Yesterday’s statement from the Treasury confirmed delays for the Making Tax Digital timetable. The new timeline shows that only businesses with turnover above the VAT threshold (£85,000) will need to keep digital records and will come under MTD in 2019, with other businesses coming under MTD in 2020.
The New Making Tax Digital Timetable
• Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes. They will only need to do so from 2019.
- Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
- Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
In the Treasury statement, Mel Stride, Financial Secretary to the Treasury and Paymaster General (the person responsible for MTD policy decisions), said that digitalizing the tax system is “the right direction of travel” but many have been worried about the practicalities, and so the government has listened to concerns and acted accordingly by delaying the Making Tax Digital timetable.
We welcome an end to the uncertainty surrounding Making Tax Digital.
As a software vendor, we welcome an end to the uncertainty surrounding Making Tax Digital. In our own survey of UK accountants, 80% agreed that an MTD deferral until 2019 should be aligned to the VAT threshold.
The revised Making Tax Digital timetable will be well received and the delay will provide more time for the pilot to be widened, and for accountants to get prepared. The pilot for MTDfB for VAT will start by the end of this year in a phased approach, until HMRC’s live pilot begins in the Spring of 2018.
To support accountants through the compliance challenge ahead, we made our MTD-compliant software available more than 12 months in advance (of the original 2018 deadline). We want to urge the accountancy industry to still take the opportunity to get up-to-speed with MTD; understand which of their clients will be impacted first; and assess their software supplier for suitability.
Accountants will now be looking to HMRC to take the lead in terms of letting businesses know about MTD. To date, there has been no official communication from HMRC to businesses and this is needs to happen to ensure the message gets through to the wider business community.
New Background Information
On 7 July 2017, the House of Commons published their Making Tax Digital Briefing Paper – a lengthy 55-page report outlining the background to the MTD reform, with significant stats on the cost of Making Tax Digital for Business (MTDfB).
This is highly recommended reading for all accountants and compiles a wealth of sources from the first announcement in 2015, to the present day.
You can also find out the what the deferral of MTD means for UK accountants by viewing our latest webinar.
For latest information on Making Tax Digital, visit our MTD Resources Hub.
Mark has spent over 25 years working in tax and specialises in Personal and Capital Gains Tax. After beginning his career as a Revenue Officer at HMRC, Mark worked for a number of years as a Tax Senior at an in-house tax department for a UK stockbroker, before joining Thomson Reuters in 2006. Mark and the team are currently working closely with HMRC to pilot software for Making Tax Digital.