nd Oct 2019 11:33

MTD for income tax
'It is still not clear when MTD for income tax will be rolled out. The accounting and tax bodies are pushing HMRC for more consultation before MTD for income tax moves anywhere near mandation.'

The Government and tax authorities still see MTD as a goer. I see it as the Titanic just after it hit the iceberg, technically it was upright and still floating. I hope MTD sinks and all that gave birth to it.

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By djtax
16th Oct 2019 11:25

Yet more damning evidence that this whole farce was introduced hastily and without adequate testing beforehand. Isn't that exactly what the House of Lords review last autumn concluded - a conclusion that was rejected wholescale at the time by HMRC?

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