The Government has now listened and responded to industry concerns regarding the pace of the proposed MTD changes, and has released details of the new proposals and timetable.
Key Points
- 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
- Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
- MTD 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 choose when to move to the new digital system
- 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.
MTD is being promoted as the means to help bring the tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HMRC. Roll out for MTD has been amended to ensure businesses have plenty of time to adapt to the changes. Mel Stride, Financial Secretary to the Treasury and Paymaster General said:
“Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms. We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses”. HM Revenue & Customs (HMRC) will continue to pilot MTD services, testing the system extensively with businesses.
Ministers also confirmed today that the Finance Bill will be introduced as soon as possible after the summer recess. This will legislate for all policies that were included in the pre-election Finance Bill. The government has also re-confirmed that all policies originally announced to start from April 2017 will be effective from that date.