The government has listened to concerns from parliamentarians, businesses and professional bodies and has agreed to slow down the pace at which businesses are moved to the new Making Tax Digital regime.
Originally, it was proposed that sole trades, partnerships and those with rental income above the VAT threshold would have to begin quarterly reporting of accounting data from April 2018, this has now been postponed until at least April 2020.
This is to give the smallest businesses and landlords time to move to the new digital system at a pace that is right for them. Making Tax Digital will be available on a voluntary basis for these businesses until it becomes mandatory so that they can choose to join earlier to get a head start on the new process and start to enjoy the benefits of a digital system.
The Treasury document states that under the new timetable:
• only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes;
• they will only need to do so from 2019; and
• businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
As VAT already requires quarterly returns, there will be no requirement for businesses to provide information on a more regular basis.
All businesses and landlords will now have at least two years to adapt to the changes before being asked to keep digital records for other taxe
This is a great opportunity for Accountants to take control of this process for their clients. They have the time to plan out a strategy and to start to move clients over to a digital way of working well ahead of the new deadlines. MTD should not be kicked into the long grass. Embarking on your digital journey now will make the transition to MTD much smoother.