In his Spring Budget 2017 the Chancellor announced that there will be a one year deferral for businesses with a turnover below the VAT threshold. This means that businesses with a turnover of less than £85,000 (the VAT threshold from 1 April 2017) will not be obliged to start submitting quarterly returns in April 2018 as their revised start has been moved to April 2019. [Read the full detail]
9 March 2017
HMRC has ignored the comments of the tax profession, the Treasury Select Committee and tax payers and decided to press ahead with the original timetable for the implementation of Making Tax Digital (MTD). Sole traders and buy-to-let landlords will start quarterly reporting of income and profit from April 2018.
There is general support for the digitisation of keeping tax records and HMRC seems to have used this as an endorsement to push through the plans using the original timetable. However, encouragingly they have agreed to review the proposed £10,000 exemption threshold and allow the continued use of spreadsheets, although an interface may be required for the spreadsheet to communicate with HMRC’s software.
Also, HMRC will be starting a major trial from April 2017 and are liaising with software developers to get the technology working.
As a further concession, HMRC will implement a ‘soft landing’ penalty regime in the first 12 months, suggesting that no penalties will be enforced in this period, although this will be subject to a consultation this Spring.
Overall I see this as a very positive response from HMRC for two reasons.
1. An increased entry threshold will mean micro businesses and many landlords won’t need to initially comply with MTD reporting.
2. By allowing the continued use of spreadsheets the compliance burden will be reduced for a significant number of taxpayers who are affected.
We will be interested to hear the outcome of HMRC's trial of the scheme starting in April.