Since the concept of MTD was introduced to the public back in March 2015, there has been a cloud of controversy as to how and when the biggest tax overhaul of a generation will take place. Since then both the former and current Chancellor have announced varying implementation dates, the latest being April 2018 for non-incorporated VAT registered entities to report quarterly via a digital tax account.
Accounting bodies such as the ACCA and the ICAEW have called for MTD to be parked and removed from the Finance Bill to provide more time to plan and implement, and it looks as though their calls have been heard. On 25 April 2017, Making Tax Digital was removed from the Finance Bill 2017.
Anita Monteith, tax manager at ICAEW said the decision to drop the MTD plans was a “sensible” move by the government.
Monteith stated that:
“Making Tax Digital plans remain controversial and need more scrutiny by those who will be affected, and most importantly proper parliamentary debate – a clear roadmap as to how MTD will work in practice is needed.
“MTD is not coming into effect until April 2018, and the announcement of the general election on 8 June 2017 provided an opportunity to withdraw these clauses and schedule from the Finance Bill which will be debated today and likely to be enacted on 27 April.
“These seminal clauses and schedule can be reintroduced after the election which will allow more time for proper scrutiny.”
Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants (ACCA), said:
‘We welcome the government’s decision to avoid rushing the MTD legislation process.
‘ACCA has raised some serious concerns about the implementation plan for MTD, and we advised at last week’s Treasury Select Committee hearing that it be delayed until after the General Election to ensure that there is time for full and comprehensive debate.
‘We also welcome the decision to delay other measures considered ‘controversial’—such as interest restriction, loss relief carry forward, an end to permanent ‘non-dom’ status and the dividend allowance reduction—so that they can be subject to the necessary scrutiny before being passed into law. ACCA will be continuing our discussions with the government on these issues once Parliament resumes.’
Yesterday’s announcement has led to questions being asked about delaying the changes or even scrapping MTD altogether. We will have to wait until after the election on 8 June 2017 to receive further updates, but rest assured as and when we receive further information we will let you know via our WHA blog.