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Making Tax Digital delayed

The government has recently announced significant changes to their Making Tax Digital plans. Nottingham chartered accountants, Clayton & Brewill explain the changes.

Originally, the Making Tax Digital plans, which were announced in 2015, would have required businesses with a turnover above the VAT threshold of £85,000 to comply with the new quarterly system as soon as April 2018, with others being required to comply by 2020.

On the back of the announcement of the snap general election, Making Tax Digital plans were removed from the Finance Bill 2017, with a view to reviewing them post-election.

The changes

Last week, the government announced significant changes to the Making Tax Digital Plans. These consist of:

• Only businesses with turnover above the VAT threshold (currently £85,000) will have to keep digital records, and only for VAT purposes from April 2019
• Business will not be asked to update HMRC quarterly or keep digital records for other taxes until at least 2020
• Businesses with a turnover below the VAT threshold will not be required to use the system (although they can if they wish)

In addition, the government has pledged not to widen the plans beyond VAT until the system has shown to be working effectively, and not before April 2020 at the earliest.

The updated plans have been welcomed by a number of campaigners, who have previously said that the changes would be costly and confusing and that businesses had not been given enough time to prepare.

Next steps

Although the recent announcement has eased the pressure for businesses, for those businesses over the VAT threshold it’s still important to consider any changes that they may need to make to be compliant.

If you’d like to discuss Making Tax Digital, and what it means for you, please contact us.