Making tax digital put on hold

The Government appears to have bowed to pressure from the various professional bodies and other interested parties and are making a significant relaxation to their original timetable for making us all go digital.

Originally, most small non-VAT registered businesses (with turnovers of between £10,000 to £85,000 a year) would have been required to start keeping digital records and make quarterly returns to HMRC, from as soon as April 2018.

This has now been put on hold until at least after April 2020 while the Government reassess the situation (and possibly their ability to get it through parliament).

Businesses already registered for VAT businesses with turnover above the registration limit (currently £85,000) are still to be required to start keeping digital records for VAT from April 2019 but as VAT registered businesses already need to report quarterly, there will be little real change for them.

For smaller businesses, it will be possible to become part of Making tax Digital on a voluntary basis but any indication of a mandatory date is, so far, absent and certainly won’t be before 2020 – when the pace of change will be reviewed.

Incorporated businesses and larger partnerships will have to also use Making Tax Digital but, again, not before 2020 and this planned ‘review’ process is carried out. It was previously unclear as to when companies and large partnerships (more than £10m turnover) would need to make the change so there is now, at least, a little more clarity for them.

HMRC have commenced various Making Tax Digital pilot schemes with selected taxpayer businesses in order to test their systems and develop and adapt these. Should you be approached, and are interested in taking part, do let us know as we would like to help and support you during that pilot process.

We will be contacting each of our clients direct about the changes ahead and how that will likely affect you but, in the meantime, if you want to know more, do please get in touch with your usual manager.