Over 100 businesses a day are signing up for the ongoing pilot scheme, Treasury minister claims

With less than three months until the use of HMRC’s digital platform for filing VAT returns becomes mandatory for businesses, the government has claimed work is “on track”.

Beginning in October, the government has issued invites to more than 500,000 companies to take part in a pilot scheme for the Making Tax Digital for VAT platform. Some 4,000 firms so far taken up this invitation, with “over 100 businesses a day” joining the pilot, according to Treasury minister Mel Stride, who added that uptake is “in line with initial expectations”.

“This is enabling HMRC to test the service fully for all business types. HMRC informed stakeholder groups of the numbers participating in the pilot by email on 10 January,” Stride said, in answer to a written parliamentary question.

He added: “HMRC is also continuing to issue letters to all businesses in scope inviting them to join early, alongside a range of other communications activity. HMRC’s assessment is that progress with testing and take-up remains on track to mandate the service from April 2019, and support all businesses in scope to join the service in time for their first VAT return due after that date. HMRC continues to work with a wide range of business groups, agents and software providers to support business readiness for this change.”

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As it stands, using MTD will be mandatory for the filing of all business VAT returns covering a period beginning on 1 April 2019 or later. For firms that file quarterly returns, this will mean that, in effect, using the new digital platform will be compulsory from 7 August onwards.

Outside of certain designated deferrals – for which use of MTD will become mandatory in October – the switch to the digital platform in April will affect all UK businesses with annual revenue in excess of the current VAT registration threshold of £85,000.

Two months ago, a House of Lords select committee published a report urging HMRC to delay the rollout of Making Tax Digital for VAT by 12 months. The committee concluded that many of 1.2 million businesses that will be required to begin using the digital platform in April will not be ready to do so.

“HMRC has inadequately considered the needs and concerns of smaller businesses,” it said.

The department responded: “We are disappointed that the committee’s report doesn’t reflect HMRC’s wide and significant engagement on Making Tax Digital over the last three years, nor the changes made as a result for small businesses.”