MTD: good news as “soft landing period” extended for deferred charities and social enterprises

Following HMRC’s announcement that non-profits that are "not set up as a company" would not have to use the Making Tax Digital (MTD) service for VAT until October 2019, there was concern that organisations subject to the deferral would not benefit from the full extent of the “soft landing period” available to non-deferred organisations, giving them less time to prepare themselves for the change.

Happily, HMRC has now confirmed that there will be an extended “soft landing period” for deferred organisations, amending its VAT notice on MTD for VAT to state:

“The soft landing period is either:

• 1 April 2019 to 31 March 2020
• if HMRC has given a specific direction to a business to start following the Making Tax Digital rules for VAT periods starting on or after 1 October 2019, the soft landing period is 1 October 2019 to 30 September 2020”

This is good news for all charities and social enterprises subject to the deferral, giving them more time to prepare themselves for MTD. They will now need to have “digital links” in place by October 2020, rather than April 2020 as previously expected.

See our previous blog posts for more on the MTD arrangements for deferred charities and social enterprises generally, and for clarification of the type of organisation considered a “non-profit not set up as a company” by HMRC.