Making Tax Digital – U-turn or just a delay?



Businesses can breathe a (temporary) sigh of relief after the Government quietly put its Making Tax Digital plans on the backburner.

You might have missed this latest backtrack, following on from the debacle over NI changes for the self-employed, because it was ‘announced’ around the time the General Election was called.

The plans were due to have been included in the final Finance Bill of the Parliament, but were dropped along with a number of other items. However the Government isn’t saying the scheme has been scrapped, so small businesses are not out of the woods yet.

We blogged about this brainwave from the Treasury back in March. The main proposals are:

  • All businesses with sales of more than £10,000 will be required to maintain their accounting records in a digital format.
  • Not only will there be a requirement to complete an annual tax return but also quarterly returns.
  • This means that not only will your records need to be in a digital format but they will need to be up to date, at least on a quarterly basis.

Making Tax Digital was due to begin a roll-out next April. But the consultation period saw it come in for a barrage of criticism, not least from accountants, tax experts and even the cross-party Treasury Committee.

Now it is hoped that some of these criticisms may be listened to and the scheme amended. I suspect that far too much time and money has already gone into this for it to be abandoned, but here’s hoping the Treasury sees sense and drops the requirement for sole traders and very small businesses, and rethinks the quarterly returns which will add so much to the workload of people trying to run businesses.

As we said in March, having up-to-date information is so important, helping people make better informed business decisions. But this was a badly thought-out scheme which was in danger of being rushed in too quickly.

In order to get the Finance Bill through before Parliament was dissolved, some 600-odd pages were dropped from it. So perhaps we are being optimistic in seeing this as the Treasury realising MTD needed more work – or was a plain dumb idea. It may well be back on the table under the new Parliament, so watch this space!