The UK government has deferred the introduction of the controversial Making Tax Digital (MTD) initiative.

The new system has had a tricky development to date, with various parties calling for more work to be done before its introduction. Contractors who submit their own tax returns have also been naturally wary of the potential new challenge the system would pose.

Just last week, we reported on the Chartered Institute of Taxation’s call for some flexibility when the system is introduced to avoid unfair penalties for those submitting their returns.

This is indicative of somewhat controversial potential changes to taxation in this country once MTD is eventually introduced. The government has however indicated that more preparation will be done to ensure a smooth process for all concerned when MTD eventually makes its debut.

In a written statement on the website, Mel Stride, financial secretary to the Treasury, said: “Businesses will not be mandated to use the MTD system until April 2019 and then only to meet VAT obligations. This will apply to businesses with turnover above the VAT threshold. Businesses with turnover below the VAT threshold will not be required to use the system but can choose to do so. Businesses will also be able opt in for other taxes, benefitting from a streamlined, digital experience.”

Stride added that the Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest.

“This will ensure that there is time to test the system fully and for digital record keeping to become more widespread,” he said.

Though many contractors will breath a sigh of relief at this, it remains important to ensure taxes are done correctly to avoid any punitive action.