Exemption from Making Tax Digital
3.1 Who is exempt from Making Tax Digital
HMRC expect that most customers will be able to meet the legal obligations of Making Tax Digital, but accept that it may not be possible for a small number of customers to do so.
You will not have to follow the rules for Making Tax Digital if HMRC is satisfied that either:
- it’s not reasonably practicable for you to use digital tools to keep your business records or submit your VAT Returns because of age, disability, remoteness of location or for any other reason
- you or your business are subject to an insolvency procedure
- your business is run entirely by practising members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records
You do not need to sign up for Making Tax Digital or apply for an exemption if either:
- you’re already exempt from filing VAT Returns online
- your taxable turnover is below the VAT registration threshold
3.2 Examples of businesses who are exempt
You’ll be exempt if it’s not practical for you to keep records digitally because:
- of your location - for example if you cannot get internet access at your home or business premises and it’s not reasonable for you to get internet access at another location
- of a disability - for example if you cannot use a computer, tablet or smartphone for the frequency amount of time it takes to keep digital records for your business
You might not be exempt if you:
- believe you should be exempt purely because of your age - HMRC will consider how your age and circumstances impact your ability to follow the rules for Making Tax Digital
- believe you should be exempt because you’re unfamiliar with the relevant software - HMRC will take into account how much you use or intend to use a computer, tablet smartphone or the internet for other purposes and whether it’s reasonable for you to learn how to use Making Tax Digital software
- consider yourself to be a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications - but you’re currently filing online and use a computer or smart device for business or personal use
HMRC will not give you an exemption purely on the basis that reasonable effort, time and cost may be involved in making the transition to Making Tax Digital, for example choosing and buying any new hardware or software or learning to use them.
HMRC will however take effort, time and cost into account in its overall assessment of whether it is practical for you to follow the rules for Making Tax Digital.
3.3 If you get help from a third party
If you get help from a third party (for example a bookkeeper, agent, friend or family member) to meet your obligations for Making Tax Digital, they’ll need either:
- full access to your digital business records - so you’ll need to be content that your information is secure
- you to keep digital business records and then electronically extract the data and send it to them by electronic means - for example by using a pen drive or emailing a file
If the third party stops supporting you and you do not think you can follow the rules for Making Tax Digital without their support, you should ask HMRC for an exemption.
3.4 Ask HMRC for an exemption
To make a claim for exemption, call or write to VAT: general enquiries : Portcullis House, 21 India Street, Glasgow G2 4PZ
- your VAT Registration Number
- your business name and principal place of business
- the reason for your exemption request
- details about how you currently file your VAT Returns
- the reasons why you wouldn’t be able to file returns through software or keep digital records (even if you can file using VAT online services)
- any other reason why you cannot follow the rules for Making Tax Digital
You can ask an agent, friend or family member to ask for an exemption on your behalf, but they must:
- fully understand your circumstances in relation to getting an exemption
- have authority to act on your business’ behalf - such as written authorisation sent to HMRC or verbal authorisation on a phonecall (0300-200-3700)
It’s usually better to call HMRC yourself as you’ll have a better understanding of your abilities and how you engage with technology in your personal life. The helpline advisers will talk to you about support that HMRC can provide to help you transition to Making Tax Digital.
Whilst HMRC intends to deal with as many telephone requests as possible, we may ask you to make a request in writing.
HMRC will make a decision after you have provided all the necessary information.
If you write to us or call us to request an exemption, you’ll receive our decision in writing.
The letter will tell you either:
- that you are exempt and clearly set out what your obligations are
- why you are not exempt and that you can appeal
You should continue filing VAT Returns the way you usually do if:
- you’re waiting for HMRC to make a decision on an exemption request or an appeal after being rejected for exemption
- HMRC have told you that you’re exempt from Making Tax Digital