BUSINESSES have been urged not to celebrate too soon after the scrapping of controversial plans which would have meant them filing tax returns every quarter.
The government’s Making Tax Digital (MTD) scheme would have obliged businesses and the self-employed to keep digital records and file returns quarterly.
But the measures are among parts of Philip Hammond’s last budget to be dropped in a bid to speed up the passage of the Finance Bill through parliament before the general election.
Lisa Macpherson, head of tax technical at chartered accountants and business advisers PKF Francis Clark in Poole, said the decision would be welcomed by many businesses.
But she added: “Any celebrations could be premature as it’s unlikely we’ve seen the back of MTD.
“Will it survive? The simple truth is we don’t know, although we think it likely that it will.
“Introducing MTD from April 2018 was already a challenging timetable and the election makes it harder for the government and HMRC to achieve a 2018 start date for mandatory tax filing.
“However, this is a key government policy and it is possible that we will see it resurrected in a new Finance Bill immediately following the election.”
PKF Francis Clark had called on the Government to heed calls for a delay in bringing in the changes.
The firm says a one-year delay would allow time for a full-scale test of the idea. Another option would be to make the scheme voluntary for the first year or two.
Ms Macpherson said: “One thing that won’t change, however, is the push to get businesses online.
“The future for record keeping is definitely digital and many small businesses could see great advantages from moving to cloud based accounting systems, including the ability to track costs in virtually real time, and to monitor profitability and adapt their strategies accordingly.”
Those worst hit by MTD would be self-employed people with turnovers of more than £85,000, who faced filing at least five returns a year from April 2018 as well as their regular VAT return.