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HMRC says Making Tax Digital will not apply to those under the VAT threshold

  1. Making Tax Digital
    iStock/DagDurrichPhotography
    ChrisGoodfellow

    ChrisGoodfellow UKBF Regular Full Member - Verified Business

    140 43
    1 |

    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:

    • 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
    • Businesses will not be asked to keep digital records or to update HMRC quarterly for other taxes until at least 2020

    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:

    • You will not have to give HMRC data it can get from elsewhere, such as banks, building societies and other government departments
    • HMRC will collect and process information affecting tax as close to real time as possible
    • Digital record keeping software will be linked directly to HMRC systems, allowing customers to send and receive information directly from their software

    Making Tax Digital will be available on a voluntary basis for businesses under the VAT threshold.

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  2. Azam.net

    Azam.net UKBF Regular Free Member

    411 12
    Making Digital Taxing as I like to call it will be a nightmare for businesses. As many commentators have said, switching to quarterly reporting adds yet more work to overworked businesspeople.

    We are already in one of the most red-tape heavy business regimes in the world and this development will just encourage even more people ot sit on their backsides and watch the Jeremy Kyle show instead of considering starting a business.
     
    Posted: Oct 21, 2017 By: Azam.net Member since: Aug 19, 2003
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