Proposed changes to the roll-out of the UK Government’s plans for businesses to keep digital records and report quarterly online are expected to be approved this month but at least they will be rolled out rather than introduced immediately.
I have previously expressed concern about the impact of quarterly reporting by SMEs, especially as most only see their accountant once a year when they report annual accounts as required under current legislation.
The timetable and other changes mean that from April 2019 only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for reporting their VAT under new scheme, called Making Tax Digital (MTD).
It will also mean that businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least 2020.
The Government has made it clear that it wants to test the new system thoroughly before rolling it out making it even possible that the deadline may slip further.
HMRC is expected to start a small-scale pilot of MTD for VAT by the end of this year, then widen the scope into a larger pilot starting Spring 2018.
The Government has also announced that MTD will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system. They will also be given at least two years to adapt to the changes before being asked to keep digital records for other taxes.
The changes are expected to be approved during passage of the Finance Bill 2017, expected to take place this month, September 2017.
The changes have been welcomed by business groups, particularly by the FSB (Federation of Small Businesses) whose chairman Mike Cherry said it was a very positive decision and a welcome relief to the smallest businesses that were “already facing a hugely challenging economic climate”.