Around 3m of the smallest businesses and landlords will be able to move to the new digital system for keeping tax records at a pace that is right for them. The government says that it has listened to concerns raised by parliamentarians, in particular the Treasury Select Committee, businesses and professional bodies, about the pace of change and says that it is taking steps to ensure a smooth transition to a digital tax system.
Mel Stride, financial secretary to the Treasury and Paymaster General said: “Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms. We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.”
Under a new timetable to implement the change, only landlords and businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes and they will only need to do so from 2019. Ministers had previously said it would apply to those with turnover above £10,000. Businesses and landlords will also not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system. As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.