A statement from HM Treasury has confirmed that, in light of concerns from businesses and professionals the full implementation of digital taxation should be delayed until at least 2020.
The latest schedule for Making Tax Digital will be included in the upcoming 2017 Finance Bill and will see businesses with a turnover above the VAT threshold (£85,000) keep digital records and report them on a quarterly basis to HM Revenue & Customs, but initially only for VAT purposes, starting from 2019.
This will effectively delay the original plans for a year and businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
The Revenue has said it will begin piloting the regime on a small scale at the end of this year, before running a wider pilot in 2018.
Within the Treasury’s statement, Mel Stride, 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.”
The government has pledged to no “widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest.”
The previous set of MTD plans would have seen all businesses, landlords and self-employed taxpayers with an annual turnover of £10,000 or more register, file, pay, and update their information online each quarter under MTD by 2020.
This would have started in April 2018 with businesses with profits chargeable to Income Tax and Class 4 National Insurance contributions (NICs), with turnovers in excess of the VAT threshold (£85,000) having to fully implement the policy.
In the following year, businesses with profits chargeable to Income Tax and pay Class 4 NICs, with turnovers below the VAT threshold (£85,000) and those that are registered for and that pay VAT would have followed suit.
Many businesses will be welcoming this change however, it is integral that all companies assess their current reporting procedures and consider the advantages of early implementation of online accounting software.
Packages such as Xero, of which we are an official partner at Grunberg & Co, offer businesses the opportunity to collaborate with their advisers in real time, store important data securely on the cloud and access information while on the move.
If you would like to know more about our wide range of online accounting services, please contact us.
