MTD – is this Making Tax DIFFICULT?
Making Tax Digital – an update
The Government has made significant changes to the initial Making Tax Digital (MTD) implementation programme.
HMRC say they are trying to make taxes easier under the MTD scheme, which will move businesses, landlords and the self-employed into quarterly reporting, giving them a clearer and more up-to-date idea of what they owe. They will also have to pay quarterly. MTD was due to get all taxpayers on to digital accounts starting in April 2018, with everyone online by 2020.
Now, MTD will only become mandatory as from April 2019 and that will be for VAT purposes only. The requirement to keep digital records and report quarterly for other taxes will not become mandatory until at least April 2020, although MTD will be available on a voluntary basis during that time should those smaller businesses and landlords choose to use it. This update is well received by smaller businesses as it allows more time for testing prior to being rolled out.
Regardless of the roll-out date, some MPs have expressed doubts about the viability of the technology. And of course a minority government may have great difficulty and perhaps no appetite to push this through yet. Maybe we’ll see a proper trial after all.
We have already explained in an earlier blog that HMRC have not even been able to get this year’s tax return calculations right. Some people will get charged to too much tax. Implementing MTD so quickly sounds like a bridge to far to us.
The type of tax you pay could also change once the Review of Employment Practices, looking at rights and responsibilities in the labour market, is published. Matthew Taylor, the chief executive of the Royal Society of Arts, was commissioned to undertake the review in October 2016. In March he told MPs that he believed a “more consistent way of taxing labour” was required. It was announced in the Queen’s Speech that the review would be released shortly. We anticipate changes and recommendations looking at contract workers and the gig economy. Watch this space.
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