This means that smaller businesses will have much longer to familiarise themselves with digital record keeping and find the right software and processes suitable for their business.
This latest announcement by the Treasury means that the Government has deferred mandation for at least two years from the original proposed start date of April 2018.
The move was welcomed by the Chartered Institute of Taxation (CIOT). Its President, John Preston, said: “We are delighted that the Government has relaxed the timetable for Making Tax Digital (MTD) and appears to be basing its approach on coaxing rather than compelling businesses into going digital.
“Whilst we are supportive of the Government’s long term ambitions for digitalising the tax system, we have always called for this to be achieved in a measured and manageable way. 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. It will also ensure that many more software products can be developed and tested before mandation is reconsidered.”
Whilst the requirement has been deferred for Income Tax, the timetable for VAT has not changed, and VAT registered businesses with a turnover in excess of £85,000 per annum will be obliged to maintain digital records and provide quarterly updates (VAT returns) to HMRC.
Adrian Rudd, Chair of the joint CIOT and ATT Digitalisation and Agent Strategy Working Group said: “The announcement by the Minister is extremely welcome, although there is still much to do to ensure MTD for VAT works effectively from April 2019. We look forward to continuing our constructive engagement with HMRC and other stakeholders to identify, and iron out, potential problems before the system is mandated.”
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Susie Hughes © Shout99 2017