The Labour Party’s manifesto claims that, if elected, the Party would ensure that small businesses with a turnover of £85,000 or less are exempt from quarterly digital reporting requirements under Making Tax Digital (MTD) plans.
MTD proposals were abruptly dropped from Finance Bill 2017 following the announcement of the upcoming General Election – but most commentators suspect that the plans will be reintroduced in a second Finance Act, regardless of the result on 8 June.
Previously, the MTD project – which would require most businesses to issue digital reports to HM Revenue & Customs (HMRC) on a quarterly basis – was due to be phased in as early as April 2018.
Prime Minister Theresa May has said that the clauses dropped from the Finance Bill remain policy and that, subject to the Conservative Party being re-elected, the Government will put forward legislation at the start of the new Parliament to enact them.
Conversely, Labour has confirmed that, should it be elected, businesses with an annual turnover of less than the existing VAT threshold of £85,000 would be exempt from MTD if the project is reinstated.
Labour’s proposals follow mass criticism from tax and accounting bodies that the existing MTD threshold of £10,000 would only extend to a very small number of microbusinesses.