Making Tax Digital

Making Tax Digital: New Timetable

On 13 July 2017 the Government announced that it would be delaying the introduction of Making Tax Digital (MTD).

In response to concerns raised by MPs, businesses and professional bodies such as the CIOT, MTD will now not be mandatory until April 2019, and then only for VAT purposes.

Under the new timetable:

  • Only businesses over the VAT threshold (currently £85,000) will have to keep digital records.
  • Digital records will only be required initially for VAT purposes, and only from April 2019.
  • Business will not have to keep digital records or report quarterly for other taxes (e.g. income tax and corporation tax) until April 2020 at the earliest.
  • MTD will be available on a voluntary basis for businesses below the VAT threshold, and for other taxes.

HMRC will begin to pilot MTD for VAT by the end of 2017, starting with small-scale, private testing, followed by a wider, live pilot in Spring 2018.  The Government have stated that they will not widen the scope of MTD beyond VAT before the system has been shown to work. 

The enabling primary legislation for MTD for businesses for both Income Tax and VAT is in sections 60, 61 and 62 and Schedule 14 Finance (No 2 ) Act 2017.

On 18 December 2017, the Government published draft VAT regulations and a draft VAT Notice regarding Making Tax Digital for VAT. The proposed secondary legislation makes changes to the VAT regime which would be effective from 1 April 2019. It would require businesses with taxable turnover above the VAT registration threshold to keep and preserve digital records and submit VAT returns to HMRC using functional compatible software. HMRC have also published for comment a proposed Addendum to the draft VAT Notice, setting out how businesses could use compatible software alongside spreadsheets to provide VAT returns. The consultation period closes on 9 February 2018. The CIOT will be submitting comments to HMRC, and we would welcome input from members. More information on the consultation, and where to send comments, can be found here.

On 1 December 2017, HMRC launched a consultation on interest harmonisation and penalties for late payment. The CIOT will be submitting comments on the proposals, and we would welcome input from members. More information on the consultation, and where to send comments, can be found here.

The remainder of the MTD pages should be read with the above in mind.