Accounting to be eased into the 21st Century
The government have announced that plans for Making Tax Digital (MTD) have been revised and smoothed over.
The changes to MTD were made after many expressed fears that the world of tax and accountancy was being dragged kicking and screaming into the 21st century.
Three million of the smallest businesses and landlords will be able to move over to new digital system at a pace that suits them.
Making Tax Digital will provide businesses with a modern, efficient system to maintain tax records and provide information for the HMRC.
Businesses agree that digitising the tax system is a step in the right direction, however concerns were raised over how quickly these plans were due to be implemented.
Mel Stride, Financial Secretary to the treasury and Paymaster General said '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'.
So what are the new plans? Only businesses with a turnover that is higher than the VAT threshold (currently £85,000) will have to keep digital records, only for VAT purposes and only from 2019.
Businesses will not have to keep records, or to update HMRC quarterly, for other taxes until at least 2020.
The smallest business will only have to move to MTD on a voluntary basis.
All businesses and landlords will have at least two years to adapt, before having to keep digital records for other taxes.
Initially, no businesses will have to provide information to the HMRC more regularly than the quarterly VAT returns.
Adrian Simpson FCA, Owner of Simpson Associates Chartered Accountants was pleased with the announcement to delay MTD.
'I'm pleased to see the delay, whilst it's good to see government continuing in this direction to have to most advanced digital tax system in the world, all the evidence shows the HMRC are just not ready for this switch yet, and neither are the public.'
The changes will be legislated for as part of the Finance Bill 2017.
Next Step:
Please contact us if you need further advice, have any questions about our services, would like a free consultation or a fixed fee quote.