HMRC has announced a new, more realistic timetable for roll-out of the digitisation of the tax system, after feedback about the scope and timescales
Making Tax Digital has been on the Government and HMRC's agenda for some time. The aim is to put as much of the financial reporting process online as possible. However, the timescales and requirements were thought by many to be unrealistic, particularly for small businesses.
After lobbying by accountants, businesses, cloud-bsed software developers and the like, the government has had a re-think. The result is a new timetable and less onerous requirements as follows:
Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes (smaller business can choose when to use the new digital system)
Full roll-out will begin from 2019 (a year later than originally planned)
Businesses will not be asked to keep digital records, or to update HMRC quarterly, for taxes other than VAT until at least 2020
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes
HMRC is piloting the service extensively across a wide range of businesses and will begin a pilot of MTD for Businesses for VAT by the end of 2017. This will start with small-scale, private testing followed by a wider, live pilot starting in Spring 2018. Xero's UK boss, Gary Turner, explains, the changed plans are good news. “It’s crucial that businesses and the accounting industry are given adequate time to adapt to new methods of compliance record-keeping. And where possible, any new rules should also improve SMB and accountant productivity and not just satisfy HMRC’s own agenda.”
Despite the criticism of timescales, the accountancy industry broadly welcomes the initiative, helping to bring record-keeping into the 21st Century and making business more effective as a result, something Gary Turner supports in this Xero video:
To find out how you can prepare for Making Tax Digital or to benefit from Xero cloud accounting, contact NWN Blue Squared.
Chancellor Hammond's 2017 Budget, now delivered in the Autumn, included a boost for the digital sector and R&D-based businesses, plus major changes in Business Rate valuation and timing, as well as investment in the construction and housing sector
The information in this site is of a general nature and is not a substitute for professional advice. You are recommended to obtain specific professional advice before you take any action. All Rights Reserved.