Institute of Chartered Accountants in England and Wales (ICAEW) has said it is “encouraged” by the “ very light touch” towards Making Tax digital announced in the Spring Statement.
The Spring Statement confirmed that Making Tax Digital (MTD) will not be mandated for any other taxes or businesses in 2020.
From 1 April 2019, VAT registered businesses with turnover over the VAT threshold (£85,000) will be required to maintain digital accounting records and to file their VAT returns directly from MTD compliant software.
The Chancellor has now confirmed that MTD will not be mandated for income or corporation tax and that MTD for VAT will not be extended to all VAT registered businesses until at least 2021.
Caroline Miskin, ICAEW tax manager, said: “We are encouraged that HMRC is adopting a very light touch approach – one of encouragement rather than compulsion – for at least the first year of MTD and that penalties will not be issued for late filing.
“It is crucial that HMRC is not heavy handed with businesses during this period of immense change and it has acknowledged the pressures that businesses are under by not extending MTD to include both more taxes or businesses.MTD for VAT is a major change in tax administration and it is important for the UK tax system that it is a success: this is too important to be rushed.”