HMRC defers conformance to Making Tax Digital scheme
The move is widely welcomed by industry bodies as it gives time for more thorough testing and enables employers to familiarise themselves with systems well in advance.
The UK government’s decision to defer its requirement for companies above the VAT threshold to keep electronic records under its ‘Making Tax Digital’ initiative’ has been widely welcomed.
The move now means that organisations with turnover of more than £85,000 per annum will not need to conform to the scheme until 2019 – and even then only in relation to VAT records. It will not be necessary to keep digital records for other taxes, or to update Her Majesty’s Revenue & Customs (HMRC) quarterly, until at least 2020.
Making Tax Digital (MTD) will be voluntary for an estimated 3.1 million businesses beneath the VAT threshold, which means they will be able to choose when to move to the new system.
HMRC plans to introduce a small-scale private pilot relating to MTD for Business for VAT by the end of 2017, but will implement a wider, live trial in spring 2018 to provide organisations with more than a year of testing time.
John Preston, chairman of the Chartered Institute of Taxation, said: “We are delighted that the government has relaxed the timetable for MTD and appears to be basing its approach on coaxing rather than compelling businesses into going digital. This deferral will give much more time for businesses, supported by their advisers to identify for themselves, at their own pace, the benefits of digital record keeping.”
Anne Fairpo, chairman of the Low Incomes Tax Reform Group, agreed. “The deferral to at least 2020 for taxes other than VAT is welcome and should give enough time for thorough testing,” she said. “It will also provide an opportunity for businesses to familiarise themselves with the systems well in advance.”