Making Tax Digital – the latest NFP news
In the March Budget 2015 the government unveiled its plans for modernising the tax system. The name of this modernisation was the ‘Making Tax Digital’ proposal. The proposal, whilst bringing an end to the traditional annual tax return for the majority of businesses in the UK, brought in mandatory digital records keeping as well as the online filing of quarterly returns.
Making Tax Digital was due to commence in April 2018 for those businesses with turnovers in excess of the VAT threshold, and April 2019 for the estimated 3.1 million smaller businesses.
Back in the early part of the year, the government confirmed that charities would be exempt from these new rules; however any trading subsidiary of said charity would have to comply.
In January 2017 MPs in the Treasury Committee called for a delay to the proposal until at least 2019/20, warning that without sufficient care the initiative “could be a disaster” (Andrew Tyrie, Chairman of the Treasury Committee).
In a recent statement from the financial secretary to the Treasury, it was announced that the Making Tax Digital proposals have been withdrawn from the Finance Bill until a new Parliament is formed. This has come as a welcome respite for many businesses and charities who were dreading the reform.
Although there has not been any defined deadline for when the initiative will now commence, charities with trading subsidiaries should use this delay as an opportunity to prepare themselves for the digital future.
We must also consider the possibility that a new Parliament may reconsider the prior statement that charities will be exempt from the Making Tax Digital proposals. As per Andrew O’Brien, of the Charity Finance Group, “Charities must use the opportunity provided by the pause to lobby for the exemption on charities to be extended to wholly owned trading subsidiaries, so that we reduce unnecessary red tape and stop money being wasted on unnecessary fees.”