Latest News

Has Brexit Killed off Making Tax Digital?

Intended to simplify tax payments for individuals and companies, and push the UK towards a more digitally focussed finance system, Making Tax Digital (MTD) has been hounded by delays and setbacks since its first introduction in 2016.

It had been anticipated that the new scheme - which was also set to address a £34bn tax gap in the UK economy - would be completely ready to go by 2020.

However, with government departments scrambling to be ready for the UK's exit from the European Union, currently scheduled for March 29, 2019, HMRC recently announced that the tax changes for individuals within MTD have been put on hold indefinitely because officials are too tied up with Brexit.

These changes would have impacted income and corporation tax for individuals.

Some of the proposed changes are still set to go ahead; for instance, HMRC has confirmed that MTD for VAT will come into effect from April 1, 2019 so plans for registered businesses over the VAT threshold (£85,000) are still going ahead, for now.

But consistent delays in the implementation of MTD, now coupled with the uncertainty of what the UK finance and tax system will look like in a post Brexit world, mean few businesses have been able to keep up with what the new digital tax regime will actually look like.

The fact that 24% of firms have still never heard of Making Tax Digital and 66% only know it by name without knowing the details - according to a British Chambers of Commerce survey - highlights just how lost in the wind this new system has become.

Businesses trying to get to grips with MTD in time for the deadline are reporting low levels of satisfaction and support from HMRC - according to British Chambers of Commerce - which has now led to the business group to call for the entire introduction of MTD to be delayed until the start of the 2020/21 financial year.

Mike Spicer, director of economics and research at the British Chambers of Commerce, went so far as to say that ministers had to "face up to the reality" of the pressure HMRC is under due to Brexit and delay MTD even further.

This is leaving many businesses with no option but to plough ahead with making changes to how they will deal with tax requirements - not that moving their finance and tax systems to a digital platform is a bad thing - without knowing if they're making the right changes.  Given that even after the UK leaves the European Union next year it will likely remain uncertain for some time what the final tax and finance picture will look like the question remains - is Brexit the thing to kill off Making Tax Digital for good?