Making Tax Digital postponed

Apr 27, 2017


By Lyndsey Hall

After facing overwhelming opposition from business owners and the accounting industry alike, Making Tax Digital will now be postponed for at least one year, potentially longer.

Out of the 135 clauses in the Finance Bill 2017, seventy two have now been removed and will be put on hold until after the upcoming General Election.

The bill was due to be the longest in history, but after the Prime Minister’s surprise announcement that an election will be held this June, the decision was made to cut the bill in half and rush it through Parliament in just two hours.

Making Tax Digital (MTD) is one of the controversial measures that has been shelved temporarily, with some suggesting it may end up being scrapped entirely. The Government’s initiative would have forced all business owners, including landlords and the self-employed, to submit four online tax returns per year, helping HMRC to tax businesses more accurately and removing the need for paper returns.

Both small business owners and accountants widely opposed the initiative as it would almost quadruple the work required to be compliant, costing valuable time and money that, in this post-Brexit world, no one can spare.

Treasury minister Jane Ellison told MPs on Tuesday the government would legislate for the 72 postponed measures “at the earliest possible opportunity at the start of the next parliament”. Ellison said the government’s decision was made “in light of the pressures on time” to allow for proper consideration of the controversial clause post-election.

Bill Dodwell, president of the Chartered Institute of Taxation (CIoT) welcomed the announcement, but called on the government to “make a clear statement about whether, if re-elected, all of the clauses dropped will be reintroduced on the original timetable”.

Dodwell said it was conceivable the second finance bill could be rushed through after the election and receive Royal Assent in July, although it was more likely to be in the autumn.

The original implementation date for MTD was April 2018, with any business that falls under the VAT threshold allowed to delay until April 2019. Now, it seems all effected businesses will be given a twelve month reprieve.

What do you think of the Government’s U-turn? Will we see MTD pushed back one year, or thrown out completely? Leave your opinions in the comments, or on Twitter.

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