Making Tax Digital Delayed

Posted on: July 17th, 2017 by Tim Buringham

17 July 2017

HMRC have announced that the timeframe for the implementation of its controversial Making Tax Digital plans has been extended to allow businesses more time to prepare.

Following pressure from businesses and tax professionals, the government has backed down on its plans to begin the compulsory implementation of Making Tax Digital next year. Instead, 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. For other taxes, such as income tax and National Insurance, businesses will not be required to keep digital records or provide HMRC with quarterly updates until at least 2020.

Steve Maggs, Tax Partner, was delighted with the news:

“I had previously felt that HMRC were proposing an unrealistic timeframe for the introduction of Making Tax Digital, rushing into the plans out of ideological desire rather than practical consideration, so I am pleased to see that the government is listening and that plans will be delayed.

“Making Tax Digital represents one of the most significant changes the taxation system has ever undergone. There are huge implications for SMEs, the self-employed and landlords, so Cornwall will be particularly affected. It is imperative that businesses begin to prepare for the changes now, even with the announced delays.”
Making Tax Digital has been mired in controversy since the plans were first announced, with critics taking issue with the rapid pace of implementation, the requirement for quarterly reporting, and the previous low turnover threshold for businesses required to register of just £10,000.

Mel Stride MP, Financial Secretary to the Treasury, gave reassurances to businesses concerned about the implementation of Making Tax Digital said:

“The Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.

“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.”

 

If you would like to find out more about how we at Robinson Reed Layton can help your business with Making Tax Digital, please contact our Tax Partner, Steve Maggs, on 01872 276116 or steve.maggs@rrlcornwall.co.uk. You can find previous articles from the Tax Blog here.

This publication has been prepared by Robinson Reed Layton. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific tax advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.

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