The word on the street...

Small businesses below the VAT threshold will not need to keep digital records, or make quarterly online returns, until 2020 - which doesn't mean they should ignore the business advantages!

More time to get your bones in a row

From April 2019, businesses above the current VAT threshold of £85,000 a year must use MTD-compatible software (Making Tax Digital) to file accounts to HMRC.

Originally, the Government wanted mandatory quarterly reporting to come into force from April 2018. But requirements for unincorporated businesses were deferred for 12 months in the March 2017 budget statement, and stripped out of the Finance Bill passed before Parliament dissolved.

Even so, HMRC has been working hard to make the software viable, but progress has been slow.

Although the MTD pilot scheme started in the new tax year, few application programme interfaces are yet ready to share data with HMRC computers. The new target is December 2017, but testing is needed first.

Best to act soon

As a result, all businesses and landlords will have at least two years to adapt to change before being asked to keep digital records for other taxes, according to the Treasury. Companies below the VAT threshold will be able to choose when they transfer to the new digital system.

Delay is an opportunity. Small business may well find it to their advantage to come to grips with the technology much sooner rather than later.

If in doubt, please feel free to give us a call on the old telling-bone!

Kind regards

Budget