Farmers question HMRC’s readiness for Making Tax Digital

An under-pressure HMRC has admitted to a number of farmers that it is unable to process new applications for exemption from Making Tax Digital until next month.

The agency also announced this week that it had had to push back the rollout of the new VAT system to the largest and most complex businesses until October, although this is unlikely to affect many farms.

With a little over five months to go until businesses must comply with the new regulations, anxiety is growing over the lack of answers among many farmers who do not feel they will be able to cope with the fully digital system.

Many are currently using a paper-based accounting system and then relying on help from either a family member or a tax agent to file the final submissable figures on their behalf, a process that is likely to be significantly more difficult under the new regime (see box).

HMRC had said in July and again earlier this month that new applications for exemption were open and that all farmers had to do was contact it by phone to start the process.

See also: One-fifth of farmers still in dark over VAT changes

It stated that if it was not reasonably practicable for businesses to use digital tools to keep records or submit returns for reasons of age, disability, remoteness of location or for any other reason, they could be exempted.

What are the changes?

The changes will remove the ability of businesses to manually submit VAT figures into the HMRC website and instead require this to be done by specialist accounting software or “bridging” software which can pull data from an Excel spreadsheet and send it to HMRC automatically.

Use of the accountancy software will require that all paper invoices are scanned and uploaded to the computer, making all filing systems fully digital.

The new system comes into place next April for all businesses with a turnover of more than £85,000, with those trading below that threshold allowed to continue under the existing system. Those already exempt from online submissions will continue to be exempt.

See also: Changes to submitting VAT in 2019: What you need to know


But farmers have been getting in touch with Farmers Weekly to say that when they attempted to get in touch with HMRC to apply for an exemption they have been told that the process is not yet up and running and the criteria for exemption have not been finalised.

Scottish farmer Gordon Rennie said that when he phoned an HMRC call centre he was told that the only current exemption was “on religious grounds” and that the process would not be ready until the second half of November.

Mid Wales upland beef and sheep farmer Linda Meredith also spoke to an HMRC call centre operative who also stated that the rules around exemptions were still being worked on.

Farmers concerned about the changes are still advised to contact the HMRC VAT helpline on 0300 200 3700 to discuss the matter.

Pilot scheme launched

A pilot scheme for straightforward businesses whose tax affairs are up to date was launched this week to allow users to try the system ahead of the April launch.

Mel Stride MP, Financial Secretary to the Treasury, said: “HMRC is transforming the tax administration so that it’s more effective, more efficient and easier for taxpayers.

“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.”

But Farmplan software development manager Jim Ashwell warned farmers thinking of joining the pilot scheme to ensure that they were using software that was capable of making the necessary submissions.

He also said that once users had signed up to take part in the new system they would be unable to revert to the old system.

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