Leading tax bodies have joined the House of Lords in calls to delay the introduction of Making Tax Digital (MTD) for all taxes, less than three months before it’s due to come into force for VAT.
MTD is finally due to commence on 1 April 2019 for VAT-registered businesses with an annual taxable turnover of more than £85,000 in 2019/20.
However, a House of Lords executive committee released a report in November 2018 calling on HMRC to push back the rollout of MTD for VAT by one year – to 1 April 2020.
It also recommended the start date of MTD for other taxes, such as income tax and corporation tax, should be postponed until at least April 2022.
The peers’ report warns that many small businesses in the UK are not ready for the MTD, a view that is shared by the Chartered Institute of Taxation (CIOT) and the Association of Tax Technicians (ATT).
Adrian Rudd, chairman of the CIOT-ATT digitalisation and agent strategy working group, said:
“Many businesses still have little or no awareness of MTD, and this widespread lack of awareness is a concern with the start date for MTD for VAT less than 150 days away.
“With just a few months to go before it kicks in, these knowledge gaps could mean normally compliant firms fail to fulfil their new obligations.
“Pushing back the start date for MTD for other taxes to 2022 at the earliest is something we support.
“But it is more important there is sufficient time set aside for a full review and evaluation of MTD for VAT before this programme is extended.”
In response, HMRC expressed dismay at the committee’s findings, arguing that it had done a lot to improve awareness of MTD among the business community in the last 12 months.
A spokesman for HMRC added:
“We are disappointed the report does not reflect HMRC’s wide and significant engagement on MTD over the last three years, nor the changes made as a result for small businesses.”
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