Tax Expert’s Delight as Making Tax Digital Delayed
HMRC have announced that the timeframe for the implementation of its controversial Making Tax Digital Plans has been extended to allow businesses more time to prepare.
Following pressure from businesses and tax professionals, the government has backed down on its plans to begin the compulsory implementation of Making Tax Digital next year. Instead, 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. For other taxes, such as income tax and National Insurance, businesses will not be required to keep digital records or provide HMRC with quarterly updates until at least 2020.
Steve Maggs, Tax Partner at Robinson Reed Layton, an independent firm of Chartered Accountants and Chartered Tax Advisers based in Cornwall, was delighted with the news:
“I had previously felt that HMRC were proposing an unrealistic timeframe for the introduction of Making Tax Digital, rushing into the plans out of ideological desire rather than practical consideration, so I am pleased to see that the government is listening and that plans will be delayed.
“Making Tax Digital represents one of the most significant changes the taxation system has ever undergone. There are huge implications for SMEs, the self-employed and landlords, so Cornwall will be particularly affected. It is imperative that businesses begin to prepare for the changes now, even with the announced delays.”
Making Tax Digital has been mired in controversy since the plans were first announced, with critics taking issue with the rapid pace of implementation, the requirement for quarterly reporting, and the previous low turnover threshold for businesses required to register of just £10,000.
Mel Stride MP, Financial Secretary to the Treasury, gave reassurances to businesses concerned about the implementation of Making Tax Digital said:
“The Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.
“Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.”
For further information on Robinson Reed Layton, and how they can help your business with Making Tax Digital, please visit their website http://www.rrlcornwall.co.uk/