Opinion Former Article

Tax Institute welcomes delay of Making Tax Digital ‘phase two’

The Chartered Institute of Taxation (CIOT) welcomes the announcement that, in the light of the impact of COVID-19, the digital links requirement of Making Tax Digital for VAT will be deferred by 12 months to 1 April 2021.

Tina Riches, Chair of the joint CIOT and ATT Digitalisation and Agent Services Committee, said:

“We welcome the announcement to defer for a year the requirement to digitally link separate software programmes in the VAT return ‘journey’. This obligation will therefore only commence from the first VAT return period starting on or after 1 April 2021.

“Many businesses are working hard simply to survive these unprecedented times. We know that some businesses, particularly those with legacy or complex systems, were struggling to meet the deadline for this requirement. This announcement helps those businesses focus on doing the business they can and managing the COVID-19 challenges, rather than dealing with changes to how they keep their business records."

‘Phase one’ of the MTD for VAT requirements required businesses to sign up to MTD and submit their VAT returns to HMRC directly from their software. This ‘phase two’ required businesses to digitally link their software all the way from entry of each transaction at one end of the process through to submission of the VAT return at the other, irrespective of how many pieces of software were used.

John Cullinane, CIOT Tax Policy Director, said:

“When we started to appreciate the likely impact of COVID-19 on businesses we wrote to the Financial Secretary to the Treasury, Jesse Norman MP, suggesting a number of easements to help businesses through this difficult period. A deferral of the digital links requirements was one of our key suggestions and we are pleased that the Government agrees that this is one measure that can be put on ice while businesses concentrate on survival.

“We continue to work with the Government and HMRC in resolving the many questions that people have about the response to the COVID-19 challenge, so that businesses and individuals can better understand how they can be helped, and to ensure that every opportunity is taken to avoid imposing unnecessary burdens during a time of crisis.”
Notes for editors

The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

The Association of Taxation Technicians

The Association is a charity and the leading professional body for those providing UK tax compliance services. Our primary charitable objective is to promote education and the study of tax administration and practice. One of our key aims is to provide an appropriate qualification for individuals who undertake tax compliance work. Drawing on our members' practical experience and knowledge, we contribute to consultations on the development of the UK tax system and seek to ensure that, for the general public, it is workable and as fair as possible.

Our members are qualified by examination and practical experience. They commit to the highest standards of professional conduct and ensure that their tax knowledge is constantly kept up to date. Members may be found in private practice, commerce and industry, government and academia.

The Association has over 9,000 members and Fellows together with over 5,000 students. Members and Fellows use the practising title of 'Taxation Technician' or ‘Taxation Technician (Fellow)’ and the designatory letters 'ATT' and 'ATT (Fellow)' respectively.

Contact: CIOT External Relations 0207 340 2702 HVerma@ciot.org.uk

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