The minister responsible for HMRC has confirmed that Making Tax Digital (MTD) for VAT will go ahead as planned on April 2019, but remained tight-lipped over when the individuals programme will come online.
Speaking to AccountingWEB at Sage’s Making Tax Digital ‘One year to go’ event, Financial Secretary to the Treasury Mel Stride confirmed that MTD for VAT is “definitely mandated” for April 2019 for all businesses above the VAT threshold of £85,000.
One of the first things Stride did when he took office last June was to change the timescale for the rollout of MTD and the minister has recently fielded calls for the programme to be pushed back further.
However, speaking to an assembled audience of accountants, officials and software developers at the House of Commons, Stride stated his determination to keep the new timetable on track.
Kelly: MTD ‘catalyst to stimulate productivity’
Sage CEO Stephen Kelly hosted the parliamentary get together to renew the software house’s commitment to the government’s policy.
Kelly set out his reasons for publicly and politically aligning Sage with MTD: “Making Tax Digital we see as a catalyst to stimulate productivity in the UK economy”.
According to Kelly, the UK is “behind the game” when it comes to digitisation, highlighting a Sage survey which showed the average UK business wasted 120 days a year on admin.
“We have some way to go before we leave bureaucracy behind and accelerate towards a digital Britain,” said Kelly. “We can’t be left behind by the Finns, Australians, Spanish and Hungarians [all of whom have rolled out digital taxation programmes to various degrees]. Digitisation will help us manage cash flow and reduce late payment.”
Just 220 working days to go
Presenting the accounting point of view to the room was Chris Downing, Milsted Langdon BI partner and AccountingWEB technology champion.
Discussing the future of accountancy, Downing told the audience that accountants recognise compliance is reducing in value. “Clients ask what they’re getting for their money,” he said. “We can use technology to change relationships and maintain fee levels. But only with good data can we give good advice.”
Downing also flagged the need for urgent action to make affected clients aware of the changes from both accountants and HMRC, as at time of writing there are only 220 working days until MTD for VAT.
“Accounting firms have clients on Excel, manual or non-compliant software. Even moving them across one a day is hard –that’s the education factor.”
Key problem is capacity
Representing the SME community at the event was FSB policy chairman Martin McTague. In a forthright address he stated that in his opinion, digitisation was not at the top of the priority list for small business.
However, McTague acknowledged that the administration of tax collection is a serious problem. “The key problem is capacity,” he said, “if we could get this right, MTD can be part of that capacity issue.
“The most irritating thing for our members is that HMRC says you are their customers,” continued McTague. “I don’t think anyone in this country thinks of themselves as that. And the customer experience is very poor.
“Rather than closing the tax gap, MTD should be about making a better experience”.
MTD for Individuals
Despite the positivity around the VAT side of the digital taxation programme, there remain questions around when it will come into force for individuals.
Commenting on AccountingWEB earlier this month Xero MD Gary Turner said: “I think it's fair to say MTD (Income Tax scope, not MTDfb (VAT)) is 'effectively' redundant. Last July they said it would be 2020 earliest, and last month added that any remaining HMRC resources and focus on this part were being pulled altogether."
Responding to this point, Stride told AccountingWEB that they have the project “constantly under review”, but that the Treasury was not looking to make an immediate announcement on it.
“HMRC clearly has a whole host of different priorities,” he said, “and one of those which is a new priority since George Osborne’s announcement [launching MTD as the death of the tax return] is Brexit.
“Whilst we’re looking at VAT being mandated for April next year we’re going to go no earlier than April 2020 for the other tax areas. I think that’s the right thing to do. We’re advancing at a sustainable pace where we can get it right, and that’s the most important thing.”