There are serious questions over the future viability of Making Tax Digital (‘MTD’) following yesterday’s announcement that it is to be delayed by two years to April 2026.
Nimesh Shah, CEO of tax and advisory firm Blick Rothenberg, said: “It is more than 10 years since the original digital transformation project was announced by George Osborne in 2015. There are now serious questions as to whether it is meeting the intended goal of offering taxpayers does.” Digital gateway for their taxes, and HMRC to increase efficiency and reduce compliance.
He added: “Continuity in the MTD project has stalled, with HMRC having to contend with not being able to keep pace with the growing tax code and digitization agenda.”
Nimesh said: “The latest announcement goes beyond a simple expansion, raising the minimum threshold level to £50,000, and a phased introduction for landlords/sole-traders with incomes above £30,000 from April 2027. I would not be surprised if around April 2027 businesses generating less than £50,000 are taken out of the MTD entirely.”
He said: “The expansion and increase in the minimum threshold is good news for hundreds of small businesses who were facing a significantly higher compliance burden – but why has it taken HMRC so long to reach this inevitable point?
“MTD was always going to be challenging for businesses, as it introduced a greater compliance burden – and businesses have been left largely in the dark as to how they were expected to meet the requirements given HMRC delays.”
Nimesh said: “Nevertheless, small businesses will be relieved that the key changes that were planned for April 2024 have been delayed by at least 2 years. However, the small business may be wondering whether the MTD will ever drop, and if it does, in what form. In my view there has been a serious loss of credibility in HMRC to deliver on its digital mandate.