“Bing, bong… we regret to inform you that the making tax digital scheme due to arrive on platform one has been delayed — again. The train is currently sitting in Whitehall and it is now expected to arrive on April 6, 2024… we apologise for the delay.”
So what has gone wrong and what does this mean for your business?
What has gone wrong?
Where do we start? There has been a long history of hold-ups which has led many in the accountancy profession to question the future of the entire scheme. One thing everyone agrees on is that the original start date was too soon, and the delay will provide more time to iron out the many wrinkles.
Some predicted serious damage would be done to the UK’s tax system if MTD ITSA went ahead in its current guise, with question marks raised over multiple issues, including the tax year end date, mandatory rollout plan and turnover limits.
While the economy recovers from the pandemic and the effects of Brexit, the Government has taken the logical step of treading carefully when it comes to changing the tax compliance landscape. HMRC now has time to review the financial impact of MTD, to test the software and to hopefully devise a staged rollout.
What does this mean for your business?
Accountants across the land will be breathing a sigh of relief as the news allows them more time to prepare their clients for the upcoming changes. Hopefully, they should be helped by more information and resources from HMRC to help taxpayers meet their obligations.
The key thing to remember is that MTD will be happening at some point in the future, so now is the time to talk to your accountant to make plans for what you need to do. For example, could your business handle the burden of quarterly reporting?
The MTD delay may also provide an opportunity for HMRC to introduce other changes simultaneously, such as re-aligning the tax year to 31 March and reforming or possibly abolishing the ‘current year basis’ of tax for businesses with a year end different to the tax year end. Watch this space…
Nobody likes delays, but putting MTD on hold makes sense. HMRC has a lot of work to do on their own internal IT systems in order to make the scheme work, while businesses have plenty on their plate post-Covid-19. Hopefully HMRC will use the extra time wisely so that when the MTD train finally pulls into the platform in 2024, everyone will be ready to step aboard.
The next steps
For more information, please contact Graham Boar or your usual UHY adviser.