Did HMRC really just admit it is delaying MTD?

Last week’s headlines about MTD would have come as a bombshell to my friend Chris.

Chris has a small accountancy business. Already close to retirement, he had decided that the introduction of  Making Tax Digital (MTD) was a good time to hand over the reins to someone who could steer his clients through the transition and beyond.

So as Chris read his newspaper, his stomach would have been churning over the retirement cruise he has booked. The headlines proclaimed MTD is about to be delayed.

HMRC letter: too many balls in the air. Time to prioritise.

Stories in the financial and IT press arose from a letter written by HMRC’s chief executive, Jon Thompson, to the Public Accounts Committee.

Thompson’s letter stated that tax officials are talking with the Treasury about delaying projects, to ensure new customs controls are ready before Brexit in March 2019.

‘[W]e need to retain right control of our risks to ensure successful delivery of CDS (The Customs Delivery Service) by January 2019)’, Thompson said.

‘We have proposed a number of projects which should stop, or not start and a number which should be stretched over a longer timescale.’

2 + 2 = 4: MTD will obviously be delayed, won’t it?

Writers apparently assumed the review of projects is new, or that it is a roundabout way of saying that MTD’s introduction will be put back.

After all, if officials want to take the pressure off the tax department over the next eleven months, what better way than delaying a large transformation project like MTD?

A number of ‘industry experts’ were invited to join up the dots for us: MTD is a massive piece of work. Delivering it two days after Brexit is asking for trouble. Obviously a delay is looming.

The trouble is… not all experts agree.

Here’s the thing… MTD remains a top line priority

AAT’s own tax policy adviser, Brian Palmer works very closely with HMRC and he takes a different view.

‘There seems to be something of an urban myth developing,’ says Palmer. ‘People who are not very close to the subject seem to be just catching up with what has already been said.’

Last July Government ministers announced a two-year introduction, starting with VAT. And in November, HMRC said it was looking at the priority of its workload by examining some 200 projects.

‘Clarification is in order. HMRC are sensibly looking at their transition workload. But MTD is a very top level priority. HMRC have been very clear that they see agents as a crucial part of delivery. Some nice-to-haves may be delayed. But that won’t have an impact on MTD.’

So is this ship ready to sail?

‘There is no slippage and no change on what has been said last November,’ concludes Palmer. ‘Because this was announced six months ago, it has been forgotten. It’s just resurfacing now and people are making wrong links.’

Making Tax Digital for business (MTBfb) is expected to continue as planned, with green light from Government ministers after the successful conclusion of the VAT trial.  MTBfb is the key area for Government and the profession, as it will have the greatest scope for improving record keeping and reducing the ‘tax gap’ (the difference between taxes due and taxes collected by Government).

On the other hand, Making Tax Digital for individuals (MTBfi) could see some changes, depending on the results of HMRC’s review.

Full steam ahead

So it seems my accountant friend Chris can put the champagne on ice and look forward to his cruise after all.

Equally, accountancy professionals should continue with their future planning. Here are a few points for the to-do list.

David Nunn is Content Manager at AAT .

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