The Government has responded to pressure from accountants and other interested parties and announced the delay of Making Tax Digital for Business to 2020 at the earliest.
Quarterly VAT reporting using the new system will be mandatory from 2019.
In a further U-turn, three million small businesses and buy to let landlords below the VAT threshold will now not be required to keep digital accounting records but will be able to move to the new system for keeping tax records at a pace that is right for them. For such businesses, Making Tax Digital will be voluntary.
Mel Stride, the new Financial Secretary to the Treasury and Paymaster General, announced that the roll out for Making Tax Digital has been amended to ensure businesses have plenty of time to adapt to the changes. Under the revised timetable:
- only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records, and initially only for VAT purposes from 2019
- 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, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
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. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before the system is mandatory.
We are on annual accounting and cash accounting for Vat so I presume that we will have to send in quarterly returns under MTD?
Hi Allan, actually as it stands you’ll remain with your annual submission, so long as it’s made online. To quote the Chartered Institute of Taxation… businesses on the annual VAT accounting scheme “will not be exempt from MTD, nor will Annual Accounting be abolished. Businesses using Annual Accounting will still be requirement to maintain digital records, but as now they will submit annual VAT returns, rather than quarterly updates” (Ref: https://www.tax.org.uk/policy-technical/technical-news/making-tax-digital-vat-main-issues-consideration). This always has potential to evolve so we’ll be keeping an eye on it but for the time being, feel free to give us a call or send us an email if you want to discuss further.