The government’s plan for a digital transformation of how businesses report to HMRC has been pushed back after businesses complained the changes were coming in too quickly. 

HMRC’s ‘Making Tax Digital’ project was originally scheduled to roll out in spring 2018, starting with quarterly online reporting of profits for unincorporated businesses (sole traders and some partnerships) and landlords; with digital VAT reporting from 2019, followed by companies and large partnerships from 2020.

The announcement sets out a new timetable as follows:

• only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes

• they will only need to do so from 2019

• businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020

Smaller businesses can move to digital reporting on a voluntary basis.

Susie Walker, Partner & Head of Tax commented:

"We’re pleased to see the government has listened to and acted on the feedback from businesses, who were nervous about the initial timetables laid out last year.

There’s a definite recognition that digital reporting is a good idea, but smaller businesses have plenty of other things to focus on at the moment. The planned pilots that were to run from earlier in 2017 didn’t happen because of the General Election purdah and this revised timetable will be good news for all.

The new timetable, and allowing smaller businesses to make the change voluntarily, is a sensible move and will remove an unnecessary distraction from what’s likely to be a challenging few years for lots of businesses."

These measures and the other measures which were dropped from the draft Finance Bill pre-election will be legislated on as soon as possible after summer recess.