01 Jul A new timetable for Making Tax Digital
Further to earlier news articles regarding Making Tax Digital, HMRC will not now seek to implement compulsory quarterly digital reporting of trading and property businesses results starting in 2018. Instead the process will be slower and initially only for VAT purposes, which is excellent news.
This follows continued concerns being raised by businesses, professional bodies and MPs about hurried implementation of a computerised system which would have had little time to “iron out” teething problems and which seemingly provides little if any benefit to many businesses.
The Treasury have advised that:
- Businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records from 2019 and provide their VAT information to HMRC through Making Tax Digital software for VAT purposes only; and
- Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
HMRC advise that this will mean that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
It would therefore appear that most VAT registered businesses will still be required to implement Making Tax Digital from April 2019, but only for VAT purposes. This is a small but significant relaxation for VAT registered businesses, as for many businesses the only change will be a need to use HMRC’s Making Tax Digital software. However for those business using manual records, they will be required to keep digital records from 2019 and for those using spreadsheets, it is assumed that there will be a requirement for these to link to the Making Tax Digital software (based upon previous proposals).
For businesses that are not VAT registered, including many property businesses, the start date for when Making Tax Digital will be compulsory has been delayed until at least 2020, rather than the compulsory start in April 2019 previously announced (April 2018 where rental would have exceeded the VAT threshold) . There is also an assurance that all businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
The Finance Bill, including the amended legislation introducing Making Tax Digital, will not now be published until this autumn, so further detail is awaited. However, as much of the detailed requirements of Making Tax Digital were to be made by Statutory Instruments that are not subject to the same parliamentary scrutiny as Acts of Parliament, it may still be some time before the position from 2020 becomes clear.
If you have any queries, please contact your usual consultant or Caroline Lovibond on 01865 261100 ([email protected])