The House of Lords and leading accountancy bodies have requested a delay to the Governments Making Tax Digital (MTD) scheme by at least 12 months.
MTD is HMRC’s plan to digitalise the UK tax system, making it more effective, efficient and easier for taxpayers. HMRC has confirmed that Making Tax Digital (MTD) will be implemented from 1 April 2019 – this will mean changes to the way individuals and businesses interact with HMRC.
Under MTD, the existing portal used to submit VAT returns will no longer exist. From 1 April 2019, VAT returns will need to be submitted directly from MTD approved software.
The House of Lords has recommended that MTD should not be compulsory when it comes into force in April 2019 but instead, businesses should be allowed to transition to digital reporting at a pace that suits them.
ICAEW supports the delay
With over 40% of businesses that are going to be affected by MTD still unaware of the scheme and its implications, the ICAEW has lent its support to the House of Lords.
In response to the recommendations, HMRC have said that they are ‘disappointed’ in the report produced by the House of Lords. HMRC say it doesn’t take into account previous feedback from businesses and representative groups that has already been taken on board to ensure everyone had adequate time to prepare for the scheme’s implementation.
HMRC also states that they have written to 200,000 businesses and will be writing to every other mandated business in the coming weeks to ensure they know about the changes and how to prepare.
Personally, while I believe the move to digital will massively benefit businesses, particularly for those that move to cloud software such as Quickbooks or Xero, it’s clear that an alarming number of businesses simply aren’t ready and aren’t even aware of the need to change.
Too little, too late from HMRC
As campaigns go, I’d have to say it’s been too little too late from HMRC to raise awareness of MTD and businesses already have so much uncertainty ahead with Brexit impending. It’s clear the next six months will be incredibly challenging for businesses.
This is why is more important than ever to seek advice and support from your accountant, who will be able to help you through the digital switchover. For larger businesses can involve remapping operational processes completely, which is why action really needs to be taken immediately.
To discuss how MTD will impact your business, please get in touch here.