The Chartered Institute of Taxation (CIOT) welcomes today’s announcement by the Chancellor of the Exchequer that, for businesses trading below the VAT registration threshold, the mandatory requirement to maintain digital records and submit quarterly updates will be deferred from April 2018 to April 2019.
This means that smaller businesses, many of whom maintain accounting records in hard copy or on spreadsheets, will have an additional year to familiarise themselves with the requirements of Making Tax Digital, obtain appropriate software, and seek advice to ease the transition.
Adrian Rudd, Chairman of the CIOT’s Digitalisation and Agent Strategy Group, said:
“This announcement by the Chancellor recognises the challenges which will be faced by the many small businesses who are not currently maintaining digital records or interacting with HMRC on a frequent basis. The software being developed for MTD is not yet ready, and indeed may not be fully available until late 2017. Whilst testing of MTD software will take place on an increasing scale throughout 2017 and early 2018, it makes no sense for the government to require small businesses, which are likely to suffer the greatest proportionate impact, to be at the vanguard of MTD.”
The exemption from MTD for the self-employed and landlords also appears to have been confirmed at £10,000 per annum1, in line with previous announcements.
The main timescales for mandation into MTD will therefore be:
April 2018 – Unincorporated businesses with a turnover above the VAT registration threshold, for their Income Tax obligations2
April 2019 – Unincorporated businesses with a turnover above £10,000 but below the VAT registration threshold for their Income Tax obligations, PLUS all businesses (unincorporated and incorporated) for their VAT obligations
April 2020 – All incorporated businesses for their Corporation Tax obligations
Adrian Rudd said:
“Notwithstanding this very welcome relaxation for small businesses, the timetable for MTD remains extremely challenging. The many complexities of tax still need to be translated into functioning software, and the diverse nature of businesses accommodated, not to mention how their agents can support them.
“We would encourage HMRC to step-up their engagement with professional bodies, agents, software companies and businesses themselves. Success of MTD will only come from real collaborative working with all stakeholders.”
Notes for editors
See https://www.gov.uk/government/publications/making-tax-digital-for-business/making-tax-digital-for-business
An exception to this is that ‘complex’ partnerships, defined as those with a turnover exceeding £10,000,000 per annum, will be mandated into MTD in April 2020.
3. The Chartered Institute of Taxation (CIOT)
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.
The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.
The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
Contact: George Crozier, Head of External Relations, 0207 340 0569 or gcrozier@tax.org.uk (Out of hours: 07740 477 374)
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