In the March 2017 Budget the government and HMRC announced that plans to impose quarterly reporting on unincorporated businesses from April 2018 have been deferred by at least two years to April 2020 at the earliest
Also, businesses with a turnover of less than the current VAT threshold (£85,000) may not be required to quarterly report at all. This will come as a massive relief to small businesses currently keeping their records in a manual form or on simple spreadsheets and is also a relief to the accountancy profession, which has been gearing up for this major initiative.
The full potential impact of Making Tax Digital proposals has still not been appreciated by business, but accountants and tax advisers have been lobbying to ask the government to slow down their timetable and water down their proposals for quite some time now.
We have been able to see the juggernaut coming and the likely damage it was going to cause when it crashed, especially to small businesses. Therefore, it is gratifying to see the government is listening.
There is no doubt that changes at the Treasury following the recent election have acted as the catalyst for this change, but I suspect there may be another significant factor at play. The UK is now involved in EU exit negotiations that are going to suck up vast amounts of civil servants’ time and energy, not just in the negotiations, but also in the subsequent massive overhaul of the UK legislative system. To have any significant diversion from this project at this time would seem foolhardy to say the least. Perhaps someone within government has seen the light!
Of course, I, along with the vast majority of the accountancy profession, strongly support the introduction of digital systems and the move towards electronic record keeping, but I felt the original Making Tax Digital timetable was too ambitious and was unfair to small businesses. Yesterday’s announcement now gives small businesses the opportunity to opt in to digital record keeping when they and the software are ready rather than being forced into a distressed purchase.
There is an added element of detail in that businesses will be required to keep digital records for VAT purposes from April 2019 – this will have a huge impact for small businesses over the £85,000 turnover
If you would like to discuss MTD or have any questions please do get in touch with us.