Making Tax Digital – MTD for short- has been in the news a lot in 2017, but just in case you missed it. Here is an overview.
The original finance bill was cut down from 742 pages to a just 140 and MTD went from potentially revolutionising the UK tax system to being on the shelf just a bit longer. Not toally unheard of, the government has delayed the start.
The plan of MTD is to make all companies (with a turnover above £85,000) report quarterly through a digital platform. Many companies agree that digitising the tax system is the right direction of travel. However, many have been worried about how the reforms would be done. Mel Stride, the new minister of MTD says “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.”
HMRC believe that digitisation of the tax system will generate £500m in tax a year as they believe there is abuse of the current system which digital reporting will close down. We shall see.
John Preston, CIOT president, said: “Whilst we are supportive of the government’s long-term ambitions for digitising the tax system, we have always called for this to be achieved in a measured and manageable way. This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping. It will also ensure that many more software products can be developed and tested before mandation is reconsidered.”
Fortunately those many of our clients are already on Xero and as a result will be ready for MTD. How do we know? Because Xero, one of our favourite online accounts software providers, are working with HMRC to make sure the platform is ready for the launch of MTD meaning the interruptions that our clients may otherwise experience should be minimal.