The BTCSoftware team has welcomed the Government’s announcement of a delay to the Making Tax Digital (MTD) mandation. This delay gives accountancy practices and their clients some much needed additional time to prepare. It also gives HMRC’s Digital team, and third party software developers, more time to develop and perfect the technology behind the Digital Tax Return.
Making Tax Digital Delay – The New Timetable
Under the current new timetable:
- only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
- they will only need to do so from 2019
- businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
“This week we received a roadmap from HMRC’s Digital Team. It mapped out when they plan to deliver the APIs (the application programme interfaces) to third party software developers such as us, in order to make the Making Tax Digital technology fully functional. Whilst it was good to finally receive this steer, the roadmap was incredibly ambitious. For example, it would have meant HMRC’s initial promise of Agents having 12 months of parallel running before the previous mandated Go-Live for Making Tax Digital for Business (MTDfB) in April 2018 was clearly not going to happen.
I voiced our concerns to HMRC’s Digital team and questioned when HMRC was going to come clean about the true timescales for MTD. It’s really good that we, along with the tax and accounting community and the Treasury Select Committee, have been listened to. Saying that, I am surprised it’s been set back so long, as only recently HMRC had been pushing really hard for a 2018 mandation kick-off.”
Voluntary basis for the smallest businesses
Ellis, also questioned the Government’s announcement that Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes. The announcement indicated:
- Businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
- As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
- All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
“The voluntary element is completely out of the blue and begs the question that, when given the choice, will people really move over to Digital Accounting? “ said Ellis.
Continuing to support HMRC’s Digital Team
The BTCSoftware team will continue to work closely with HMRC’s Digital Team, to test its APIs to make the Making Tax Digital technology fully functional. For the unfamiliar, the APIs enable data to effectively pass through HMRC’s portal from third party software, such as BTCSoftware’s. HMRC is heavily reliant on third party software to make MTD work and in the roadmap it published this week, HMRC’s Digital team mapped out 43 different elements to be developed, tested and finalised by December.
The BTCSoftware team, remain fully committed to testing and then integrating the APIs into its own tax and accounting products.
Helping Agents prepare their practices and clients
BTCSoftware appreciates that many accountants and tax professionals are trying to prepare their practices and their clients for MTD. This delay is welcome, however, there are still questions about what shape MTD will finally take and how businesses will be affected. The BTCSoftware team are continuing to liaise with HMRC to get clarity in order to advise BTCSoftware customers how best to prepare.
If you have any questions about MTD’s impact on your practice, please contact the BTCSoftware team . We will do our best to answer them.