Since 2010, the filing of VAT returns online was made mandatory. With this new rule, a brand new problem arose – 15% of the UK do not have access to the internet.

 

These individuals are classed as ‘digitally excluded’ and they face further problems with the impending introduction of the ‘Making Tax Digital’ reporting requirements.

 

What criteria must someone meet to be deemed digitally excluded?

 

For someone to be classed as digitally exempt, HMRC states they must meet at least one of the following criteria:

 

• If someone’s beliefs or religion prevents them from using electronic communication or
• If someone’s age, disability or remote location etc prevents them from using an electronic return system

 

Although this list of exemptions was created in 2014, it is still widely unknown among those who could benefit from having the knowledge

 

For the digital excluded, making them file tax returns online would be a breach the European Convention on Human rights. This is because it would be too difficult and time consuming.

 

Clearly you, the reader, are not digitally excluded but your family and loved ones very well may be. If they are or you suspect they might be, you may be wondering what alternatives are there.

 

Are there any alternatives?

 

It is not against the law to fail to own a computer in the UK so why should each taxpayer be forced into making their declarations online?

 

They’re not if you qualify as digitally exempt – you are given an alternative method to complete your tax returns.

 

Gov.uk does not feature a lot of information on the topic of digital exemption though this may be because they don’t expect such individuals to look online to find out more on their case.

 

Those who believe they may qualify as digitally exempt should call the VAT helpline on 0300 200 3700. If HMRC agrees that they do fit into the classification, then they may provide their VAT return figures over the phone or on paper.

 

The digitally exempt person should make the phone call themselves. If an agent calls on your behalf, HMRC will state that the agent should fill the VAT returns for the client.

 

MTD for VAT – a new rule

 

From April 2019, keeping records digitally will be mandatory. VAT registered businesses with a turnover higher than the VAT registration threshold (£85,000) must do the following as of April 2019:

 

• Keep their business records digitally – for VAT purposes
• Give HMRC their VAT return information by using ‘Making Tax Digital’ compatible software

 

• For businesses not falling under this threshold, MDT will be available on a voluntary basis.

 

HMRC says this new method of working will help businesses avoid errors when calculating tax – a problem so significant that it leads to £9 million lost annually. Others believe that taxpayers will err on the side of caution and overpay in the belief it’s better to pay too much and keep the taxman off their back.

 

Other areas HMRC claims that Making Tax Digital will improve on the current system include:

 

• Make calculating tax returns easier
• Make budgeting more effective
• Reduce the cost and worry associated with HMRC interfering when errors are made
• Access tax information in one place

 

How will MDT affect non-internet users?

 

For those that do not have access to the internet, the new way of working is probably going to be more of an obstacle than an aid.

 

Many of the traders who would qualify as digitally exempt have made no attempt to let HMRC know of their situation – suggesting the process of is complicated or lengthy.

 

Instead, these individuals will have their accountant file their VAT returns for them.

 

However, even with the help of an accountant, these individuals still face problems such as being required to receive emails from HMRC. And receiving emails is a hard task if you do not have an email address or access to the internet.

 

The future – April 2019 to be exact

 

Because Gov.uk doesn’t feature a lot of information on digital exemption, it is not clear what alternative the digitally exempt will have to Making Tax Digital. We hope that they will publish the answers surrounding the topic before the mandate takes place.

 

Perhaps we should not be too hopeful though. In a recent webinar, an agent asked HMRC what clients without computer access should do. What was HMRC’s response? The client can use their smartphone of course. This response suggests that the taxman does not fully understand the issue.

 

For now, it appears similar exemptions and alternatives will be in place for the digitally exempt when MDT occurs. As society moves towards relying on technology more, we can safely assume that the digitally exempt will face even more obstacles in the future.

 

To speak with Panthera Accounting’s team about Making Tax Digital and how to make your business ready for it if you’re not a digitally-excluded business, please call us on 01235 768 561 or drop us an email to enquiries@pantheraaccounting.com – we’ll be back in touch with you shortly.