After an unprecedented 3,000 + responses to HMRC's six Consultation Documents on Making Tax Digital, we finally got the official response from the Government.....and it basically says not much is going to change from the original proposals.
There are still concerns that HMRC has responded to public concerns with only some "window dressing". There is to be a period of further consultation regarding the two main aspects of the MTD proposal that have given most concern - namely the decision on the hoped-for increase in the exemption limit up to the VAT threshhold and the timescale for implementation. However, this period of consultation is only three and one-half weeks instead of the usual 12 weeks!
Most professional commentators still consider the pace of change is too ambitious and could damage the economy at a delicate time, post-Brexit when the country's smaller businesses will be facing other, more pressing, challenges. A fundamental change in reporting and taxation for these businesses could just tip some over the edge as the perceived view is that HMRC's projection, of a reduction in costs for these businesses, is totally wide of the mark. If the public's concerns are taken onboard, we could perhaps expect to see a postponement, possibly only for one year until April 2019, but even that would be widely welcomed.
At least HMRC has now agreed that Excel spreadsheets, beloved of most businesses and accountants, can be used for digital record -keeping, which is seen as a major softening of HMRC's original proposal. Furthermore, the penalties regime will be sympathetic to late submissions in the early days.
So, we are still waiting for the Government's answers on the two fundamental issues of the exemption limit and the implementation timetable, but with such a short second consultation period, we will hopefully get some answers soon!