HMRC Delays Making Tax Digital
Posted On July 17, 2017 By mhauk
HMRC has announced a deferral to the launch of Making Tax Digital (MTD) following concerns raised by the accountancy profession, businesses and parliamentary bodies. The recommendation to postpone the implementation of MTD to 2019/2020 was originally proposed by the Treasury Committee in January which called HMRC’s plans ‘over ambitious’ in their 50 page report. The system for keeping tax records digitally was originally set to go live from April 2018.
The New Timetable
- Businesses with a turnover above the VAT threshold (currently £85,000) will start to keep digital records, for VAT purposes only, from 2019. All other taxes are optional until 2020.
- Businesses and landlords with a turnover below the VAT threshold will not have to keep records digitally until ‘at least’ 2020.
All businesses and landlords can still opt to use digital reporting on a voluntary basis prior to the mandatory dates. However, the new timetable now provides at least two more years for businesses and industry to adapt to the changes.
HMRC will launch small-scale pilots for VAT reporting later this year with wider public pilots beginning in Spring 2018. This gives accountants and tax advisors a year’s worth of reporting to test the system before it goes live.
Welcomes and Warnings
The delays to Making Tax Digital are widely welcomed by industry professionals who criticised the original launch as being too slow and lacking depth. However, software companies have warned the Government not to become complacent following the announcement; surveys of their clients revealed low levels of awareness around MTD which raised concerns about the general lack of communication from HMRC.
Mel Stride, Financial Secretary to the Treasury and Paymaster General, said:
“Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms. We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
Ministers also announced that the Finance Bill will be introduced following the summer recess. It will legislate all policies that were outlined in the pre-election bill. All policies that were previously announced to start from April 2017 will still be effective from that date.
This article originally appeared on the blog of our member firm, MHA Carpenter Box.