With just 12 months until it was meant to be fully launched and having already suffered delays to what was an ambitious roll out plan, HMRC’s Making Tax Digital (MTD) strategy has now been put on hold, indefinitely.
In a statement to tax professionals in April, HMRC made it clear that the impact of preparations for Brexit, which had a similar implementation date to MTD, was overwhelming and so the decision had been taken to shelve much of the MTD project. Businesses will still be required to submit VAT returns via commercial software from April 2019 as this part of the project was far enough down the road that it can be progressed to completion.
The concept of Making Tax Digital was, in the long term, designed to make personal tax calculation and reporting as near to real time as possible, ultimately negating the need for Self-Assessment tax returns. But when it was first announced, many business organisations voiced concern about the time plan for implementation, suggesting it was too rapid and businesses would not have time to adjust. This feedback, combined with technical issues of implementing such a challenge scheme, resulted in HMRC pushing the project back, but this latest delay does not come with a revised date.
Having originally set a date of 2020 for all taxpayers to be interacting with HMRC digitally for personal tax matters, the notice to the tax sector made clear that significant work had been completed towards the introduction of MTD and that could be picked up when the project starts again, however no indication was given as to when this may recommence.
Every tax payer does have access to their own personal tax account and HMRC is encouraging more individuals to use this service until MTD is reintroduced. You can link to HMRC Personal Tax Accounts here.
Despite the delay, those already filing their records digitally every three months such as the self-employed and partnerships, will continue to use the service. As noted above, businesses will also have to submit their VAT returns electronically from commercial software from April 2019.