Making Tax Digital – Can I claim exemption?
HMRC has recently issued guidance on who might be able to claim exemption from MTD for VAT, and how to do it. If you are already exempt from filing a VAT return or your taxable turnover is less than £85,000 per annum, then you do not need to apply for an exemption.
You may qualify, and need to apply, for exemption in the following three categories:
– Your business is subject to an insolvency procedure
– Your business is run entirely by members of a religious society who do not believe in using electronic devices or electronic communications (although in this case you may already be exempt)
– It is not reasonably practical for your business to use digital tools due to age, disability, location or other reason
The third category is going to cause the most confusion, as what is considered ‘reasonably practical’? The HMRC guidance suggests that age alone will not be sufficient for exemption, you must demonstrate how your age affects your circumstances and therefore your ability to comply with MTD. Not understanding accounting software will not be an excuse if you currently use computers and the internet for other purposes. Time, effort and cost will not necessarily give exemption, but may be taken into consideration by HMRC.
You can apply for exemption by phoning the VAT general enquiries team or by writing to them, giving full details of your business, how you currently file your VAT and your reasons for claiming the exemption. HMRC will then issue a decision in writing.
Remember, if you do not qualify for exemption or an application is rejected, our Making Tax Digital Taxperts are here to help you. Contact them today to discuss your circumstances.