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The government’s plans to digitise tax returns have been delayed until 2020 and will only apply to businesses over the VAT threshold.
The original Making Tax Digital plans would have seen businesses of all sizes filing updates four times a year. However, responses from industry groups and businesses have caused HMRC to revise its plans.
“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,” said Mel Stride, financial secretary to the Treasury, in the statement announcing the change that was published last week.
The new plans mean:
Mandatory quarterly reporting under MTD would have come into force from April 2018 for businesses over the VAT threshold that paid income tax.
When talking about the potential impact MTD would have on the processes businesses use to track their finances, UKBF member UK Contractor Accountant noted the role of accounting software.
“With the move to MTD and quarterly returns to HMRC on the cards, it no longer makes sense to use spreadsheets for book-keeping or tracking finances.
“HMRC have not yet ruled out spreadsheets but have indicated that you would need some sort of third party integration software to link up with their systems,” he said in a post earlier this year.
As part of the announcement of the updated timetable, the government said MTD aims to ensure:
Making Tax Digital will be available on a voluntary basis for businesses under the VAT threshold.