Delays to the implementation of Making Tax Digital were expected, perhaps inevitable, but what does that mean for you and your business?
Among the avalanche of recent Brexit news, there was a Spring Statement that seems to have flown comparatively under the radar. In this statement, there were two things in particular that stood out to us at Moulds & Co.
Firstly, changes to VAT reporting for businesses over the threshold (with income exceeding that of £85,000) will still come into effect from 1st April 2019. Secondly, Making Tax Digital will not be mandated for any new taxes in 2020. This means that the introduction of Making Tax Digital for income tax and corporation tax appears to still be two years away at least.
So what does this mean for you? If you are above the aforementioned threshold, you will need to start filing VAT using MTD compatible software as of next month, ensuring to keep your records recorded digitally. However, for smaller businesses, you “will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.”
The government stated that it “remains committed” to Making Tax Digital but, thankfully, Philip Hammond stated that there will be a “light touch” approach to penalties in this first year of implementation. Having seen countless erroneous penalties handed out to businesses in the early days of newly implemented schemes, this is a welcome comment. “Where businesses are doing their best to comply, no filing or record-keeping penalties will be issued” is a statement obviously open to interpretation but will regardless be of some comfort to the ears of many businesses.
As things stand, Making Tax Digital is expected to expand into covering income tax affairs from 2021, however, amid a “cloud of uncertainty” the latest news suggests that this could well be a slow roll-out with more delays to come.