Making Tax Digital creates headlines yet again…
Making Tax Digital continues to have a torrid time and on this occasion caused by the early general election. The majority of this year’s Finance Bill has been dropped to ensure it can be passed quickly and without potential delays because of the general election. 110 out of 135 items in the original plan have now been dropped including the Making Tax Digital provisions. So the finance bill has gone from 760 pages down to just 140 pages.
Does this mean the end of Making Tax Digital?
Of course not. HMRC have committed too much time and money to the project to drop it despite massive opposition from many accountants and their professional bodies. This will cause a delay but I believe that the delay will be just a matter of months although I guess it does depend on who forms our government after the election. If the conservatives form the new government then another finance bill will be forthcoming within a few weeks and all of the stuff currently left out will be brought back in plus no doubt a few extras. If there is another government then possibly Making Tax Digital will be delayed for perhaps another year.
So those hoping that it will never happen will be disappointed. It is coming whether they like it or not so why not embrace the changes and look at Making Tax Digital as the opportunity to make changes to their accounting systems to improve their value. Better systems will lead to better understanding, better decision making and improved planning including tax planning. Contrary to what HMRC believe I think my clients will pay less tax as a result of Making Tax Digital because they will not lose receipts or forget expenses so their tax deductions will increase. And the bigger opportunity is the planning one whereby any opportunity to discuss their finances with their accountant before the end of their tax years will inevitably lead to tax savings.
If you have missed the whole Making Tax Digital rollercoaster I suggest you read my previous blog below with links to 10 earlier blogs going back to February 2016.