The majority of customers want to get their tax right but the latest tax gap figures show that too many find this hard, with avoidable mistakes costing the Exchequer over £9 billion a year. The improved accuracy that digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, will reduce the amount of tax lost to these avoidable errors.
HMRC has consulted with stakeholders throughout the development of Making Tax Digital, both formally and informally.
Having listened to concerns about the pace of change, particularly for small businesses, the government announced in July 2017 that the pace of mediation would be slowed and that Making Tax Digital will not be mandated for taxes other than VAT until at least April 2020.
The Government further announced in March 2019 that they would focus on supporting businesses to transition, and will therefore not be mandating Making Tax Digital for any new taxes or businesses in 2020.
The primary legislation for Making Tax Digital relating to VAT and Income Tax is contained in the Finance (No.2) Act 2017, providing certainty about the broad framework in which Making Tax Digital will operate, with secondary legislation for VAT laid in February 2018, coming into force from April 2019.
HMRC has published a VAT Notice which explains the rules for Making Tax Digital for VAT and about the digital information that must be kept.
HMRC has also published a communication pack which supports our partnership working arrangements with stakeholders, who can use the contents to inform their own communications activity and key messages for their clients, customers or members.