As the exempt income doesn't count for VAT purposes, do we have to use MTD software?
Based on this bit
if your taxable turnover is above the VAT registration threshold you must follow the rules set out in this notice
i would generally say no as taxable turnover is under 85k.
However they unhelpfully then say
Only businesses with taxable turnover that has never exceeded the VAT registration threshold (currently £85,000) will be exempt from Making Tax Digital.
Ok so thats somewhat confusing - its not clear if that means every business must look back at their entire turnover history to make sure they haven't ever exceeded that vat threshold in the dim and distant past - it looks like that is what they are saying. I find it hard to believe they would be worried about what turnover was 5 years ago.
Perhaps i am missing something with skim reading sections here - apologies if this is the case -as ever though with hmrc the absolute lack of clarity in the written guidance again beggars belief. Who do they get to write this stuff? and do they check it with anyone who might read it before they release it?
https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat#check-if-you-have-to-follow-the-making-tax-digital-rules
https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat#check-if-you-have-to-follow-the-making-tax-digital-rules
2.1 Turnover test (exemption on the grounds of taxable turnover)
With effect from 1 April 2019, if your taxable turnover is above the VAT registration threshold you must follow the rules set out in this notice. If your taxable turnover subsequently falls below the threshold you will need to continue to follow the Making Tax Digital rules, unless you deregister from VAT or meet other exemption criteria (see paragraph 2.2 of this notice).
Only businesses with taxable turnover that has never exceeded the VAT registration threshold (currently £85,000) will be exempt from Making Tax Digital. You will therefore need to keep an eye on your taxable turnover, especially if you think it is close to the VAT registration threshold.
