Her Majesty’s Revenue and Customs (HMRC) has acceded to the convenience store sector’s demands to further delay its Making Tax Digital (MTD) programme.

Chancellor Philip Hammond announced in the Budget on 8 March that he would provide 3.1 million small businesses under the VAT registration threshold – currently £85,000 – with an extra year until 2019 before they were required to send HMRC quarterly updates for income tax purposes.

But most convenience stores are unlikely to fall below the threshold and Association of Convenience Stores (ACS) chief executive James Lowman called on the government to delay MTD until at least 2020 so businesses had time to prepare.

The House of Lords Finance sub-committee backed Lowman’s calls so that a full pilot could be assessed and it also said MTD should be optional for businesses below the VAT threshold.

Ministers appear to have listened and now the new timetable sees the move to digitalisation for non-VAT taxes delayed to “at least 2020”.

And those below the VAT threshold will not have to go digital unless they choose to do so.

Now only businesses with a turnover above the VAT threshold will have to keep digital records from 2019 for VAT purposes only.

The ACS welcomed that the government had listened to the concerns of local shops across the country and delayed the implementation of the reforms.

“All our evidence suggested that the cost and administrative burden of MTD had not been fully assessed and prepared for. The delay will give the government more time to pilot the reforms and business more time to prepare for the changes.

“We are committed to working with the government on the MTD proposals with the new timetable in place.”

Mel Stride, financial secretary to the Treasury and paymaster general, said businesses agreed that digitising the tax system was the right direction of travel but many had been worried about the scope and pace of reforms.

“We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses,” he said.

The changes will be legislated for as part of the Finance Bill 2017.