Making Tax Digital







Good news for all on the Government delay of bringing in their Making Tax Digital (MTD) regime

The original plan from the government and HMRC would have forced the smallest businesses and sole traders to start quarterly reporting from April 2017, but those below the VAT threshold (currently £85,000) will now be exempt from requirements to quarterly report until the government can reassess the plans. Massive vocal opposition to the roll out timetable from MPs, business and the influential Treasury Committee has resulted in the climb-down.

There will be a one-year delay for the wider roll out, with an April 2019 start date for businesses with a turnover above the VAT threshold (currently £85,000) to start keeping digital records but only for VAT purposes. Full-blown quarterly reporting will not start before ‘at least 2020’ according to the ministerial statement.

Changes at the Treasury after the election seem to have resulted in a more sensible approach to the whole Making Tax Digital debacle. The latest statement reads: “The Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.”

The Treasury document states that under the new timetable:

  • Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes;
  • They will only need to do so from 2019; and
  • Larger businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
  • Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes
  • Businesses and landlords with a turnover below the VAT threshold will be able to opt to use the new digital reporting system but it will not be mandatory until ‘at least’ 2020.
Business annual turnover Quarterly reporting details required Old timetable New timetable
Over £85,000 and VAT registered VAT Only 1st April 2019 Still 1st April 2019
Over £85,000: all businesses and landlords (not necessarily VAT registered) Income tax and national insurance 6th April 2018 At least April 2020
£10,000 to £85,000 (threshold not yet confirmed) Income tax and national insurance 6th April 2019 At least April 2020 but voluntarily basis only
All companies Corporation Tax 1st April 2020 At least April 2020

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now. 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.