Making Tax Digital: What happens next?
Against a background of numerous government U-turns, Making Tax Digital (MTD) for VAT-registered businesses took effect as planned in April 2019.
It’s been a rare success story for HMRC too, with 94% of the UK’s 2.2 million VAT-registered firms complying with the first two quarterly deadlines. A light-touch approach towards issuing penalties for non-compliance remains in place until April 2020, with the Revenue preferring to nudge those reluctant business owners to join the digital revolution instead.
Given its success, MTD for other businesses seems likely to be the next extension of the Government’s digital regime – just when is anyone’s guess. Ministers pulled the plug on fully rolling out MTD for individuals in May 2018, although it remains in the pipeline.
When it does arrive, it’s likely to include a simpler assessment and real-time tax code changes. It should also spell the end for taxpayers having to file self-assessment as we know it, possibly from 2022/23 but probably no earlier. Before then, as part of the MTD scheme, the Revenue could merge personal tax accounts with business tax accounts.
In October 2019, the Office for Tax Simplification (OTS) called on HMRC to implement an individual tax account to enable all taxpayers to see information about different types of income in one place. If HMRC agrees, it could soon be the case that individuals see self-employment and rental income in new sections alongside other sections for employment income, savings income and national insurance.
For further information on Making Tax Digital, please contact Andrew Kershaw on 023 8046 1245.