The government has confirmed that the timetable for Making Tax Digital (MTD) will be delayed after considerable pressure from professionals and taxpayers.
With the general election resulting in the MTD provisions being axed from the Finance Bill and the pilot project behind schedule, it is no surprise, but a very welcome one, that the timetable has been pushed back.
Under the original timetable, businesses with turnover above the VAT threshold (currently £85,000) would have been required to maintain digital accounts and provide quarterly reports to HMRC for income tax purposes from April 2018. This was set to extend to all businesses and landlords with turnover above £10,000 from April 2019.
Under the new proposals, MTD will not come in until 2019 and then only for VAT purposes. In reality, this should have minimal impact as most businesses above the VAT threshold already have a quarterly reporting requirement.
For other taxes including income tax, national insurance and corporation tax, a commencement date has not yet been set in stone. We have been told, though, that there will be no requirement to keep digital accounts or provide quarterly updates for these taxes until April 2020 at the earliest.
In addition, the government has now advised that MTD will be voluntary for smaller businesses i.e. those below the VAT threshold.
Nick Haines, Head of Tax, commented: “This announcement is a relief for both professionals and taxpayers. There was a real fear that HMRC were going to plough on with MTD when woefully unprepared.
The delay gives everyone time to ensure that, when it is introduced, it is done so efficiently and with as little disruption as possible for everyone involved.”