The last we heard of Making Tax Digital was that it had been shelved with plans to be reopened in April 2018. Well we finally have some more news on the subject and it looks like some bright-spark has actually had a good idea on the topic.
Mel Stride, the Financial Secretary to the Treasury and Paymaster General, has recently stated that:
“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.”
Or, in simpler terms, we will be getting a much more relaxed version of Making Tax Digital (to begin with at least).
What’s New About Making Tax Digital?
For a start, Making Tax Digital has new rules to help businesses adjust to the change. Specifically, they’re making it so that not every business has to digitally file their tax returns. The new rules mean:
- Only businesses who are over the VAT registration threshold will be required to keep digital records.
- Businesses with a turnover beneath the VAT threshold (£85,000) don’t have to keep digital records, but can still volunteer to do so.
- Businesses will still need to update their tax returns quarterly to keep their VAT taxes up to date.
- This will not take place until 2019 (an extra year later than originally planned).
- Businesses will not be required to file other taxes digitally until at least 2020 (hopefully longer).
This change to the Making Tax Digital scheme makes sense since VAT registered businesses have to file their tax returns quarterly (for VAT reasons). It also means that the majority of businesses that would have suffered from Making Tax Digital (Small Businesses) are now exempt from having to take part in the scheme.
It still looks as though HMRC are planning to implement the entire scheme by 2020, however nothing has been made absolutely certain just yet. With any luck, they might decide that only businesses that are VAT registered will have to stick to making quarterly tax returns, as opposed to all businesses.
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