According to an update on its MTD overview, the six-month deferral applies to organisations who fall into one of the following categories: trusts, ‘not for profit’ organisations that are not set up as a company, VAT divisions, VAT groups, those public sector entities required to provide additional information on their VAT return (government departments, NHS trusts), local authorities, public corporations, traders based overseas, those required to make payments on account and annual accounting scheme users.

HMRC says the deferral will apply to around 3.5% of mandated organisations. They will now need to meet a later deadline of 1 October 2019, which it says is to ensure there is sufficient time to test the service with them in the pilot before they are mandated to join. 

Moore Stephens welcomed the deadline being pushed back to give more time for businesses to prepare, but said the delay should be expanded to small businesses. The firm pointed to results from its recent survey which found that 37% of UK businesses are not familiar with the new regime at all.

Additionally, 64% of businesses said they are not prepared for the new regime, and 48% have no plan in place to prepare for MTD.

Nick Warner, VAT partner at Moore Stephens, said: ‘Businesses swamped with preparations will welcome the delay to the deadline - but HMRC should be extending the deadline for SMEs too.

‘Many SMEs have not even started the complex process of digitising all their tax processes and upgrading their software and systems, with less than six months to the deadline.

‘Complying with VAT regulations is a huge burden for many businesses, which have had little to no support or guidance on how to implement MTD. The added task of meeting these requirements is only adding to existing stresses such as Brexit.’

Overview of Making Tax Digital is here

Report by Pat Sweet