The government has listened to businesses and professional bodies and has delayed the rollout of Making Tax Digital (MTD) by at least two years, although quarterly VAT reporting using the system will be mandatory from 2019.
Under the reformed timetable, starting in 2019 only those businesses and landlords with a turnover above the VAT threshold (currently £85,000)will have to keep digital records, and only for VAT purposes. Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
MTD will be available on a voluntary basis for the smallest businesses, and for other taxes. This means that businesses and landlords with a turnover below the VAT threshold will be able to opt to use the new digital reporting system if they wish.
The new minister in charge of MTD, Mel Stride, Financial Secretary to the Treasury said:
Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
This is excellent news for businesses and their advisors. It should ensure there is sufficient time for the development and testing of software and allow a measured conversion to the new digital reporting system.