A bit of good news for a summer Friday morning.
Yesterday – Thursday 13 July – the Government announced a deferral in the timescales for the ambitious Making Tax Digital programme – the one where businesses would have to submit quarterly figures online.
The previous timescale was:
- April 2018 for Sole Traders/Partnerships with turnover over the £85,000 VAT threshold in respect of Income Tax/NI
- April 2019 for Sole Traders/Partnerships with turnover over £10,000 and below £85,000 in respect of Income Tax/NI – businesses with a turnover below £10,000 are exempt.
- April 2019 for VAT returns to be done via software rather than government gateway – Companies, Sole Traders and Partnerships
- April 2020 for Companies in respect of Corporation Tax
The revised timescale:
- April 2019 for VAT returns to be done via software rather than government gateway – Companies, Sole Traders and Partnerships
- Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020 – this is HM Governments own words, and it could be longer.
Its hard not to see political realities behind this.
- Government very stretched with Brexit, and this was another major project that would stress resources
- Weak Government and risk of both back bench rebellions and upsetting the small business vote.
Whether all businesses will be required to join in 2020 or whether the “at least” means a phase in over a couple of years, who knows. Electoral cycles and politics suggests the latter.
The April 2019 vat reporting requirement will mean VAT registered businesses who currently don’t use a structured software package, eg FreeAgent, Sage, Quickbooks, Xero, will almost certainly need to use one – its the death of spreadsheets and paper. The old option of logging on to HMRC every quarter and typing the vat return in manually won’t be available.
Whitefield are offering FreeAgent to our clients as a solution for this.
For more in general on Making Tax Digital visit our guide