The end of the tax return? Not yet!

In the March Budget of 2015, the then Chancellor, George Osborne announced government plans to modernise the tax system, bringing it into the digital age.

The announcement signalled the death of the annual tax return, with Osborne hailing the scheme as a “revolutionary simplification of tax collection”.

Ever since, Making Tax Digital (MTD) has faced criticism from MPs and the tax and accounting profession over its short timetable, with the majority calling for it to be delayed.

With an implementation date of 1 April 2018 for VATpaying unincorporated businesses with a turnover above £85,000, businesses were beginning to plan for the requirement to submit quarterly accounts electronically to HMRC.

However, in the last week of April, Finance Bill clauses, including MTD, have been dropped from the Bill due to Theresa May’s decision to call a snap election.

The clauses will likely return in a bill after the election on 8 June.

This seems sensible. MTD plans remain controversial and need more scrutiny by those who will be affected, and most importantly proper Parliamentary debate - a clear roadmap as to how MTD will work in practice is needed.

But, the Government is keen for this initiative to continue after further debate, so readers would be wise to prepare for change.

For businesses, by far the most significant change is the requirement for digital record keeping.

This will involve the use of software or apps to record income and expenditure, which can submit informationtoHMRConceeverythree months.

It is worth noting that landlords who let out rental properties are included within the definition of ‘businesses’ and will have to comply with the new record keeping requirements.

For individuals, the changes have already started to happen. Every person can register for a digital tax account with HMRC now.

Over the next four years, HMRC will add data, such as details of employer/pension income and bank interest received.

Eventually, it will be possible to declare all other sources of income and gains using the digital account, so that by 2020 it will no longer be necessary to file a self-assessment tax return.

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