August 4th, 2018.

The government’s plan to force firms to use a purely online digital tax regime - Making Tax Digital - and to report to HM Revenue & Customs (HMRC) multiple times a year, has been watered down. It says it has listened to concerns raised by parliamentarians, in particular, the Treasury Select Committee, businesses and professional bodies about the pace of change and is taking steps “to ensure a smooth transition to a digital tax system.”

Roll out for Making Tax Digital has been amended so that under the new timetable:
• 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

Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now. All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.

The government has confirmed that a Finance Bill will be introduced as soon as possible after the summer recess. This will legislate for all policies that were included in the pre-election Finance Bill. Further, all policies originally announced to start from April 2017 will be back-dated to be effective from that date.

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