Quarterly Digital Tax Reporting Plans Shelved…For Now
The snap announcement of the general election on 8th June took many people by surprise. Not least of these were Treasury ministers who now have to drastically cut down the Finance Bill currently going through Parliament in order to get it passed by the dissolution of Parliament next week. One major casualty of this cull is the much-criticised Making Tax Digital agenda.
Making Tax Digital is the Government’s plan to digitise the tax return process for millions of small businesses and unincorporated landlords. One aspect of the plans is to mandate landlords with annual income over £10,000 to update HMRC every quarter.
Clauses of the Finance Bill have been dropped that would have made this mandatory for unincorporated landlords with an income over the VAT threshold (currently £85,000) from 1st April 2018, and for unincorporated landlords with an income under the threshold from 1st April 2019.
The Treasury have said that the clauses will be picked up again in a new Bill following the election (assuming a Conservative victory).
A Welcome Delay
The NLA welcomes the decision to remove the Making Tax Digital measures instead of rushing them through before the election. This unintended delay, for a policy that gives us plenty of cause for concern, will enable proper scrutiny post-election and hopefully some further revisions to ease the impact on landlords.
The Treasury Select Committee also found that such a low threshold was universally considered to be unacceptable, and agreed with our recommendation that it be permanently raised to the VAT threshold (currently at £85,000).
And the House of Lords Economic Affairs Committee concluded the plans should be delayed until 2020 and also agreed that businesses with turnover below the VAT threshold should be exempt. That latest report can be found here.
Whether or not the new - although most likely still Conservative government - will feel the need to make any changes is yet to be seen. The NLA will continue to make the case for a higher starting threshold and a more realistic timeframe for implementation that includes a longer trial period.