The government has announced today a change to its ambitious Making Tax Digital (“MTD”) project taken on board the written representations from professional advisers and firms such as Menzies.
The proposed changes recognise the following concerns raised:
- The pace of implementation was too quick with insufficient time to ensure systems worked effectively and taxpayers understood and were prepared for their obligations; and
- A disproportionate burden would be placed on the smallest businesses those (earning between £10,000 and £85,000), including small rental businesses, who were least likely to maintain digital records and need the most support
As a result the following changes have been announced:
- The implementation date will be pushed back to April 2019 and only those filing VAT returns will be affected from this date;
- Only businesses with income above the VAT threshold (£85,000) will be required to submit returns under MTD from 2019;
- Digital records will not need to be retained for other taxes and for smaller businesses until the system has been shown to work property and not before 2020 at the earliest;
- A pilot will be run from Spring 2018 to allow the system to be properly tested before implementation in April 2019
This is positive news for landlords and small businesses who will have more time to prepare for the proposed changes and we will be working with our clients and offering solutions to help ensure that not only are they ready for the implementation but also can leverage the data that they are required to keep.
What is Making Tax Digital?
We are now fundamentally a digital society with banking, shopping and entertainment all being done online.
The latest internet access survey shows 89% of households have internet access with 82% of adults accessing it almost daily and 70% of adults accessing the internet ‘on the go’ using a mobile phone or smartphone.
The government has looked at digital trends and assessed that it is inevitable that tax will move into the digital era in the next decade or two and decided to embrace this with an eye on making the UK’s tax system more efficient, easier to understand and more effective.