Keeping you up to date on the latest accounting and tax issues

More progress made with Making Tax Digital

Last week, Ministers set out the next steps for the Finance Bill following June’s general election. In doing so, they made an important announcement about Making Tax Digital (MTD).

It has now been decided that around 3m of the smallest businesses and landlords will be able to transition to the new system at a pace more suited to them. The government’s flagship policy to digitise the tax system is intended to help businesses to streamline the maintenance of tax records and the provision of information to HMRC.

Concerns were raised over the initial proposals by parliamentarians and professionals, as well as businesses. Many were wary of the scope of the regime and the pace at which it would be imposed. The original proposal was for Making Tax Digital to be implemented from April 2018. Considering the latest announcement it appears that the government have considered those reservations and are keen to ensure that the transition to a digital tax system is as smooth as possible.

The new conditions of Making Tax Digital

Under the new timetable, the following conditions will apply:

  • From April 2019, only businesses with turnover above the VAT threshold (currently £85,000) will be required to keep digital records and only for VAT purposes;
  • businesses will not be required to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.

For the smallest businesses, who aren’t VAT registered, Making Tax Digital will be available on a voluntary basis. This means that they can choose when they wish to adopt the new practices.

It’s worth noting that, since VAT already requires quarterly returns, no business will need to report to HMRC more regularly than they do now. In addition, with the requirement to keep digital records and update HMRC quarterly for other taxes delayed until 2020, businesses and landlords will have at least two years to become accustomed to the changes.

A pleasant surprise

We had certainly championed a re-think when it came to the suggested timeline for MTD. This latest news is a pleasant surprise and implies that HMRC are taking stock of peoples concerns. For Making Tax Digital to work, businesses need support before, during and after they transition. Now, at least, businesses have more time to assess, supported by advisers such as ourselves, how they can benefit from digital record keeping and how the new practices will impact upon them. HMRC also have more time to conduct pilots and test software before further details are confirmed.

Ministers also confirmed that the Finance Bill will arrive soon after the Summer recess. The Summer recess concludes on 5th September. The Bill will legislate for all policies detailed in the pre-election Finance Bill. All policies originally intended to take effect from April 2017 will still be effective from that date.

Make sure you keep up with all the latest progress by visiting our Making Tax Digital page. To find out more about how we can help you, contact us today.

Share this article:Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn

Leave a Comment

Your email address will not be published. Required fields are marked *




Contact Us

Our Offices

Bedfordshire (Biggleswade)
Brigham House, 93 High Street, Biggleswade, Bedfordshire, SG18 0LD
Tel: 01767 315010

Hertfordshire (Letchworth)
Unit 1b, Focus 4, Fourth Avenue, Letchworth Garden City, Hertfordshire, SG6 2TU
Tel: 01462 708810

Cambridgeshire (Huntingdon)
St George’s House, George Street, Huntingdon, Cambridgeshire, PE29 3GH
Tel: 01480 426500
© 2017 George Hay