The Government has decided to remove from the Finance (no.2) Bill 2016-17 the relevant clauses and schedules relating to its Making Tax Digital agenda, as well as a number of other contentious issues. The Bill has seen 72 out of the original 135 clauses and 18 out of 29 schedules dropped, reducing it in size by about 80%.

Financial Secretary to the Treasury Jane Ellison announced during the Bill’s Committee stage debate that, because the Bill was progressing on the basis of consent and there was little agreement on this topic,  the Government would be removing the legislation for now. There is currently no suggestion that any of these proposals will be dropped entirely, only that the measures need to be properly considered and that legislating for them will be delayed until the “earliest opportunity, at the start of the new Parliament.”

It is unknown whether HMRC will push back the aspects of the Making Tax Digital agenda due to come into force from next April.

CTG Chairman John Hemming commented:

“As was made clear at the recent CTG Tax Conference, HMRC is very committed to Making Tax Digital and this announcement represents a postponement for practical reasons rather than a cancellation. CTG is in discussions with HMRC officials about include charity trading subsidiaries in the Making Tax Digital pilot stage which is taking place in the coming months. We still have reservations about the logic for not extending the exemption to charity trading subsidiaries, and continue to convey these to officials, but, if this is not changed, we will be seeking further protections for charities, including consideration of a de minimis threshold to protect small subsidiaries and provision of free software and training”.

For more information on Making Tax Digital and what it means for charities, click here.