The Government has toned down its Making Tax Digital plans for smaller businesses and landlords.
Earlier this year, it was announced that the programme would be delayed. However, ministers have now announced that three million of the smallest businesses and landlords will “be able to move to the new digital system for keeping tax records at a pace that is right for them”.
Under the new rules, only businesses with a turnover above the VAT threshold – currently £85,000 – will have to keep digital records, and only for VAT purposes, from 2019. Furthermore, businesses will not be asked to keep digital records, or update HM Revenue & Customs (HMRC) quarterly, for other taxes until at least 2020.
The Government said the Making Tax Digital U-turn was in response to concerns raised by MPs, the Treasury Select Committee, businesses and professional bodies “about the pace of change”.
The Paymaster General, Mel Stride MP, explains: “Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
“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.”
The CEO of the National Landlords Association (NLA), Richard Lambert, also comments on the decision: “We are pleased that the Government has finally listened to the concerns raised by the NLA on behalf of landlords who would have been dragged into a system of tax reporting rushed into being before they or it are ready.
“While we have always supported simplifying the tax system, we were concerned by the issues raised by the Making Tax Digital programme, and welcome the changes announced by the new Financial Secretary to the Treasury, Mel Stride MP, as they address exactly the points we’ve been raising since the initial announcement.”
Nonetheless, he adds: “However, rather than being evidence that the Government is willing to work with the industry, this has come about because they no longer have the majority to push through such controversial plans.”
Are you pleased about the U-turn?