HMRC Extends Deferral for Making Tax Digital (MTD): What NHS Finance Teams Need to Know
HMRC has confirmed that public bodies and NHS Trusts using the GIANT (Government Information and NHS Trusts) VAT return system will not need to migrate to MTD for VAT until at least April 2027. This extends the previous deferral (to April 2026) by a further year and means Trusts should continue filing via GIANT for the time being. While we await HMRC’s formal public guidance, this aligns with earlier HMRC correspondence to GIANT users and sector updates.
What’s changing (and what isn’t)
- No MTD for VAT mandation for GIANT users until at least April 2027. Continue filing VAT returns through the existing GIANT process until HMRC instructs otherwise.
- Digital record-keeping exemption remains in place for now under Regulation 32B (SI 2018/261). This is the statutory basis for exempting certain entities (including public bodies using GIANT) from digital records pending mandation.
- HMRC has historically written directly to GIANT users to confirm deferrals (to 2025, then 2026).
HMRC has indicated in previous GIANT letters that it will update bodies ahead of any switchover. You should expect advance notice before you’re required to move off GIANT (typically through letters and HMRC notices).
Why this matters for NHS Trusts
- Breathing space for planning and budgets. The extension provides time to plan for MTD alongside ERP upgrades/finance-system changes (e.g., ledger, e-invoicing, data warehouses).
- Opportunity to align with potential s.41 VAT reform. HMRC/HMT has continued to work on public-sector VAT reforms. Aligning MTD plans with any Section 41 changes may reduce duplicated work.
- Reduce “cliff-edge” risk. Adopting digital record-keeping disciplines early (even while exempt) lowers transition risk once a definite mandation date is set. HMRC’s core MTD requirements for digital links and functional-compatible software are already outlined in VAT Notice 700/22.
Recommended next steps (NHS-ready checklist)
- Stay on GIANT for VAT submissions.
- Gap-assess your digital records.
- Map an MTD pathway within your ERP roadmap.
- Strengthen VAT controls now.
- Plan communications.
How CRSTAX can help
- MTD-for-VAT Readiness Review (NHS): A targeted review to map your current VAT processes, data flows and digital links, and produce a GIANT→MTD migration plan.
- ERP & Tax Controls Alignment: We sense-check VAT codes, partial exemption data, and evidence packs so you’re not retrofitting controls under pressure.
- Section 41 Reform Watch: Briefings on the interaction between Section 41 changes and VAT recovery, plus what that means for MTD sequencing.
- Training for NHS finance teams: Bite-size sessions on digital links, evidence, and VAT adjustments under MTD.
What next?
The extension to April 2027 at the earliest gives NHS bodies welcome time, but it’s not a reason to pause. Trusts that embed digital record-keeping now, tidy VAT controls, and align plans with ERP changes will have a smooth, low-risk transition when HMRC sets the date.
Need a quick sense-check? Book a 30-minute MTD Readiness Call with our NHS VAT specialists today.