HMRC delays MTD for individuals, but presses ahead with business changes

HMRC has confirmed that Making Tax Digital for individuals (MTDfi) will be delayed to pave the way for Brexit, as AAT Comment predicted last month.

As expected, the timetable for Making Tax Digital for business (MTDfb) is unaffected (see below). VAT services are scheduled to be introduced in April 2019.

The changes were revealed in an email from HMRC to stakeholders, and come after a review of its commitments amid a massive programme of change.

Digital tax services for individuals placed on hold

HMRC’s email states: ‘We have made the decision to delay plans to introduce further digital services for individuals, to release project capability to EU Exit work. This means halting progress on simple assessment and real time tax code changes.’

‘We will pause work to digitise services that impact fewer numbers of customers, such as those paying Inheritance Tax, or applying for Tax Advantaged Venture Capital Schemes and PAYE settlement agreements.’

HMRC continues with MTD for business timetable

Personal tax changes are on hold, but work on business continues as planned.

MTDfb  is a top priority because it will contribute most to closing the ‘tax gap’ (the difference between taxes due and taxes collected by Government).

HMRC’s email to stakeholders stated: ‘The prioritisation work means the convergence of business taxes from our current range of IT systems onto a single system will now happen at a slower pace. This will slow the creation of the single account for all business customers. This remains our ultimate aim and it does not impact the delivery of Making Tax Digital.’

Milestones for Making Tax Digital for business

  • Voluntary MTDfb service for income tax was launched in March 2018.
  • Live pilot just launched for VAT.
  • Mandatory digital VAT returns from April 2019.
  • No further mandatory steps for business will be introduced before 2020.

AAT tax policy advisor Brian Palmer gave his feedback on HMRC’s announcement:

‘The Department is now being required to deliver essential programmes to support access to European markets and boost worldwide free trade. Many of these projects will need to be underpinned by sophisticated digital systems.

‘At the end of 2017, HMRC had 15 major programmes and more than 260 projects running. It is hardly surprising in this context that Jon Thompson, HMRC’s Chief Executive, felt the need “to take a step back and look carefully at what we could, and should, deliver in light of those challenges.”’

AAT has a specialist half day MTD seminar in May. Also, Brian Palmer and HMRC will be giving updates on MTD at the annual conference in June.

David Nunn is Content Manager at AAT.

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