The end of the annual tax return?
Making Tax Digital (MTD) is part of the Government’s plans to make it easier for businesses and individuals to keep on top of their tax affairs – essentially the end of the annual tax return.
With the details being removed from the Finance Bill 2017, ahead of the election in a bid to discuss the proposition further, we’re looking at what is being promised in the run up to the election.
Labour’s manifesto promises to exclude small businesses (those with turnover below the £85,000 VAT threshold) from the quarterly reporting under MTD. The Government’s current MTD proposals require unincorporated businesses to make quarterly submissions from April 2018. The Budget did introduce a year’s deferral to April 2019 for such smaller businesses – but only gave an exemption for those businesses with a turnover below £10,000.
The Labour proposal is likely to curry favour with many smaller businesses who would suffer both extra costs and administrative burden to meet their MTD obligations. However, the Government remains under constant pressure to exclude smaller businesses from MTD, and defer changes to 2020 to allow sufficient time for the necessary software to be created and properly tested. It remains to be seen whether this pressure may yet produce a similar relaxation in the not too distant future.
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