The Finance Bill 2017 (2) was published on 12th September and picked up most of the clauses which were washed out of the original bill, due to the general election. Hence the latest bill is being referred to as the Phoenix Finance Bill. Clause 60 to 62 and Schedule 14 deal with the primary legislation, but leave much of the detailed legislation to be provided by way of statutory instrument.
When HMRC released six consultation documents in August 2016 it was envisaged that smaller businesses were going to be brought onto MTD first, starting in April 2018. The proposals were for most businesses and landlords to be required to keep their records on HMRC approved software and to make quarterly returns summarising their transactions.
HMRC’s ideas for making the UK’s tax system the most digitally advanced in the world were generally applauded, but their timetable for implementation was heavily criticised as being too ambitious. These concerns were listened to and in July 2017 HMRC announced a revised timetable to ensure that businesses and landlords will have plenty of time to adapt to the changes.
Under the new timetable only businesses with a turnover above the VAT threshold – currently £85,000 – will have to keep digital records and will only need to do so for VAT purposes. They will only need to do so from 2019 and businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
MTD will be available on a voluntary basis for the smallest businesses and for other taxes, thus allowing businesses and landlords with a turnover below the VAT threshold to choose when to move on to the digital system.
Informal consultations with HMRC took place last week with volunteers from larger businesses feeding back how they maintain records and report to HMRC. The key messages were that there appears to be little, if any, benefit to business or HMRC of quarterly reporting by large businesses. It will be time consuming and costly to implement. HMRC are reported as saying that no firm decisions have yet been made and that they remain in evidence gathering mode.
It’s been a bumpy ride for the MTD implementation timetable and there may be more changes to come. We wait for the secondary legislation to be published and will report back when this becomes available.
You can watch my video update on Making Tax Digital HERE.
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