First businesses to use new software after criticisms that timescale for roll out is unrealistic
HM Revenue & Customs (HMRC) has said it is ready to launch a pilot under its Making Tax Digital for Business (MTDfB) programme.
It plans to invite the first group of businesses and their agents to sign up for the new channel this month, with the aim of bringing more into the scheme at a later date.
The move provides the first public test of a programme that has recently run into criticism from MPs and business with warnings that the systems will not be ready for the deadline.
An HMRC spokesperson told UKAuthority that it is beginning with a small number of customers but plans to ramp it up “tens, hundreds of thousands” in the course of the financial year.
Under MTDfB most businesses will send quarterly rather than annual updates on their income and expenses to HMRC using specialised accounting software. They will have the option to send the information more frequently if they wish.
Based on the information they provide the businesses will receive an estimate on their tax liabilities.
The department plans to publish a list of registered suppliers of compatible software, some of which is free, later in the year.
It added that customers who have not been invited to take part will not yet be able to send quarterly reports, but they can start to use the new software or check whether any software they use is compatible with the new demands.
MTDfB is part of the broader Making Tax Digital Programme, backed by £1.3 billion from the Spending Review of November 2015, aimed at shifting businesses away from annual tax returns towards digital record keeping and quarterly updates.
Over recent months it has attracted criticisms: accountancy association UK200Group warned that the timescale was too short for businesses to adopt the new software required; and Parliament’s Treasury Committee said the timetable looked unachievable and that small businesses would struggle to manage the new reporting requirements.
Subsequently, Chancellor Philip Hammond made a partial concession in delaying implementation for unincorporated small businesses and landlords under April 2019; but the plan for the system to come online for larger companies next year remains in place.
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