HMRC have made some significant changes to the roll-out of its Making Tax Digital scheme. It was due to go live from April 2018.
The scope and timetable have now been pared back. Following feedback and concerns about scope and short timescales from HMRC, the accounting profession and software companies including Xero.
- Only businesses with a turnover above the VAT threshold 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 update HMRC quarterly for other taxes until at least 2020, instead of 2018 as originally proposed
- Small businesses will be able to file digitally on a voluntary basis for other taxes
It’s crucial that businesses and the accounting industry are given adequate time to adapt to new methods of compliance record-keeping. And where possible, any new rules should also improve SMB and accountant productivity and not just satisfy HMRC’s own agenda.
The UK still languishes at the bottom of the table of G8 nations for productivity; it follows that smarter and more productive UK SMBs will play an important role in securing our economic future at the same time as creating vital new jobs in the next decade. So this extra time to build and bed down new digital processes for SMBs and accountants is welcomed, and I’m glad that HMRC has responded to the many concerns raised.