The pilot will include more than half a million businesses, the Revenue said, but it estimates there are around one million registered for VAT with a taxable turnover above £85,000 that will need to keep digital VAT records and file returns using MTD-compatible software from April 2019.
A small number of businesses with more complex requirements will have a further six months to prepare, HMRC said.
MTD for VAT will enable businesses to manage their tax and save time. HMRC hopes the system will enable it to become one of the most digitally advanced tax authorities in the world.
Mel Stride, financial secretary to the Treasury, said, “HMRC is transforming the tax administration so that it’s more effective, more efficient and easier for taxpayers. Today’s announcement means that around half a million businesses will be able to join MTD and start filing their VAT returns online making it easier to get their tax right first time.”
“More and more businesses use digital tools every day to help them operate – tax shouldn’t be different. This is a major step towards bringing VAT into the 21st century.”
Meanwhile, Theresa Middleton, director for MTD for Business, added that using digital tools to help businesses manage income, expenses and tax will help them better control their finances.
The first pilot of MTD for VAT launched this April for a small number of invited businesses. After “successfully” testing the process, the Revenue has now opened it to sole traders and companies that are up to date with their VAT.