Research in July 2018 revealed that of the businesses required to submit their VAT returns using software or an app from April 2019, 42% were unaware of the change. 

Although accountants have been making their clients aware of Making Tax Digital (MTD) and its impact on how businesses keep their accounting records and file their VAT returns, neither HMRC nor the government has done very much at all to make businesses themselves aware of what they need to do. 

The publicity campaign is about to begin. HMRC has advised us that it will shortly start issuing letters to 200,000 businesses that are currently eligible to join the MTD VAT pilot. 

The first 20,000 such letters are expected to start arriving on Thursday 8 November, after which there will be a pause while HMRC monitors the impact of the letters before restarting the following week. If you receive one of these letters and are unsure what action, if any, you should take please get in touch with me. 

HMRC has also told us that it is testing the effectiveness of the information campaign by using two different letters in the first wave.  “We are also taking this opportunity to monitor the effectiveness of our letter content so have created two, slightly different, versions of the letter. Which version a customer receives will be selected at random to ensure the results can be assessed impartially.”

However, both letters seem to me to be misleading as they underplay the fact that you can keep all your records in a spreadsheet.  In particular the second letter states "[you must] start using software to keep VAT records, if you don’t already".  That is not true.  Spreadsheets are perfectly acceptable if using bridging software.   That is going to cause a lot of confusion amongst businesses.

I'll keep you posted as the campaign unfolds.

​​​​​​​Noel Guilford