Shock move on Making Tax Digital

Making Tax Digital (MTD) will not be mandated for income tax or corporation tax until 2021 at the earliest, according to Chancellor of the Exchequer Philip Hammond. He made the announcement in a written statement following his Spring Statement on 13 March.

He said: “Mandatory digital record keeping for VAT for businesses over the VAT threshold (with turnover over £85,000) comes into force from 1 April. This is an important first step in this modernisation of the tax system to which the government remains committed. The government can confirm a light touch approach to penalties in the first year of implementation.

“Where businesses are doing their best to comply, no filing or record keeping penalties will be issued. The focus will be on supporting businesses to transition and the government will therefore not be mandating MTD for any new taxes or businesses in 2020.”

George Bull, senior tax partner at RSM, said: “We were expecting MTD to be extended to income taxes and corporation taxes from 2020, but this now appears to have been deferred to an as yet unknown later date. It’s likely that HMRC will want to fully assess how MTD for VAT, which comes into force in 2019-20, is working in practice before committing to an extension.

“This is a far cry from the ‘end of the tax return’ we were promised back in Budget 2015.”


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