Critics push for the rollout of Making Tax Digital to be delayed

Leading tax bodies have joined forces with the House of Lords in a bid to delay the introduction of Making Tax Digital (MTD). 

The new scheme is set to come into force in less than three months’ time and the first deadline will be for VAT returns. Those affected will be small businesses and individuals with a turnover above the VAT threshold of £85,000 and this will come into effect from April 2019.

Back in November, a House of Lords executive committee called on HMRC to push back the rollout of MTD for VAT by one year – to the 1 April 2020. It was also recommended that the start date of MTD for other taxes, such as income tax and corporation tax, should be postponed until at least April 2022.

The peers’ report warns that many small businesses in the UK simply aren’t ready for MTD. This is a view which is shared by the Chartered Institute of Taxation (CIOT) and the Association of Tax Technicians (ATT).

Adrian Rudd, chairman of the CIOT-ATT digitalisation and agent strategy working group, commented:

“Many businesses still have little or no awareness of MTD, and this widespread lack of awareness is a concern with the start date for MTD for VAT less than 150 days away. With just a few months to go before it kicks in, these knowledge gaps could mean normally compliant firms fail to fulfil their new obligations.”

He continued:

“Pushing back the start date for MTD for other taxes to 2022 at the earliest is something we support. But it is more important there’s sufficient time set aside for a full review and evaluation of MTD for VAT before this programme is extended.”

In response, HMRC expressed dismay at the committee’s findings, arguing that it had done a lot to improve awareness of MTD among the business community in the last 12 months.

A spokesman for HMRC added:

“We are disappointed the report does not reflect HMRC’s wide and significant engagement on MTD over the last three years, nor the changes made as a result for small businesses.”

What’s the point of Making Tax Digital?

MTD hopes to improve the relationship between HMRC and business owners by:

• Allowing everyone to check that the information HMRC holds about them is 100% correct
• Reducing human error from data input
• Enabling taxpayers to better understand how much tax they owe
• Making it easier for people to contact HMRC via web chats and secure messages

How do I get ready for Making Tax Digital?

The main steps to getting your business ready for MTD include:

• Checking your business isn’t exempt (if you’re not VAT registered and your turnover is less than £85,000 you can choose whether or not you register for MTD)
• Upgrade to functional compatible software
• Understand the digital records you need to keep

All of these steps are discussed in further detail on our Making Tax Digital page.  Alternatively, PKB can also help you make the switch so you can focus on other important aspects of running your business.

Click here to read more about Making Tax Digital