HMRC announces further delays in MTD rollout for complex cases


    HMRC announces further delays in the MTD rollout for complex cases in the United Kingdom

    The rollout of the new Maxing Tax Digital (MTD) initiative is to be delayed from April 2019 to October 2019 for those businesses with “more complex requirements”, according to a recent HMRC update.

    The delay may come as an embarrassment to Small Business Minister Kelly Tolhurst, who warned small businesses not to expect a further hiatus on the rollout just last week in an article in The Times.

    MTD represents a significant change in accounting procedure as tax reporting will move to a digital-only model, with businesses required to keep their figures up to date every quarter.  This will signal the end of the dreaded tax return and annual scramble to get paperwork over to the accountants, and as such is set to be quite an historic event.  The system is due to be launched for VAT in April 2019.

    Secondment within HMRC due to Brexit was cited as the reason for a “pause” on the rollout of MTD to individuals back in May.   Then in July it was announced that HMRC were relaxing the rules on digital links between software programs for the first year of mandation, effecting making it compliant to “cut & paste” figures between software programs, at least initially.

    The latest delay, says the taxman, comes from HMRC listening to taxpayers’ concerns about business readiness whilst planning the pilot service for MTD for VAT.  The 6-month deferral will apply to businesses who fall into one of the following categories:

    • Trusts
    • ‘Not for profit’ organisations that are not set up as a company
    • VAT divisions
    • VAT groups
    • Public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts)
    • Local authorities
    • Public corporations
    • Traders based overseas
    • Those required to make payments on account
    • Annual accounting scheme users

    Around 3.5% of mandated businesses are expected to be deferred.  These businesses will have until 1 October 2019 to start keeping records digitally and using MTD-compatible software to send their VAT returns to HMRC.  For the majority of businesses, however, MTD will become obligatory next April.

    The MTD pilot is open now for those businesses that wish to voluntarily move over to the new arrangements before it becomes mandatory.

    23 October 2018.