New MTD timetable, but firms still need to act
Having admitted that plans to move all businesses to quarterly digital tax returns by 2018 were ambitious, the government has extended the timescale for its Making Tax Digital for Business (MTDfB) project. But while many in the profession – and those among their clients aware of the changes – heaved a sigh of relief, this is no time for resting on proverbial laurels.
In April 2019, MTD will take effect for businesses with turnover above the VAT threshold of £85,000, and with a wider rollout by 2020, there isn’t much breathing space. Here Penelope Rance talks to stakeholders in the MTD process, who outline their concerns about the shifting timescale and what needs to be done to make HMRC’s digital dream a reality.
Businesses with turnover over the VAT threshold will be obliged to use MTDcompliant software to file VAT returns from April 2019. Only about 12% of VAT returns are currently filed directly from commercial software, but affected businesses cannot plan for the change as requirements have not yet been finalised and there is no software to test.
The pressure is off with regard to MTD for income tax, but it has not gone away; HMRC still expects it to become mandatory. The pilot for income tax is currently in “controlled go live” – and we would encourage agents and businesses to join the pilot to test the systems. When and how MTD will be implemented for corporation tax, particularly for the most complex businesses, is still a matter for discussion.
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