Making Tax Digital – delayed again!

This will be welcome news for accountants, bookkeepers, businesses, individuals and software providers.

The Government say that Making Tax Digital (MTD) is their plan to make life easier for individuals and businesses. How so? Because it will allow everyone to keep on top of their tax affairs.

Others view it differently!

Professional bodies, businesses and MPs have all voiced concerns about the scope and pace of the reform. The Government has listened (or they have more pressing issues to deal with at the moment) and announced another delay – the first being when it was dropped from the Finance Bill before the general election.

The new timetable for MTD is now as follows:

Businesses income over the VAT threshold of £85,000
From April 2019 these businesses will be required to keep digital records and then ONLY for VAT purposes. Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.

Businesses income under the VAT threshold of £85,000 but VAT registered
As above although there is ambiguity in the Government statement as to whether these businesses will be required to report for taxes other than VAT come 2020 or whether the fact they are VAT registered is, by definition, an opt-in and therefore requires reporting.

Businesses income under the VAT threshold of £85,000 and not VAT registered
The government has committed that it will not widen the scope of MTD for Businesses beyond VAT before the system has been shown to work well – stand by for more delays​!​ At the earliest they have said this would April 2020. These businesses may however opt-in to MTD for Business.

If you are a business that has to comply or one of those that opts-in what will this mean? You will have to keep digital records, i.e. use software, and provide updates to HMRC. Until 2020 this will only be for VAT purposes.

​So, for the moment, it’s as we were and we can relax​ although it would still be prudent for any business that is VAT registered not yet using software to plan ahead and ensure that they have the appropriate tool in place for 2020.

Next steps on the Finance Bill and Making Tax Digital
Making Tax Digital Overview

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