Government drops its Making Tax Digital legislation from the Finance Bill
4th May 2017
Midlands businesses are at risk of being squeezed because of the General Election, according to one of the region’s tax specialists.
Following the announcement of a General Election on June 8, the Government has dropped its Making Tax Digital legislation from the Finance Bill in a bid to focus on ‘core issues’.
HMRC’s Making Tax Digital programme requires all businesses and landlords turning over more than £10,000 per year to report tax digitally, with unincorporated businesses and landlords operating above the VAT threshold being the first required to comply, by April 2018.
The original timeline had prompted businesses to start investing time and money into preparing for the changes but this latest development has raised speculation about whether the legislation will be scrapped altogether.
Helen Coombes, Head of Tax at Harrison Beale & Owen in Coventry and Leamington, believes businesses can’t afford to adopt that view.
She said: “There is the very real risk that businesses could miss their digital tax deadline because of these last minute changes to the Finance Bill, prompted by the General Election.
“There’s now the temptation for businesses to delay any preparations for moving across to reporting tax digitally, yet we have no reason to believe the Making Tax Digital programme will be scrapped.
“What we don’t want is the Government announcing the same timings after the election and businesses then panicking because they’re up against time to meet the deadlines.
“Timing may be up in the air, but this could change in a matter of weeks so we’d urge businesses to keep these digital tax requirements at the top of their priorities.
“In advance of compliance deadlines, businesses should be looking at a number of changes immediately.
“These changes include switching to a cloud accounting system and implementing timely bookkeeping systems so their accounts are up to date.
“Seeking advice on the many apps which exist to help streamline the digital accounting process.
“Appointing a professional adviser to advise on likely digital tax compliance dates and requirements.
“Businesses with multiple income streams also need to look at their quarterly reporting periods and work with their advisers to ensure their reporting system is set up correctly.”