The House of Lords wants to slow down Making Tax Digital (MTD). It is due to be introduced to businesses that are VAT registered from 1st April 2019. It is estimated that without the delay 1.2 million businesses will start MTD from next year.
All businesses with an annual turnover of more than £85,000, or expect to go over the threshold within 30 days, are required to register for VAT. Full details on VAT registration can be found on the HMRC website.
Making Tax Digital is being introduced to reduce the errors of VAT submission while using manual systems. VAT submissions will all have to be submitted using accounting software designed to submit returns directly.
Lords Wants to Slow Down Making Tax Digital
Small Businesses Not Ready
Many business are still not ready and are running old systems that will not allow them to submit their VAT return through accounting software. The House of Lords has published a report ‘Making Tax Digital for VAT: Treating Small Businesses Fairly’. The report has found that HMRC have not given enough support to small businesses with the introduction and changes. The report welcomes the attempts by HMRC to modernise the systems that are currently in place.
The recommendation is that Making Tax Digital is deferred until 2022, allowing businesses more time to install new software and put procedures in place. There are lots of software companies that have said that the software will be ready on time including XERO, Quickbooks, Sage and many others. The problem arises that some businesses do not realise that they may have to change software and may need the skills of a bookkeeper or Accountant to set and run everything for them.
As a bookkeeper I’m sure there will be panic early next year for VAT registered businesses to ensure that they are ready if it is not delayed. The report recommends that it is delayed until 2022, at the earliest. Another reason for the delay is with BREXIT taking place just before the current date of introduction.
Lords wants to slow down making tax digital – read more on MTD