24th April 2017

In August 2016, the government published its proposals on how businesses will maintain their accounting records for tax purposes in the future and also how businesses will report their profits to HMRC. At the end of January 2017, after consideration of suggestions made by interested parties, revised proposals on many aspects of the new regime were published, including the intention to introduce quarterly digital reporting for businesses with turnovers more than the VAT Registration Threshold of £85,000.

However, when Theresa May announced a general election for 8 June 2017, the finance bill, which covered this proposal, was immediately subject to the process by which the government and opposition discuss which bits of the bill can be rushed through Parliament. Known as the “wash up” process, this means that legislation that is controversial or needing amendment is delayed until after the election.

Theresa May’s announcement was on the same day that the influential Treasury Committee reviewed calls for the move to quarterly reporting to be parked until HMRC could provide more clarity on software and IT availability issues. Representatives from CIOT, ICAEW and ACCA were up before the Committee chaired by Andrew Tyrie MP who asked the tax experts whether the rollout plans should be ‘put into cold storage’, adding that ‘there is no option to phase the measures, either they are parked or they go ahead’.

The Finance Bill hearing also probed the lack of detail on the software provision for Making Tax Digital, with no software companies actually up and running with working software which could integrate spreadsheets into HMRC’s quarterly reporting system. As there won't be time to properly consider all of the proposals in the draft Finance Bill, Andrew Tyrie is urging the chancellor to truncate it but it is yet to be confirmed which measures reappear in the new Parliament, and which are quietly dropped.

HMRC officials were due to be up before the Committee on 25 April to discuss Making Tax Digital and progress to date. This was hoped to provide some clarity on the many unanswered questions from software provision to the minimum threshold and administrative costs. This meeting was cancelled, with no information on if/when it will be rescheduled. Instead on 25 April came the announcement that Making Tax Digital has been removed from the Finance Bill 2017, as well as a majority of other tax measures such as corporate loss relief, the money purchase annual allowance for pensions and penalties for enablers of tax avoidance schemes. Whether this decision to drop MTDFB from the Finance Bill means HMRC will push back the implementation date of 1 April 2018 for VAT-paying unincorporated businesses with a turnover above £85,000 is still unknown.  What is clear is that there will be no further progress until after the general election