There’s been a great deal of speculation in recent months about deferring the Making Tax Digital (MTD) deadline.
The House of Lords report published in November recommends that MTD should not be mandatory when it comes into force in April. Professional bodies including the ICAEW, CIOT and ATT have joined the House of Lords in a call for a delay for at least a year, proposing that businesses should go digital at a pace that best suits them.
The ICAEW found that 40 percent of businesses about to be affected by MTD for VAT are not yet aware of it. It also stated that a quarter of businesses are still using a paper based accounting system, which is not permitted under the new MTD legislation.
With direct communication from HMRC only starting in the last couple of months, Anita Monteith, ICAEW Tax Manager stated that many VAT registered businesses are not going to be ready for implementation in April.
With plans to further roll out digital tax reporting, it is hoped that lessons can be learned from MTD for VAT. The House of Lords report recommends that the government should wait until at least April 2022 before MTD is extended to other taxes.
Whilst the clock is ticking for MTD for VAT, it is acknowledged that there will be benefits of digitisation including greater efficiency for the tax payer, the authorities and agents. AAT said that companies should still act now on the assumption that MTD is going ahead as planned.
With Brexit taking place three days before MTD for VAT, Adrian Rudd Chair of the CIOT/ATT Digitalisation and Agent Strategy Working Group (DASWG) comments, “It promises to be a spring of change and challenges for businesses”.
CPiO is working closely with Sage and its clients to communicate the changes for MTD for VAT. If you’re an existing Sage customer and need help in finding out if your Sage software is MTD compliant, get in touch today. Read everything you need to know about MTD here.
Original post by Beth McLoughlin is featured in Accountancy Age.