HMRC yesterday announced that there would be a much-welcomed delay to their Making Tax Digital (MTD) project which had been previously been expected to start affecting income tax returns from April 2018.
The MTD system will still be introduced but not until April 2019 and will only be mandated for businesses with turnover above the VAT threshold and then only to meet VAT obligations.
Businesses with turnover below the VAT threshold will not be required to use the system but can choose to do so.
The Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.
Whilst the removal of the “stick” enforcing the use of digital record keeping is welcome news for tax payers, the MTD project has encouraged the market to create a wealth of new software solutions. Aside from just meeting the regulatory requirements, these innovations in digital record keeping can bring huge benefits and efficiencies from increased information and more accurate financial reporting.
We would recommend that all businesses review their processes now to see if their systems can be improved upon. The postponement will enable time for businesses to get used to digital record keeping and the processes involved. At BHP, we have the experience and industry knowledge to help you with the choice of system as well as assisting with the conversion and training.
If you would like to discuss your systems and what might benefit your business, please contact Zoe Roberts or your usual BHP contact.
