MTD Communications – HMRC letters to businesses affected by MTD for VAT

By Technical Team on 07 Nov 2018

During the week commencing 5 November 2018, HMRC started to send out their first wave of what they are calling “encouragement letters” to businesses within the scope of MTD for VAT. The letters are being sent to businesses which are currently eligible to join the pilot. They are not being copied to the businesses’ agents.

During the week commencing 5 November 2018, HMRC started to send out their first wave of what they are calling “encouragement letters” to businesses within the scope of MTD for VAT. The letters are being sent to businesses which are currently eligible to join the pilot (see above).  They are not being copied to the businesses’ agents.

The first wave is 20,000 letters and, following a pause to monitor their impact, a further 180,000 letters will be issued the following week (commencing 12 November). There are two versions being used, again to enable HMRC to monitor their impact. Both have the same core message but are written in slightly different styles.

Since HMRC will be monitoring how businesses react and respond to the different versions of the letter, we have been asked by HMRC not to publish the full text of the letters.  However, HMRC recognise that it is important that agents are aware of the letters and what they say, so are happy for us to summarise the content.

Version 1 explains to the business that the way they keep VAT records and submit their VAT returns to HMRC is changing, and that the new way of doing things is called Making Tax Digital.  It goes on to explain which businesses are within scope (mandated) from April 2019, and that they will need to keep their records digitally, either using software or a combination of software and spreadsheets, and submit their VAT returns using MTD compatible software.  It says the business can join early if it wants to.  There is then advice on how to join the new service, with links to help and advice on gov.uk.

Version 2 is shorter.  It says that the VAT system is being modernised, and the business needs to get ready for the change now.  It explains which businesses are within scope (mandated) from April 2019, and that they must keep digital records for all VAT transactions and use software to submit their VAT returns to HMRC. This is called Making Tax Digital. There is then advice on how to get the business ready, with links to help and advice on gov.uk.

HMRC remain committed to writing to everyone within the scope of MTD for VAT, which we understand is to be done by the end of November, although HMRC have not committed to a firm backstop date.

Posted in: Technical News