Making Tax Digital .... Slowed down!

Under the original proposal most businesses, self employed people and landlords were going to be required to use software or apps to keep their business records digitally and to report this information quarterly to H M Revenue & Customs. This was intended to apply from April 2018 for Income Tax and National Insurance, VAT from April 2019 and Corporate Tax from April 2020.

An HMRC Treasury statement issued on 13 July 2017 confirmed that the requirements for digital quarterly reporting were being stripped back to cover only VAT in a revised roadmap for MTD.

The revised timetable will be as follows:

• Only businesses with a turnover above the VAT threshold (currently £ 85,000) will have to keep digital records and only for VAT purposes
• This will only apply from 2019 onwards
• Businesses will not be asked to keep digital records or to update HMRC quarterly, for other taxes until at least 2020
• Small businesses will be able to file digitally on a voluntary basis for other taxes

Given that VAT is already quarterly for most businesses and most submissions are already made online, what needs to change for MTD? They key issue under MTD is that submissions need to be made directly from the accounting software. The challenge is therefore going to be that VAT records may not be entirely integrated within the business accounting software with a majority of businesses currently keying-in date for online VAT submissions.

The MTD legislation will be included in the Finance Bill (No. 2) due to be introduced in the autumn when we will have more detail about these revised plans. In the meanwhile, if you would like to discuss how the move to digital reporting will affect your business, please contact Kirsty MacDonald at kirsty.macdonald@renniewelch.co.uk