Making Tax Digital delayed to 2020 at the earliest for taxes other than VAT
Heeding concerns across the accounting spectrum, the government has amended the timetable and implementation intakes of Making Tax Digital (MTD).
Under the reformed timetable, only businesses with a turnover above the VAT threshold (£85,000) will have to keep digital records, and only for VAT purposes, starting from 2019. Businesses will not be asked to make the switch to MTD and update HMRC quarterly for other taxes until at least 2020.
While still wholly supporting the MTD initiative as a necessary move to modernise and streamline the tax system, the Treasury accepted the need to slacken the timetable and mandation around MTD in order to ensure businesses are able to comfortably transition. This means that 3m of the smallest businesses and landlords will have the option to voluntarily make the switch to digital record keeping at their own pace before it becomes mandatory in no sooner than two years.
In this initial phase of MTD, businesses will not need to provide HMRC with information more regularly than usual, as VAT already requires quarterly returns.
The government came to this decision after taking into account the concerns of the Treasury Select Committee in particular, who have just elected new chair Nicky Morgan.
HMRC will continue with their Making Tax Digital pilot and will start to pilot MTD for VAT by the end of this year, initially on a small, private scale and then widening the scope into a public pilot starting Spring 2018.