The Economic Affairs Committee has recommended that the government’s introduction of mandatory Making Tax Digital for VAT be delayed by “at least one year.”

According to HMRC’s plan, any business with an annual turnover over the VAT registration threshold of £85,000 as of 2018/19 will be required to keep digital records and submit their VAT returns digitally from 1 April 2019.

However, the Economic Affairs Committee found that: many businesses will not be ready for the introduction of MTD for VAT in April 2019; the costs to businesses will be far more than HMRC’s impact assessment; and the smallest businesses will struggle unless HMRC provides a basic free software option. In the report ‘Making Tax Digital for VAT: Treating Small Businesses Fairly’, the Committee concluded that HMRC inadequately considered the needs of smaller businesses.

The NFRN is relieved that such an influential parliamentary committee is taking our members’ concerns seriously, and calls upon the government to postpone the project. There is still time for HMRC to delay the plan and avoid putting small businesses in a dire situation. The NFRN would welcome a consultation with small businesses’ representatives to redefine together a realistic implantation schedule.

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