The UK Government has delayed the mandating of digital record-keeping and quarterly reporting by small businesses and landlords for income tax purposes until at least April 2020.
Under the Making Tax Digital project, it had originally aimed to introduce mandatory digital record keeping in April 2018.
The government said that under the new timetable only businesses with a turnover above the value-added tax (VAT) threshold, currently GBP85,000 (USD110,000), will have to keep digital records and only for VAT purposes.
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes, it added.
“Businesses agree that digitizing the tax system is the right direction of travel,” said Mel Stride, Financial Secretary to the Treasury and Paymaster General. “However, many have been worried about the scope and pace of reforms.”
“We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.”
The Chartered Institute of Taxation (CIOT) said the delay means that smaller businesses will have much longer to familiarize themselves with digital record keeping and find the right software and processes suitable for their business.
“This deferral will give much more time for businesses, supported by their advisers, to identify for themselves, at their own pace, the benefits of digital record keeping,” said CIOT President John Preston. “It will also ensure that many more software products can be developed and tested before mandation is reconsidered.”
Whilst the requirement has been deferred for income tax, the Government is still planning to mandate digital reporting for VAT in April 2019. From this point VAT-registered businesses with a turnover in excess of GBP85,000 per annum will be obliged to maintain digital records and provide quarterly updates (VAT returns) to HMRC.
Article compliments Tax News.