Charitable trusts have been given an extra six months’ “soft-landing period” to fully comply with the government’s digital tax requirements, HM Revenue & Customs has announced.
The government’s Making Tax Digital (MTD) scheme for VAT returns is currently being piloted and will be mandatory for most organisations with a turnover of more than £85,000 from April.
After concerns about compliance with the scheme, HMRC announced a “soft landing period” meaning organisations will only need to fill in nine boxes of information from April 2019 in a spreadsheet, which is then automatically linked to HMRC using application programming interface (API) bridging software.
In October last year, HMRC announced a new implementation schedule which means that trusts and organisations that are either unincorporated or a member of a VAT group registration will have their mandatory compliance date deferred to 1 October 2019.
While this was welcomed by the sector at the time, some concerns were raised by the Charity Tax Group that the soft landing period for these organisations would still only go to April 2020.
However, HMRC announced on Friday that the soft-landing period for these deferred organisations will run until October 2020, so they will have a full year.
It said: “During the soft landing period only, where a digital link has not been established between software programs, HMRC will accept the use of cut and paste as being a digital link for these VAT periods.”
CTG welcomed the news on Twitter.
Great news that HMRC has accepted @CharityTaxGroup calls (reported in @CivilSocietyUK) for a 12 month soft-landing period for #MakingTaxDigital. Charities deferred until Oct 2019 don't need to have "digital links" in place until Oct 2020 (prev April 2020) https://t.co/cgeaz1N2Pt pic.twitter.com/iqM6khmnWQ— Charity Tax Group (@CharityTaxGroup) 21 January 2019
Charitable companies that are not a member of a VAT group will still have to comply by April 2019 with their soft-landing period running until April 2020.