However, VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are now required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.
Brian Palmer, former AAT president and a member of its tax panel, welcomed the news, and said: “With all that’s been happening in 2020 you could be forgiven for thinking that HMRC has lost its enthusiasm for Making Tax Digital (MTD).
“However, as reported yesterday, HMRC’s MTD programme will be extended to firms with turnover below the VAT threshold of £85,000 at the start of the 2022 financial year and to the self-employed and unincorporated landlords for income tax purposes from April 2023.”
He added: “This clear and unequivocal statement of its commitment to the digitisation of the UK tax regime is a confident move by the government that will see the delivery of HMRC’s ambition to be one of the most digitally advanced administrations in the world.
“But of even greater importance is that the drive to digital will see many of the smallest businesses benefit from increased productivity as they start to exploit the enhanced functionality available to them from apps and cloud-based accounting products.”