HM Treasury has announced that the introduction of the Making Tax Digital initiative will be delayed until 2020.
In a surprising statement, the new Financial Secretary to the Treasury and Paymaster General (Mel Stride), announced significant changes to the projected Making Tax Digital (MTD) rollout, affecting the timescale as well as the businesses and taxes involved.
The most significant change is that MTD will only apply to VAT. From April 2019, businesses over the annual registration threshold (currently £85,000) will have to keep digital records for VAT purposes, submitting VAT returns to HMRC using MTD software.
HMT’s logic is that VAT-registered businesses already provide quarterly information, so this won’t involve more contact with HMRC. MTD for VAT will be piloted using small scale private testing towards the end of 2017, which My Digital Accounts will obviously participate in. Submission direct from accounting software will provide some challenges as most business (even those using software which can submit VAT returns electronically), choose to use HMRC’s basic tools for their VAT returns.
MTD requirements will not now kick in for other taxes until at least 2020. Businesses below the VAT threshold won’t need to keep digital records or provide quarterly updates for other taxes until then.
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