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Big changes to HMRC’s Making Tax Digital plans

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This morning, HM Treasury announced major changes to the timetable for the introduction of HMRC’s Making Tax Digital project.

We’ve covered this previously in terms of the original timetable and some small changes made during the early part of this year, but today’s announcements are a major shift in the government’s plans………..it’s a victory for common sense and great news for small businesses across the UK.

 

The original plans

  • Businesses and landlords with turnover over £85,000 would need to file quarterly returns from April 2018; these returns would disclose turnover, costs and profits; figures would allow for tax and NIC to be projected for the current year and payments could be made voluntarily
  • Businesses and landlords with turnover over £85,000 and who are VAT registered would need to file quarterly VAT returns from April 2019
  • Businesses with turnover from £10,000 to £85,000 would need to file quarterly returns from April 2019
  • Companies would need to file quarterly returns for corporation tax purposes from April 2020

 

The new plans

  • Businesses and landlords with turnover over £85,000 will need to file quarterly returns from April 2020 at the earliest
  • Businesses and landlords with turnover over £85,000 and who are VAT registered will still need to file quarterly VAT returns from April 2019
  • Businesses with turnover from £10,000 to £85,000 would need to file quarterly returns from April 2020 but on a voluntary basis
  • Companies would need to file quarterly returns for corporation tax purposes from April 2020

 

What this means is that Making Tax Digital, or MTD as it is now commonly known, has been greatly stripped back with the majority of businesses now having no new filing requirements for at least another 3 years.

There are a number of reasons for the change of the timetable, not least the result of the recent general election in June, but also due to huge reductions in HMRC software specialists and many teething issues with the system since its launch for testing purposes in April this year.

Regardless of the politics or logistics involved, this is most welcome news for small businesses. Whilst the strategy to move the entire tax system to the cloud and digital platforms is admirable and will be good in the longer term, it is wise to give these plans a much more realistic timeframe, to allow small business owners breathing space to make plans to change their systems and adapt cloud technology throughout their business in a more structured and sensible way, rather than a huge rush into the unknown.

 

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