The first government letters about Making Tax Digital for VAT are being sent to sole traders and small business owners in the coming days.
From April 2019, the introduction of Making Tax Digital (MTD) means that businesses will have to submit their VAT returns using software or an app.
Research by the Institute of Chartered Accountants in England and Wales (ICAEW) conducted in the summer found that 42% of business owners were still unaware of these impending changes.
Now a government publicity campaign is about to start in earnest, according to the ICAEW. HMRC has told the accountancy body that it will shortly start issuing letters to 200,000 businesses that are currently eligible to join the Making Tax Digital for VAT pilot.
The first 20,000 letters are expected to start arriving this week. HMRC has also told the ICAEW that it is testing the effectiveness of the information campaign by using two different letters in the first wave.
According to reports in AccountingWEB, all VAT-registered businesses who can now join the pilot and who have an annual turnover of £85,000 or more, will receive a letter from HMRC explaining how to submit VAT returns under MTD, and when this will become compulsory for them. Some VAT-registered businesses with a turnover just below the VAT threshold will also receive a letter.
HMRC has said that some types of business are not eligible to join the pilot scheme yet. These include: partnerships, firms that trade with the EU, businesses in a VAT group or a VAT division; those that use a VAT flat rate scheme, those that make VAT payments on account and any business that is newly-registered and hasn't submitted a VAT return yet.
However, HMRC says the pilot will be opened up to many of these businesses, including newly-registered traders, by early 2019.
HMRC will also be running a social media campaign about MTD for VAT and will publish case studies to illustrate how businesses have made the necessary changes in order to be compliant.