HMRC announces Making Tax Digital (MTD) deferral for some charities

HMRC has yesterday launched the pilot of its MTD service for VAT for around half a million businesses with up-to-date and straightforward tax affairs.

Interestingly, HMRC has also announced that non-profits that are not set up with a company structure will now not have to use the MTD service until October 2019. There will be a pilot for those organisations that have been deferred, launching in Spring 2019.

Charitable companies - unless they form part of a deferred category, such as those companies that are part of a VAT group – will still be required to use the MTD service from 1 April 2019.

It remains to be confirmed if the “soft landing period” promised organisations in relation to MTD will be extended for those organisations that have been deferred by six months. The initial indications obtained by the Charity Tax Group, however, suggest not.

The soft landing period was intended to help taxpayers who might find it difficult to comply with the IT demands associated with the initiative. If it is not extended, this will reduce the amount of time that organisations that have been deferred, such as charities not set up as companies, will have to prepare themselves for MTD.

The Government has previously announced that MTD will not be mandated for other taxes other than VAT until at least April 2020.

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