Making Tax Digital – Delayed but not forgotten

In a surprise move, the Government has announced their intention to digitalise the tax system is to be delayed.

Making Tax Digital (MTD) was expected to commence in April 2018 for unincorporated businesses and landlords with a turnover above £85,000 (the current VAT threshold), with those below that limit joining in 2019 and then limited companies and larger partnerships in 2020.

The MTD clauses were dropped from the Finance Bill due to the recent General Election as there was limited time to review the proposals before the Election.

The Government has now confirmed:

  • Businesses with a turnover above £85,000 will need to keep their records digitally for VAT purposes, from April 2019, with VAT reports filed under the MTD system from then.
  • Businesses will not be required to keep digital records or file quarterly MTD returns for income tax or corporation tax until at least 2020.

The Government has also confirmed that MTD will be available, in the meantime, on a voluntary basis for the smallest businesses and landlords.

The delay in the start of the MTD filings is welcomed by accountancy bodies and professionals who have campaigned for delays whilst businesses install accounting software capable of coping with MTD filings. We, at Clive Owen LLP, are still firm believers that cloud accounting has many benefits to your business (http://www.cliveowen.com/sites/default/files/newsletters/MTD%20-%20May%202017.pdf ) and you should look to implement cloud accounting systems to assist not only with the eventual MTD filings but as a tool to allow you to make important business decisions based upon real time information.

If you would like to discuss cloud accounting or the implications of MTD for your business, please contact your usual Clive Owen adviser.