Making Tax Digital (MTD) update

Listed Under: Blog

 

 

Making Tax Digital (MTD) update

 

HMRC announced on 31st January the outcome of a 6 month long consultation on its MTD implementation plans.  During the consultation process a number of objections were raised including cost and complexity for businesses, the turnover threshold at which MTD will become mandatory, and the software integration. 

Following HMRC’s announcement we have partial clarification to some of these points:

  • Despite MP’s requesting implementation of MTD be delayed to avoid a potential “disaster”, HMRC is sticking with its original timeline to phase in MTD between 2017 and 2021.  HMRC will begin piloting digital record keeping and quarterly updates from April 2017 with some businesses.
  • HMRC estimates that the average cost to transition onto MTD will be £280 per business between 2017 and 2021.  Some experts are suggesting that this is a significant under-estimate.
  • A decision on the turnover threshold at which MTD will become mandatory has been delayed.  A final decision will be made later this year prior to legislation being enacted.  What is clear is that businesses and landlords with turnover less than £10,000 will be exempt from MTD.
  • Businesses will be able to use spreadsheets when preparing MTD reports, although the spreadsheet must meet the minimum requirements of MTD.  Free software will be made available to businesses with basic records.
  • Digital record keeping does not mean that businesses will have to keep digital copies of invoices and receipts.
  • Users of MTD will be given 12 months leeway before they are charged late filing penalties.

 

We’ll keep you updated with all future announcements.