HMRC delays Making Tax Digital
HMRC’s implementation of the Making Tax Digital initiative has received much criticism from Government officials and the self-employed.
The initiative was due to go live from April 2018. However, extensive concerned feedback from both self-employed workers and Government officials has pushed back its launch.
What is the new implementation schedule?
From 2019, only businesses generating a turnover above the VAT threshold will need to keep digital records, and then only for VAT purposes.
All remaining businesses and self-employed individuals will not need to start keeping digital tax records, or submitting quarterly reports, until 2020 at the earliest.
However, small businesses, freelancers, contractors and landlords can begin filing taxes digitally now, on a voluntary basis.
The problematic introduction of Making Tax Digital
Earlier this year, we reported that only 25% of small businesses currently maintain online tax records, and that they would face additional annual compliance costs of around £2,770.
At the time, the Institute of Chartered Accountants in England and Wales (ICAEW) called for a delay to the implementation. This call was later reinforced by members of the House of Lords.
The overall aims of Making Tax Digital are likely to be beneficial for the self-employed in the long term. Resistance to date has primarily concerned the short implementation window. With this window extended, the self-employed now appear to have sufficient time to prepare for this transition.