The Government announced yesterday that the implementation date for Making Tax Digital has been delayed; with the earliest that digital records are required will be for VAT purposes only, from April 2019.
We are pleased that the Government has listened to concerns from the accountancy professional bodies, businesses and the Treasury Select Committee that the proposed timescale for the introduction of the new reporting system was too ambitious. It has now confirmed that only businesses with a turnover above the VAT threshold (currently £85,000), will have to keep digital records, and only for VAT purposes, from 2019. Other businesses will not be asked to keep digital records until at least April 2020.
“We welcome the making tax digital delay, common sense has prevailed“
However, the message is that Making Tax Digital will go ahead, but at a more reasonable pace. The use of the system for VAT purposes will provide an opportunity to test the system more thoroughly, with small-scale testing beginning by the end of the year, and a wider live pilot starting in spring 2018. HMRC appear to have acknowledged that the limited pilot for MTD for business currently in place, in which very few small businesses have been involved, is not adequately robust enough for them to be in a position for MTDfB to be fully operational by next spring. The new proposals will provide for over a year of the full pilot, to enable any issues to be resolved, prior to mandatory filing for the VAT returns.
We welcome the changes announced, although we still recommend that all clients move towards digital records, so that the benefits of real time business records can be obtained, and will then be ready for MTDfB when it does arrive.
If you have any questions regarding the making tax digital delay for business or moving to digital accounting records, then please do get in touch.