The Association of International Accountants (AIA), the global body for professional accountants has welcomed HMRC’s announcement that the mandatory introduction of Making Tax Digital (MTD) will be deferred until ‘at least’ 2020, except for VAT, following a Treasury announcement (13 July).
Original plans would have seen small businesses and sole traders having to start quarterly reporting from April 2017, but those below the VAT threshold will now be exempt until the government can reassess the plans.
In addition there will also be a one-year delay for the wider MTD rollout. Businesses with a turnover above the VAT threshold will now need to start keeping digital records (VAT purposes only) from April 2019.
The Government also confirmed that the Finance Bill will be introduced to Parliament as soon as possible after the summer recess and contains amendments to the original proposals on MTD.
In brief the Treasury document states the following:
- From April 2019 only businesses with a turnover above the VAT threshold (currently £85,000) will need to keep digital records and only for VAT purposes
- Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
The Government believe that by slowing the pace of MTD for smaller businesses and making it mandatory for those businesses who already interact with HMRC regularly and digitally, they have balanced the opportunities of a modern digital tax system against the concerns from businesses.
Tim Pinkney, AIA Head of Compliance & Regulation, said: “This will come as a welcome relief to the smaller practitioners as the aggressive timetable that HMRC had adopted was of a course of major concern. It will be interesting to see the amended proposals to really understand the changing thresholds however this is a positive step.”