MTD for VAT: GIANT deferral announced

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NHS trusts and government departments have been granted a further deferral of the start date for MTD for VAT, beyond 1 October 2019.

Businesses and entities required to be VAT registered as they have VATable income exceeding the VAT registration threshold must sign-up for Making Tax Digital (MTD) to submit VAT returns using MTD-compatible software for periods beginning on or after 1 April 2019, unless they have been given a deferred start date.

In October 2018, when the MTD for VAT pilot moved into public beta stage, HMRC announced that “complex businesses” would have a deferred start date for MTD for VAT. All of those deferred businesses should now have received a letter from HMRC inviting them to join MTD and reiterating that the MTD service must be used for VAT return periods beginning on or after 1 October 2019.

The list of deferred businesses includes all public sector entities which are required to submit additional information alongside their VAT return, such as NHS trusts and government departments. Those entities use a special online system to submit that additional information known as the GIANT service (Government Information and NHS Trust).

GIANT leap

On 17 June 2019, HMRC made it known to the professional tax and accountancy bodies that the entities that use GIANT would not be able to start using MTD for VAT from 1 October 2019, and instead they would be given a further deferral to a date which has not been announced.

The affected entities should receive a letter from HMRC this week, informing them of this extra time to prepare for MTD. A further letter will be sent later this summer to give a revised timetable for the mandation into MTD for VAT.

This is not an optional deferral; it is necessary for all GIANT users. In the meantime, those GIANT users will have to submit VAT returns as they do now.

Small step

The official reason given is that a further deferral is needed due to a potential reform of the VAT refund rules for central government. A policy paper on this topic was supposed to be released “in the coming months” following the Spring Statement on 13 March 2019, but it hasn’t appeared.

The advertised aim of this yet unseen policy paper, provisionally titled: VAT Simplification and the Public Sector, is to “reduce administrative burdens and improve public sector productivity.”

MTD landing

The HMRC Agent Update issue 72 reports that over 180,000 VAT returns have already been submitted using MTD compatible software, and over 325,000 businesses have signed up for MTD.

However, there have been bottlenecks with long delays in getting through to the HMRC helplines as a large number of taxpayers and advisers look for help with numerous problems. HMRC says it is working to improve the performance of its helplines and its support model in general.

The CIOT and ICEAW Tax Faculty are also working with HMRC to identify and share causes of MTD difficulties. Keep an eye out for announcements of workarounds on the CIOT dedicated MTD news page and the Tax Faculty MTD hub. Also, don’t forget to check our MTD pages for tips from community and software experts.

About Rebecca Cave

Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.

Replies

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18th Jun 2019 17:42

Double standards .

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By AW71
18th Jun 2019 18:32

Oh so it's ok for everyone else (mostly) to have to change what they do just to fit in with some ridiculous project, but not do it themselves.

Just when I thought they couldn't get any more arrogant.

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19th Jun 2019 10:19

wait for the announcement that the expect VAT take in/on 7th July plummets.
What a bunch of tory leadership candidates!

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to memyself-eye
19th Jun 2019 11:15

memyself-eye wrote:

wait for the announcement that the expect VAT take in/on 7th July plummets.
What a bunch of tory leadership candidates!

Do you mean Conservative and Unionist Numbskull Candidates..?

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to Nick Graves
19th Jun 2019 12:49

Yes - trying to find another word for candidates. one beginning with a 'T'

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By 0705736
to memyself-eye
19th Jun 2019 15:34

Tories?

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By Ammie
19th Jun 2019 10:30

Nothing surprises me anymore, certainly after the complete mayhem and weakness of the management of Brexit.

Just goes to show how little thought and planning was given to the matter. Tantamount to abuse of power and privilege with no real consequence of messing it up.

Might be a case for a wealthy individual/business to contest in the courts.

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19th Jun 2019 10:54

All I wish is that you all write in o VAT written enquiries and overwhelm them as they have overwhelmed us.
Lot of accountants are in this to make a fast buck but they should take care as it might come back to bite them.

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to nodrogbir
19th Jun 2019 12:35

Verily - we [including HMRC] would do well to remember that
"what goes around comes around"
to paraphrase Galacians 6:7

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19th Jun 2019 11:01

I of course agree that the delay in the public sector VAT reform is typical of the shambles / total lack of capacity for anything that's not Brexit in the Government at the moment.

Equally, I think people complaining about double standards etc aren't really being fair or sensible.

The issue is that these bodies currently send their VAT returns to different software than the rest of us, because they submit extra data that we don't send.

A brand-new replacement for GIANT within the MTD system will, of course, cost a lot of money to build - even before the costs of anyone switching their own systems to speak to it.

It would be a massive waste of money for HMRC to do that just to have it ready for the same date as everyone else moves to MTD, despite knowing the whole mechanism might soon be scrapped or at least fundamentally changed.

And if they did, I'd bet everyone complaining here about the deferral would instead (quite rightly) be complaining about the short-sightedness and obstinacy of HMRC ploughing on with system change for the sake of it.

Yes, ideally the VAT reform review would have been done already. But it hasn't, so it seems bonkers to do anything other than defer their entry to MTD until it's clear what data they actually need to submit.

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to andyscotland
19th Jun 2019 11:21

I definately do not agree with you , what HMRC are asking as an example is a small hairdresser just over the VAT limit in their 60's to do is a complete and utter disgrace to this Government. They fail to understand technology through no fault of their own and have been using systems manually for decades and then over night they are expected to comply with the same rules as a multi national company and become fully digital compliant mid way through a year end. How on earth can that be fair ?

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By AW71
to andyscotland
19th Jun 2019 11:32

"And if they did, I'd bet everyone complaining here about the deferral would instead (quite rightly) be complaining about the short-sightedness and obstinacy of HMRC ploughing on with system change for the sake of it."

Erm.....like they've exactly done with the private sector???!!

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By KenKLM
19th Jun 2019 11:03

As has been pointed out this seems one rule for one and another for those that cannot argue . It is therefore on the face of it discrimination and as far as I understand it could therefore be unlawful to use 2 different dates for essentially the same legislation ? Does this not demonstrate that there is no point steam roling this into operation when even the biggest of organisations cannot cope ? I am already getting problems filing under MTD to then get phone calls from clients that the payments are not being taken . MTD VAT helpline have confirmed there is an issue moving the DD's over quickly enough to be taken but expect this to only be for the first time taxpayers file under MTD ! Not good enough as they are issuing surcharge notices !!!! Utter mismanagement yet again . Let's hope it settles down and all those businesses forced into software don't fall foul of "Rubbish In Rubbish Out" and get their records in a right old mess .

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to KenKLM
19th Jun 2019 11:26

From my limited involvement clients are struggling to use the software and HMRC stand to have significant amounts of tax over or under paid as taxpayers get stuck in the MTD system. The garbage that it produces is so bad I doubt anyone could sort it out. Do you think it right for me to tell a client to file an incorrect VAT return or is it more sensible to tell them to stay on the old system ?

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19th Jun 2019 11:05

No but wait though, when I was on a video update from HMRC I asked the question had this MTD stuff been thoroughly tested and they assured me it had. I'm beginning to think they may have been economical with the truth....

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By Bill H
19th Jun 2019 12:26

Yes I did think come July the VAT take would cause the whole ridiculous idea to be scrapped. Here's hoping! I'm not sure the accountants are making a fast buck but the software companies are! Fortunately my first returns are not due until October and I feel sorry for those who have had problems! Back from Seychelles in August.

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19th Jun 2019 13:00

Who forgot to update the GIANT vat system for MTD...

Hands up....

come on don't be shy....

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By adeyb
19th Jun 2019 13:47

"Do as we say and not as we do" leaps to mind...

Mind you it is HMRC - So we should be thankful that they've not brought forward the date that penalties kick in I guess...

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