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Brexit delays HMRC’s MTD for individuals

Brexit delays HMRC’s MTD for individuals

HMRC has announced a delay in its roll-out of Making Tax Digital (MTD) for individuals while the UK prepares to leave the EU in 2019, says Clare Elsby, Business Development Director at Elsby & Co.

In the meantime, MTD for VAT-registered businesses remains very much on track and will take effect from April 2019, at which point companies with a turnover above £85,000 will be required to keep digital records and submit their VAT returns using MTD-compatible software.

Clare explains:

“MTD for individuals was scheduled to take effect from 2020. Prior to this employees were being encouraged to set up a personal digital tax account in preparation for HMRC’s shift from employers to individuals taking responsibility for looking after their own tax code.

“However, in a letter to tax professionals, HMRC stated: ‘We have made the decision to delay plans to release project capability to EU exit work. This means halting progress on Simple Assessment and real-time tax code changes.’”

The letter added that despite the hold up, the foundations of MTD for individuals have been laid and the government will return to the initiative ‘in the future’.

Responding to the news, Yvette Nunn, Co-Chair of the Technical Steering Group at the Association of Taxation Technicians, commented: “Given the unprecedented changes which will result from Brexit, it is only sensible that HMRC seeks to prioritise their work.

“There have been reports of inaccuracies in the information which HMRC have used in Simple Assessments to calculate tax bills. As a result, taxpayers are required to check these carefully once received, especially as they only have 60 days to correct any errors.

“While we welcome the pause, we strongly urge HMRC to use the extra time given to iron out the known problems with Simple Assessment and dynamic coding before they hit play on them again.”

MTD is intended to make tax reporting and billing more accurate and straightforward by allowing businesses and individuals to update and access their financial information and submissions on a ‘live’ basis.

HMRC is also seeking to clamp-down on a shortfall in tax collection from traders who don’t declare their income accurately or, in other words, ‘tax fraud.’

For further details call Elsby & Co on 01604 678470 to register for one of our MTD workshops, visit www.elsbyandco.co.uk or email clare@elsbyandco.co.uk