Making Tax Digital (MTD), the government’s £1.3bn investment programme for HMRC to become the most digitally advanced tax administration in the world has been given a new timetable today.
MTD will see the introduction of digital record keeping and quarterly updates for the majority of businesses, self-employed people and landlords. Under the new timetable:
- 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
Since 2016 the Association of Accounting Technicians (AAT) has called for a three-year phased implementation programme as being in the best interests of small businesses, the accounting profession, HMRC and perhaps most importantly the general taxpayer.
AAT therefore welcomed the one year delay announced earlier this year and further welcomes today’s announcement of an additional one year delay.
Phil Hall, AAT’s Head of Public Affairs & Public Policy, said;
"Having a two-year implementation programme will greatly benefit all concerned, is a victory for common sense and indicates the Government’s willingness to take on board industry views."
Mel Stride MP, Financial Secretary to the Treasury and Paymaster General said:
"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.
"We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses."
AAT will continue to press for the ultimate MTD threshold not to return to £10,000 but instead be set at the personal allowance (currently £11,500).
By linking the threshold to the personal allowance at the end of this two-year period, the need to regularly revisit the limits of an arbitrary figure is avoided.
Less than 5% of AAT licensed accountants who responded to an AAT survey on MTD supported the £10,000limit. In contrast 65% supported an £11,500 limit.