Ministers have announced a new time table for Making Tax Digital.
The announcement made spoke last Thursday (July 13) came in response to concerns raised by businesses and professional bodies over the pace of change.
Making Tax Digital (MTD) is a £1.3bn investment programme that will mark a fundamental change in the way that businesses interact with HMRC.
HMRC will become increasingly digital, with businesses using Cloud accountancy software packages (apps) set to record business activity.
The rolling out of Making Tax Digital has been amended to ensure businesses have ‘plenty of time to adapt to the changes’.
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
- Businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system
- All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
“Businesses agree that digitising the tax system is the right direction of travel,” said Mel Stride, Financial Secretary to the Treasury and Paymaster General.
“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.”