Leavitt Walmsley Associates recognise the trials and tribulations of Making Tax Digital
HM Revenue and Customs have allowed businesses with legacy ICT systems to apply for a further year to comply with new legislation.
Making Tax Digital was introduced in April of this year and has since been widely criticised.
The move demands that any business with a turnover of more than the £85,000 VAT threshold will now have to submit their tax returns online.
It was anticipated that small businesses would suffer most as a consequence of this move, having to spend hundreds of pounds on the new software and staff training.
A transition period was allowed for, with HMRC assuring businesses they would not issue fines unless companies were found to be deliberately refusing to comply with the new legislation.
HMRC has recently made the decision to allow businesses to apply for an extension to the deadline in order to accommodate those who have particularly complex technological legacies.
The move is believed to be a direct result of consultations with industry leaders and trade bodies, who voiced their concern that the timescale for the transition was too short.
The trials and tribulations of MTD were previously recognised by Leavitt Walmsley Associates Ltd, an accountancy firm based in Greater Manchester, in their piece for the Parliamentary Review.
Their audit and technical director, Steve Collings, stated that “the subject of Making Tax Digital (MTD) is one of the most topical issues in the accountancy and tax professions at present.”
He expanded upon the initiative’s history, explaining that “in the March 2015 budget, plans were announced to abolish the annual self-assessment tax return and introduce MTD, which will involve a new quarterly filing regime for businesses and landlords.”
Collings continued “MTD has received widespread criticism from the accountancy and tax professions due largely to the costs businesses at the smaller end of the scale will incur and the original and ambitious timescale for implementation.”
He further stipulated that “LWA continues to keep abreast of developments in this important area as MTD will eventually affect the vast majority of businesses of all sizes in the UK.”
In spite of these legislative changes, the audit and technical director is confident that “LWA is equipped with the skill and technical expertise to overcome those challenges.”
An HMRC spokesperson said: “HMRC allowed all MTD businesses a one-year soft-landing period to put digital links in place, as it recognised early that businesses may need more time. Through ongoing engagement with businesses and stakeholders we identified that a small number of businesses using particularly complex IT systems would face difficulties with the 2020 deadline to put those digital links in place. Therefore, we have introduced a process to apply for additional time so that businesses are not penalised while making their best efforts to comply with all other MTD requirements. Businesses should review HMRC guidance and criteria for issuing a digital link extension carefully before applying.”
Steve Collings earlier this year took part in a podcast with The Parliamentary Review, and a summary along with a link to the full version can be found on this link.