PQ magazine is for part qualified accountants.
Read the latest web issue here – if you like what you see sign up today
Delay to Making Tax Digital initiative welcomed
15 July 2017
Industry bodies have welcomed the government announcement that mandatory digital record keeping and quarterly reporting by small businesses and landlords for income tax purposes will be deferred until at least April 2020.
This means that smaller businesses will have much longer to familiarise themselves with digital record keeping and find the right software and processes suitable for their business. This latest announcement means that the government has deferred mandation for at least two years from the original proposed start date of April 2018.
Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes, and they will only need to do so from 2019.
Whilst the requirement has been deferred for Income Tax, the timetable for VAT has not changed, and VAT registered businesses with a turnover in excess of £85,000 per annum will be obliged to maintain digital records and provide quarterly updates (VAT returns) to HMRC.
John Preston, CIOT President, said: “We are delighted that the government has relaxed the timetable for Making Tax Digital (MTD) and appears to be basing its approach on coaxing rather than compelling businesses into going digital.
“Whilst we are supportive of the government’s long term ambitions for digitalising the tax system, we have always called for this to be achieved in a measured and manageable way. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before mandation is reconsidered.”
Mel Stride MP, 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.”
Mark Purdue, tax product manager at Thomson Reuters, said: “We welcome the end to the uncertainty. In our own survey of UK accountants, 80% agreed that an MTD deferral until 2019 should be aligned to the VAT threshold. Today’s news will be well received and the delay will provide more time for the pilot to be widened, and for accountants to get prepared.
“To support accountants through the MTD challenge ahead, we made our MTD-compliant software available more than 12 months in advance (of the original 2018 deadline) and urge the accountancy industry to 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.”
He added: “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 needs to happen to ensure the message gets through to the wider business community.”
Subscribe to RSS