The government announces reformed MTD timetable and when to expect the Summer Finance Bill
Heeding concerns across the accounting spectrum, the government has amended the timetable and implementation intakes of Making Tax Digital (MTD).
Under the reformed timetable, only businesses with a turnover above the VAT threshold (£85,000) will have to keep digital records, and only for VAT purposes, starting from 2019. Businesses will not be asked to make the switch to MTD and update HMRC quarterly for other taxes until at least 2020.
While still wholly supporting the MTD initiative as a necessary move to modernise and streamline the tax system, the Treasury accepted the need to slacken the timetable and mandation around MTD in order to ensure businesses are able to comfortably transition. This means that 3m of the smallest businesses and landlords will have the option to voluntarily make the switch to digital record keeping at their own pace before it becomes mandatory in no sooner than two years.
In this initial phase of MTD, businesses will not need to provide HMRC with information more regularly than usual, as VAT already requires quarterly returns.
The government came to this decision after taking into account the concerns of the Treasury Select Committee in particular, who have just elected new chair Nicky Morgan.
HMRC will continue with their Making Tax Digital pilot and will start to pilot MTD for VAT by the end of this year, initially on a small, private scale and then widening the scope into a public pilot starting Spring 2018.
The government also addressed the hotly anticipated Summer Finance Bill, confirming it will be introduced following the summer recess, which concludes on 5 September. The bill will legislate all policies outlined in the pre-election Finance Bill, and all policies originally due to come into force in April 2017 will be effective from that date.
Early responses from industry have been welcoming of the more relaxed MTD timetable.
Mel Stride, 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.”
Accountancy Age recently spoke to Mel Stride, Financial Secretary to the Treasury, about the Making Tax Digital initiative and Summer Finance Bill.