Last week, the House of Lords Economic Affairs Finance Bill sub-committee announced that it has called on the Government to delay the introduction of making tax digital (MTD) for VAT by at least a year, and the call has been echoed by leading tax bodies.
The Chartered Institute of Taxation (CIOT) and the Association of Tax Technicians (ATT) have backed the Lords’ report, entitled Making Tax Digital for VAT: Treating Small Businesses Fairly.
The report argues that delaying the scheme will give small businesses a reasonable chance to prepare themselves ready for MTD and the obligations they will have to meet.
A spokesman for the CIOT / ATT Digitalisation and Agent Strategy Working Group (DASWG) said that many businesses still have little or no awareness of HM Revenue & Custom’s (HMRC) MTD project.
He added that this widespread lack of awareness is a concern with the start date for MTD for VAT coming up in April next year. MTD for VAT will be the biggest overhaul in VAT obligations in decades. With just a few months to go before it takes effect, these knowledge gaps could mean normally compliant firms fail to fulfil their new obligations.
While DASWG acknowledges that digitisation could be beneficial for taxpayers, agents and tax authorities, it is thought that many businesses will struggle to get ready in time, which is why the bodies back the Lords’ Committee’s recommendation on a delay.
The group believes that pushing back the start date for MTD for other taxes to 2022 at the earliest is also a good idea. However, it stressed that it is more important that there is sufficient time set aside for a full review and evaluation of MTD for VAT before the programme is extended.
Julian Borley, Partner at Milsted Langdon, said: “The House of Lords’ attempts to delay MTD would allow more businesses to become suitably prepared ahead of the deadline. However businesses should already be actively moving to prepare themselves over the next four months.
“If your business is not taking steps to get ready for making tax digital then it is important you seek specialist advice sooner rather than later. Contact Milsted Langdon today to find out how we can help.”
For more information about how Milsted Langdon can help, please contact Julian by emailing email@example.com or calling 0117 945 2500.