Key changes to Making Tax Digital scheme announced
HMRC has announced its revised plans for its Making Tax Digital scheme affecting businesses – and it seems to have listened to common sense.
MTD, as originally announced, came in for a barrage of criticism from accountants, tax experts, businesses, and politicians from all sides. It would have seen everyone turning over more than £10,000 forced to keep digital records and file quarterly returns, beginning next April.
The new announcement sees changes to which businesses are affected, when, and even which taxes it relates to. The key points of the revised scheme are:
- MTD will only apply to VAT until at least 2020
- Businesses below the VAT threshold (currently £85,000) will be able to opt-in if they want but it won’t be compulsory – yet
The scheme will begin in April 2019. From that date, businesses over the annual registration threshold will have to keep digital records for VAT purposes, providing their VAT information to HMRC through MTD software.
MTD for VAT will be piloted using small-scale private testing towards the end of this year, with a larger live pilot next spring.
The Treasury says businesses with a turnover below the VAT threshold can choose to use MTD, and opt in for other taxes, ‘benefitting from a streamlined, digital experience’. It is not clear when this will be from.
It also says it will not extend MTD to other taxes until the scheme has been shown to be working well, or April 2020 at the earliest.
In my previous blogs on MTD, while arguing against the timescale and requirements, I pointed out that having up-to-date information really benefits businesses and day-to-day decision making.
So while many business owners will be happy to have dodged a bullet for now under these revised MTD rollout plans, the Treasury remains committed to a digital tax future. As it says, millions of businesses are already banking, paying bills, and interacting online. Digitising routine business tasks such as record keeping is the next step and is one many businesses have already taken.
For help and advice on record keeping, and how to get the most out of your accounts, contact us here at Altus.