Following the Budget 2017 one-man companies with turnovers below the VAT limit should have more than an extra year before being forced to go digital.

Many tax bodies have made a joint statement saying that, while the delay was welcome, Making Tax Digital (MTD) should be optional for companies with turnovers below the £83,000 limit.

The tax bodies agreed with the House of Lords report, which said the scheme should not be compulsory for tiny traders as it would be of limited use and excessively burdensome to them.

The Low Incomes Tax Reform Group said, “We welcome the chancellor’s Budget announcement that businesses with a turnover below the VAT limit will have an extra year before being required to keep digital records. But [we] agree with the [Lords] committee that this does not go far enough; the digital programme should be optional for businesses below the VAT threshold for people will naturally gravitate towards systems that are good, intuitive and easily navigable, without the need for compulsion.”

The Association of Taxation Technicians (ATT) said it supported the reservations expressed by the Lords about the figures HMRC has published with relation to the scheme.

ATT’s Yvette Nunn said, “We support concerns in the report that the government’s estimate of the ‘tax gap’ savings are fragile and not based on adequate evidence. Similarly, we are highly sceptical of HMRC’s assertion that the scheme will initially cost businesses on average just £280, a figure that does not reflect the reality of the initial expenses businesses will incur.”