Making Tax Digital - The Government and commomsense
Its not very often you that you hear the words The Government and commonsense in the same sentence. However we must all applaud the sensible decision taken by the Treasury today.
The Government has amended the timetable for the rollout of Making Tax Digital, giving UK small businesses more time to get ready for the changes.
It says that three million of the smallest businesses and landlords will be able to move to the new digital system for keeping tax records at "a pace that is right for them".
Under the new timetable:
- From 2019, businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records but only for VAT purposes;
- Businesses will not be asked to keep digital records for other taxes until at least 2020;
- Quarterly reporting won't come in until 2020 at the earliest.
The Government says it has listened to concerns raised by businesses and professional bodies about the pace of change and is taking these steps to ensure a smooth transition to a digital tax system.
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."
Making Tax Digital will be available on a voluntary basis for the smallest businesses. It means 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.
These changes will be legislated for as part of the Finance Bill 2017 - expected to be introduced soon after the Summer recess. HMRC is continuing to test Making Tax Digital through pilot schemes.