HMRC have had to postpone a number of new digital projects due to the looming priorities of Brexit in 2019. The original plan was to roll out ‘Making Tax Digital For Individuals’ in 2020, however, the need to focus and prepare for Brexit means those plans are at least temporarily on hold.
Simple Assessment Rollout To Be Halted
Although part of the MTD initiative has already happened – the system of ‘simple assessment’ for a small select group of taxpayers is active – further initiatives like real time tax code changes are on hold and a complete roll out of simple assessment is on hold.
A partial rollout of simple assessment started in the 2016/17 tax year, the HMRC introduced pre-filled self assessments to certain taxpayers based on information held regarding their finances.
Dynamic Coding To Be Halted
Dynamic Coding was introduced in July 2017 to collect potential potential underpayments or ‘in year adjustments’ using third party information from pension providers and personal tax accounts.
Other Digital Services To Be Halted
Other digital services such as paying Inheritance Tax, applying for Tax Advantaged Venture Capital Schemes and PAYE settlement agreements have all been halted for the time being but one digital service is still set to go ahead- MTD for VAT.
MTD For VAT To Go Ahead
From April 2019, MTD for VAT goes into effect. From April 2019, any businesses with a turnover above the VAT threshold must keep digital VAT records and submit their VAT returns using MTD functional and compatible software. Our specialists at Numerion can help you get set up with the right software and prepare your VAT records and returns accurately in digital format. If your turnover is above the current VAT threshold and you’re not sure what to do, just give us a call.
According to the official UK Gov Tax Agents blog, MTD for VAT is being piloted and is available to invitation only volunteers at present during the ‘beta period.’ Eventually, the option to join without an invite will be rolled out as HMRC add features to help more complex businesses.
It is reported that approx 15 million taxpayers have personal tax accounts, 3 million businesses use Business Tax Accounts. A number of online services such as the HMRC app have been introduced as additions to the digital tax revolution.
Why Is MTD Being Put On Hold For Brexit?
The first and foremost issue is the large scale change to UK law and legislation which is currently enshrined within EU law itself. According to the HRMC, the pauses to MTD will be due to to ‘its focus will be on delivering programmes to support access to European markets and boosting international free trade, to be delivered by sophisticated digital systems.’
The Customs Declaration Service
Currently, the Customs Handling of Import and Export Freight (CHIEF) is the system used to process facilitate declarations to international movement of goods between the UK and non-EU countries. This will be replaced by CDS in August 2018 to replace the 25 year old CHIEF where 99% of all annual customs declarations online.
This is just one of the new systems HMRC will putting into place in preparation such as a border revenue collection system for “ensuring the smooth flow of freight and passengers from day one, and introducing processes and systems that will allow frictionless movement of goods between the Republic of Ireland and Northern Ireland.”
Despite these halts to digital services, HRMC have stated they will continue plans to take one group of people out of self-assessment, pensioners whose state pensions go just over their personal allowance and are their only source of income. The original plan had been to cover a wide range of people including customers whose PAYE underpayments cannot automatically adjust each year. By taking such people out of self-assessment, it was hoped the HMRC workload would be lessened and savings could be made.
The ‘Death Of The Tax Return’ Delayed
Former chancellor of the exchequer, George Osborne promised an end to “complex, costly and time consuming” tax returns. Perhaps the chancellor didn’t envisage the mammoth logistical nightmare of Brexit at that time. He promised “revolutionary simplification for tax collection” which was due to start in 2016.
As we now know, 2016 proved to be a defining year in history. On June 23rd 2016, the UK voted to leave the EU and with that vote came the prospect of decades of change and restructuring. New trade deals will need to be made and new laws will need to be drafted, effectively putting the ‘death of tax returns’ to the back of the line.
It also seems the complete digital tax revolution may be on halt for a considerable time. This could however present an opportunity to examine some of the critique of the current digital system and the opportunity to reform and improve it before it completely rolls out.
Brexit Is Brexit And Tax Goes On
While the government is busy with managing Brexit, tax returns and accounting will go on either digitally or on paper. If you’re concerned about any aspect of Brexit and how it may affect your business, get in contact with our specialists.
We can move your business onto the existing digital framework and help you get the best out of it. Economic forecasts for Brexit vary from positive to negative and the truth is uncertain which is alarming for SMEs, self-employed entrepreneurs and business people. We’re here to help you through these uncertain times and guide your business through potential pitfalls that may occur as we move closer to exiting the EU and beyond Brexit.
What we can promise and guarantee is honest and impartial advice, real solutions to real problems and a wealth of experience of dealing with many complex issues. We provide a personable and dedicated range of financial services tailored to your individual needs.
We’re here to support you, no matter the economic climate.