⚠️ This is a news story and may not be up to date. You can find the date it was published under the title. Our Tax Guides feature the latest up-to-date tax information and guidance.
Press Release: LITRG welcome one-year deferral of mandatory digital reporting for small businesses
LITRG welcomes the announcement today that self-employed businesses (including landlords) with a turnover below the VAT threshold (£85,000 with effect from 1 April 2017) will not now be required to comply with HMRC’s Making Tax Digital (MTD) programme until April 2019.
Anthony Thomas, chair of LITRG commented:
“This 12-month deferral period means that smaller businesses and landlords will have longer to prepare for the new obligation to keep digital business records and submit quarterly reports of income and expenditure, which is welcome as many risk finding the new rules very onerous and overwhelming. The delay should also allow time for HMRC to ensure that the new system is properly tested and fine-tuned as necessary for this group of taxpayers, so that there are fewer teething problems by April 2019. In particular it will enable the pilots due to start in April 2017 to run a full cycle of four quarterly reports and an end-of-year declaration, and for the software companies to make any changes indicated during the tests, before the smaller businesses come on board.”
LITRG has previously pointed out that there must be alignment of the rules that apply to quarterly reporting for MTD purposes with those that apply to reporting for universal credit purposes, otherwise some of the smallest businesses could be required to make at least 16 different reports of business income and expenses to Government departments each year. It is hoped this can be addressed during the deferral period too.
But it has been confirmed that the turnover threshold above which businesses will be required to keep digital records and report quarterly to HMRC will remain at £10,000.
Anthony Thomas said:
“We are very disappointed to note that there will be no change to the lower threshold of £10,000 below which a business is exempt from the new digital tax regime. We will continue to press HMRC to raise the exemption threshold substantially from the current turnover level of £10,000.”