Philip Hammond delivered some very welcome news yesterday when he announced that, for all businesses & landlords with income below the VAT limit (now £85,000), the implementation of Making Tax Digital will be delayed for one year until April 2019.
This reprieve of one year offers the opportunity, at last, for proper foundations to be laid for MTD and it gives HMRC more time to run simulations and iron out the problems which will inevitably crop up within their systems. It also provides more time to implement digital support for the small businesses and landlords impacted by MTD.
HMRC's original time frame of April 2018 was always over ambitious. Software firms, in particular, were facing impossible deadlines to provide the software packages that would underpin MTD and the accountancy profession was anxious that HMRC's proposed support systems would be inadequate. Education of those impacted by MTD can now be delivered in a staged and measured way, with businesses having the time to get proper help to prepare for "D-day" in April 2019.
In addition, this one-year postponement will also allow more time for the professional accountancy bodies and other interested parties to continue to lobby the Government over those parts of the original MTD proposals that we feel have not been properly analysed, including the very important issue of the real cost to businesses of MTD.