Following an announcement today it would appear that the government have actually listened to the concerns, raised by institutions, professional bodies and businesses, about the timetable for the introduction of HMRC’s Making Tax Digital platform and are now taking steps to try to ensure a smoother transition to a digital tax system.
As released on the Gov.uk website today (links to the news item are here) 3 million of the smallest businesses and landlords will be able to move onto the making tax digital platform at their own pace.
- Only businesses that have a turnover which is above the vat threshold (currently £85,000) will be required to keep digital tax records and even then only for vat purposes.
- They will only need to do so from 2019
- businesses will not be asked to keep digital tax records or to update HMRC quarterly until at least 2020.
- Making Tax Digital will still be made available to the smallest businesses on a voluntary basis and also for other taxes.
- All businesses and landlords will have at least 2 years to adapt to the changes before being asked to keep digital records for other taxes
- As VAT already requires quarterly returns to be made no business will be required to provide information to HMRC on a more regular basis during the initial phase than they do now.
HMRC have already begun to pilot the Making Tax Digital service andwill roll out testing with businesses. It will start to pilot MTDfB for VAt by the end of 2017 starting with small scale testing followed by a wider live pilot by the Spring of 2018. This should provide well over a year of testing before any business are required to use the system on a mandatory basis. Given previous system roll outs it will still remain to be seen whether even this extended timetable provides a robust and workable system but businesses should begin to prepare to be able to use systems to enable them to work with the digital platform from now which will give them plenty of time to get use to any changes in working practice that may be required. Solutions that can make working towards Making Tax Digital much easier can be found on our pages here