HM Treasury has confirmed that a new timeline for the implementation of Making Tax Digital (MTD) proposals will be put in place when changes are brought forward as part of the Finance Bill – *UPDATE* see here for full details

Following concerns raised by a number of sectors and organisations about the scope and pace of changes, the Treasury is taking a number of steps to ensure that the MTD agenda is rolled out in a way that offers businesses enough time to adapt to it.  Under the 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. The smallest businesses will not be required to use the system, although they can choose to do so voluntarily.
• 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

HMRC has updated its policy papers on Making Tax Digital to reflect the current policy position and timescales. It notes:

“We expect many of these businesses to take the opportunity to provide quarterly updates for other taxes too, but there will be no mandatory requirement to do so. Similarly, businesses that are not VAT registered and those below the VAT threshold who have voluntary registered for VAT can opt to join Making Tax digital for Business, giving them the choice of whether to opt to use commercial software to keep track of their tax affairs digitally and update HMRC on a quarterly basis.

By introducing Making Tax Digital for Business on a voluntary basis for most and only making it mandatory for those who already interact with HMRC regularly and digitally, we can smooth the transition maximising the opportunities of a modern digital tax system.

The government has committed that it will not widen the scope of Making Tax Digital for Business beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.”

Charities are already exempt from reporting requirements under MTD, but this development means that some charity trading subsidiaries – for which there is no blanket exemption – will not be required to keep digital records at this stage. This is potentially very positive news for smaller trading subsidiaries.

We would welcome feedback from members on how many of their charity trading subsidiaries have a turnover that exceeds £85,000. Please let us know at info@charitytaxgroup.org.uk. 

CTG is continuing to call for charitable trading subsidiaries to be exempted completely from MTD requirements; our most recent consultation response can be read here.