The final regulations introducing the Making Tax Digital (“MTD”) VAT provisions which come into effect from 1 April 2019 were laid recently. HMRC have also advised us that the MTD for income tax trial is now ready to move forward by increasing voluntary participation in the pilot so that it can be tested on a larger scale.

The service can be accessed at: https://www.gov.uk/guidance/use-software-to-send-income-tax-updates.

HMRC’s approach to delivering MTD is to start small and then add further functionality. The pilot service will continue to be developed on an iterative basis, enabling a wider range of businesses with differing requirements to join as new functionality is added.

Initially, taxpayers will be eligible for the public beta if they are a sole trader with income from one business. The next planned stage is to expand eligibility to those with income from property.

HMRC know that many of you are eager to know what MTD compatible software will be available. The current list of MTD compatible software products is available on gov.uk: https://www.gov.uk/guidance/software-for-sending-income-tax-updates.

There are a number of other products at various stages of development. HMRC will continue to add to this page as new products are ready.

HMRC tell us that they are working with the software industry, from innovative smaller developers to the large established players, as part of their strategy to ensure a pipeline of software products at multiple price points addressing different business needs.

The Autumn Budget confirmed that the timetable for MTD is unchanged from the revised timetable announced in July 2017. Under the current timetable, from April 2019, only businesses with turnover above the VAT registration threshold will have to keep digital records, and only for VAT purposes.

The scope of MTD will not be widened to other taxes before the system has been shown “to work well”, and not before April 2020 at the earliest. HMRC began piloting MTD for Business for VAT in December 2017, starting with small-scale, private testing.

The Institute has been developing a MTD hub which will be available in the next few weeks now that the detailed legislation has been enacted. A MTD event is also being planned for after summer 2018 once the trial has a few more months under its belt.