Budget provides extra year for small companies and lawyers below VAT threshold
The Government has put back the scheduled implementation of its Making Tax Digital programme for small businesses and landlords, acknowledging their problems in getting ready for the change.
Chancellor Philip Hammond (pictured) announced the delay as a detail in the Spring Budget. It follows a series of warnings that many businesses would struggle to have the software in place in time for the initial deadline of April next year.
The deadline for unincorporated businesses and landlords with a turnover below the VAT threshold will now be April 2019.
As part of his speech, Hammond said: “In a digital age, it is right that we develop a digital tax system.
“But in response to concerns about the timetable expressed by business organisations, and by several of my right honourable friends including the chairman of the Treasury Select Committee, I have decided that for businesses with turnover below the VAT registration threshold I will delay by one year the introduction of quarterly reporting at a cost to the Exchequer of £280 million.”
The Budget document says this will provide them with more time to prepare for digital record keeping and quarterly updates.
In addition, the Government is going to consult on the design aspects of the tax administration system to simplify it for taxpayers.
Electronic accounting
Making Tax Digital has been a flagship programme of HM Revenue & Customs (HMRC), which received £1.3 billion to invest in digital initiatives in the Spending Review of November 2015. A key feature will be a move away from annual tax returns towards digital record keeping and quarterly updates to HMRC. Most organisations will be forced to carry out their accounting in a set electronic format and submit quarterly updates to the taxman.
But small businesses have struggled to keep up with the preparations, prompting Parliament’s Treasury Committee to warn in January that the timetable looked unachievable.
A few weeks ago the department made some concessions in the technical demands around the programme, but failed to dampen the complaints over the timescale.
Image from GOV.UK, Open Government Licence v3.0
