Making Tax Digital (MTD) has been a real worry for some businesses over the past few years. Many struggle with the digital tax return process while others are still putting off the switch and filing their returns by paper. Whatever the case, there’s good news for 2020 as the Government has confirmed that MTD will not be extended over the coming 12 months.
In this post, we’ll discuss what MTD is, how it’s progressed and why the government has delayed its rollout.
What is Making Tax Digital?
MTD is a Government initiative to overhaul the existing non-digital tax system. The eventual aim is to make it quicker and easier to complete tax returns online, removing bureaucracy, reducing delays and improving clarity while reducing the risk of missed deadlines.
The initiative was first unveiled in 2015, with a view to finishing the transformation by 2020. However, things haven’t quite gone to plan¦
A report in January 2017 found issues with the MTD saying it could be a disaster for small businesses. It suggested a new approach, including a revenue threshold to exclude some businesses and more comprehensive pilots to highlight any issues. With that came a recommended delay of at least 2019/20 before the roll-out was even started.
While optional digital tax accounts were launched in early 2017, it wasn’t until April 2019 that MTD became obligatory for some businesses. Since 1st April 2019, businesses with taxable turnover above the £85,000 a year VAT threshold have been required to submit their VAT returns using MTD.
Delayed until 2021
The next step for MTD was to move more forms of tax online, including corporation tax, income tax and National Insurance contributions. Given the first part of the rollout was completed in 2019, this was expected to happen in some part during 2020. However, the Government has confirmed that MTD will not be made obligatory for income or corporation tax until at least 2021.
According to HMRC, this is partly due to the UK’s exit from the European Union, which is slowing the delivery of some MTD elements that relate to income and corporation tax. That also means they will continue their light-touch approach which has been in place since the first steps of the rollout, with no penalties for filing or record keeping where businesses are working to comply with the changes.
How can we help?
Does your VAT registered company want to eliminate the burden of digital VAT returns? Or do you just want to stay ahead of the game by making your corporation tax returns digital?
Whatever the case, UWM Accountants can help. We’re a team of accounting experts in Leeds, offering a comprehensive range of financial services. With years of experience in accounting, we can make sure your business is fully compliant throughout the MTD rollout and long into the future.
Give us a call today to talk more about your company and how we can help.
