Making Tax Digital for business delayed

The Government has responded to pressure from accountants and other interested parties and announced the delay of Making Tax Digital for Business to 2020 at the earliest. 

Quarterly VAT reporting using the new system will be mandatory from 2019.

In a further u-turn, three million small businesses and buy to let landlords below the VAT threshold will now not be required to keep digital accounting records but will be able to move to the new system for keeping tax records at a pace that is right for them. For such businesses, Making Tax Digital will be voluntary.

Mel Stride, the new Financial Secretary to the Treasury and Paymaster General, announced that the roll out for Making Tax Digital has been amended to ensure businesses have plenty of time to adapt to the changes. Under the revised timetable:

•    only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records, and initially only for VAT purposes from 2019

•    businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.

All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before the system is mandatory.


Stewart Davy, FCA, added his comment:

"Following ongoing consultation between HMRC and business groups, including the ICAEW, the implementation date for Making Tax Digital has been revised. The earliest quarterly reporting will now commence in April 2019 and will be for VAT only, whereas previously it was due to commence in April 2018 for all businesses over the VAT threshold for income tax purposes and those under the VAT threshold would have come in a year later. This change has been necessitated following doubts that HMRC would have their systems ready in time and many small businesses would have struggled to make the transition from their current record keeping system if it was not already software based. Although delayed, the long term plan remains unchanged so businesses will still need to consider whether their systems will be sufficient to meet the new requirements and implement any changes necessary in good time before their first submissions are due to ensure they are compliant. With this likely to mean businesses who currently use a non software based system, such as a paper cashbook or excel, needing to switch to an accounting software package they may also be able to benefit from the other aspects of using such a package – including automation of data input and remote access for both us and them to their records. We already support many clients on packages such as Xero and QuickBooks, so if you would like to discuss how we could help you transition to a software package (including obtaining the package, transferring old data and guidance on how to use the software going forward) please get in touch."