Making Tax Digital (“MTD”) for VAT becomes mandatory for businesses above the VAT registration threshold for VAT periods starting on or after 1 April 2019. In preparation for this, HMRC have recently started sending letters to affected businesses.

It is expected that 200,000 letters in total will be sent over the course of the coming weeks with HMRC pausing to monitor the impact of each batch of letters before sending further letters.

HMRC are initially contacting businesses that are already eligible to join the MTD for VAT pilot. HMRC are describing these communications as ‘encouragement letters’ – one of their main aims appears to be to persuade this group of businesses to sign up to MTD VAT in advance of it becoming mandatory in April. It is not yet clear when remaining businesses will be contacted, in particular those larger and more complex taxpayers who qualify for the recently announced six month deferral.

HMRC have also published research setting out agents’ views towards MTD for business. The research looked at ways to build understanding of the types of support and communication that would be most likely “to have a positive appeal, impact and effectiveness in supporting businesses’ transition to MTD.