HMRC is sending out two different letters about Making Tax Digital; one regarding VAT which is a reminder to some businesses that they must comply from April 2022. The other is about MTD for Income Tax Self-assessment which isn’t mandatory until April 2024.

Which MTD?

While Making Tax Digital for VAT (MTDfV) is the norm for most businesses there’s a change on the horizon for those businesses and other organisations not yet in the MTDfV club. Meanwhile, the mandatory application of MTD for Income Tax Self-assessment (MTD ITSA) has been delayed by a year. HMRC is currently in the throws of sending separate letters about both MTD systems to businesses.

Let’s Be Clear!

Letters from HMRC are never welcome and there’s a temptation to give them only a cursory read. Because both letters refer to VAT (even the one for MTD ITSA) you can be forgiven for thinking that they are regarding the same subject. So, if you receive one or both letters read them carefully to avoid being late to the MTD party and risking HMRC penalties.

MTDfV Letter

This letter explains that all VAT-registered businesses and other traders must adopt MTDfV record keeping etc. procedures from April 2022 unless they are exempt.

MTD ITSA Letter

This letter explains that most businesses (other than general partnerships and those liable to corporation tax) must follow the MTD ITSA record keeping etc. procedures from April 2024.