Individuals And Businesses Given Another Year To Prepare For ‘Making Tax Digital
Posted by Liz Seyi on November 24th, 2021
The UK Government has responded to pressure from professional bodies by confirming a one-year postponement to its comprehensive digital tax reforms.
The ‘Making Tax Digital’ initiative would have required 4.3 million self-employed people and small businesses to maintain digital records and report their income to HM Revenue & Customs (HMRC) on a quarterly, rather than annual basis from April 2023.
Now, however, the introduction of these measures has been rescheduled to April 2024, the Government has confirmed.
Government “recognises the challenges faced by many UK businesses”
Plans to change the date some businesses are required to report their profits – impacting on around 280,000 sole traders and 250,000 partners including big city law and accountancy firms – were also delayed by a year.
It had previously been expected that this reform of the so-called basis period rules – with the likely consequence of giving the Treasury access to billions of pounds years before it would have otherwise received the money – would occur from April 2022.
Lucy Frazer, who recently assumed the office of financial secretary to the Treasury, said the Government had decided to put back the changes after listening to feedback from stakeholders.
She said in a written ministerial statement: “The Government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the past year.”
The statement also confirmed that general partnerships would not be expected to report their income quarterly via digital records until April 2025, and that other partnership types – such as LLPs – would not be subject to the reforms until a currently unspecified future date.
A penalty system for late tax filings and payments was also set to be introduced alongside the digital-reporting programme; this has been postponed from April 2023 to the following year.
How have key industry figures responded?
Andy Chamberlain, policy director at the Association of Independent Professionals and the Self-Employed (IPSE), said the delay would allow for “much-needed breathing space before another painful hit to the self-employed.”
Meanwhile, Emma Rawson – technical officer for the Association of Taxation Technicians (ATT) – described the announcement as “a pragmatic decision as we were nowhere near where we needed to be.”
She said that many people who would need to purchase software in order to comply with the new rules weren’t aware that it would have been needed from 2022. Furthermore, she stated, there wasn’t yet a “proper market” for this software, with the HMRC website listing only seven software providers that offer products satisfying the planned digital income tax requirements.
We can have you ready to embrace the new age of business taxation
At this fast-moving time for so many firms around South West England, you may be appreciative of the specialised HMRC help for business in Plymouth or Wellington that TS Partners can provide.
To learn more about how our well-qualified team of chartered accountants and chartered tax advisers can assist you through the challenges of the months and years ahead as an individual or business owner, please do not hesitate to get in touch via phone or email now.
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About the AuthorLiz Seyi
Joined: August 13th, 2019
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