With the snap general election taking place this week on the 8th June, at Alexander & Co we have been thinking about what impact this could have on Making Tax Digital (MTD).
What is Making Tax Digital?
Making Tax Digital was announced in 2015. Led by HMRC, this system is overhauling the tax system as we know it – and both self- employed taxpayers and British businesses need to be fully prepared.
By 2020, the government has said they want HMRC to be “one of the most digitally advanced tax administrations in the world”. This transition to digital tax is also a mandatory one, and business of all sizes with an annual turnover of £10,000 or more will need to adhere to it.
What will Making Tax Digital involve?
Making Tax Digital lays out the following:
- Businesses need to submit reports to HMRC every quarter
- Individuals and businesses will need unique online tax accounts as tax will be 100% digital
- All taxpayers will need to use HMRC-compliant digital software
Why was MTD dropped from the finance bill?
The Government decided to drop clauses relating to MTD from the Finance Bill 2017 in order to quickly receive approval from MPs before Parliament dissolved. MTD has since been put on hold until after the election.
What does the general election mean for Making Tax Digital?
The clauses are likely to be reinstated after the General Election 2017, when, hopefully, there will be more time to debate the measures in greater detail. The clauses that will make it through to the Finance Act are contained in the version of the Finance Bill introduced into the House of Lords.
Following the general election, there is likely to follow a Parliamentary ‘wash-up’ procedure, which will see elements of the Finance Bill rushed through and other elements dropped.
What outcomes can we expect?
If the Conservatives are re-elected, we will probably see the immediate re-tabling of the proposal, although the timeframe may be altered due to the lost months. In any other outcome, other changes may have to be made. Either way, Making Tax Digital is going ahead.
Whilst everything seems to be up in the air, the best thing your business can do is consider your obligations to MTD and begin making plans in order to great ready for its inevitability.
If you are confused about the digital transition, make sure you get in touch with one of our tax experts here at Alexander & Co, who will offer you sound advice and guidance throughout the transition.