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Chancellor Philip Hammond announced in the recent Budget that plans to digitise tax returns for small businesses have been delayed until April 2019.
The Government’s Making Tax Digital (MTD) roll out was meant to start in April next year but following the announcement, sole traders, the self-employed and buy-to-let landlords with an income of less than the current VAT threshold (£85,000 from 1 April 2017) will have an extra year before they must start reporting on a quarterly basis.
It is believed that the delay will cost the Treasury around £280m in lost revenues, as its success is predicated on a reduction in the number of errors and intentional mistakes made in tax returns.
However, the Association of Tax Technicians (ATT) is calling the announcement merely a “gesture” and says it is not enough to prevent the requirements of the scheme, such as digital record keeping and quarterly updates from “burdening entrepreneurs”. While the Association acknowledges that the delay will allow a little more time for such businesses to find a digital solution, they claim it will still be “overly burdensome”.
When HM Revenue & Customs (HMRC) issued consultation documents on MTD there was a general call for the start to be delayed so that business owners could select the best reporting solution for their individual requirements.
Like most other commentators, the ATT accept that a digital interface between HMRC and taxpayers is the best solution but are concerned at the cost of compliance, particularly since HMRC still has not responded to requests to publish the details of what the cost might be for small firms, so no one knows whether their estimates are accurate.
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