From April 2019, all affected businesses will be required to keep digital records and must set up an account with HMRC in order to submit VAT returns online. As the accounting system must interact digitally with the HMRC business account, entering VAT return figures manually into the Government Gateway system will no longer be viable. All affected businesses who cannot comply with these new rules risk financial penalties and business disruptions associated with being classified as ‘non-compliant’ by HMRC.

The new Making Tax Digital (MTD) regime poses special challenges for rural businesses. In 2017, during the MTD consultation phase, the National Farmers Union (NFU) proposed an exemption for the 5% of the population without access to highspeed broadband. However, this plea was largely ignored as under MTD for VAT a business will not have to adopt the MTD rules where HMRC is satisfied that: ‘it is not reasonably practical to use digital tools to keep business records or submit returns for reasons of age, disability, remoteness of location or for any other reason’. An application will need to be made in order to be considered for an exemption.

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