18 Jan Calls for Making Tax Digital Delay
The House of Commons Treasury Committee has recently published its report on Making Tax Digital (MTD), which calls for a delay in the implementation of MTD and for more extensive piloting of the reforms. Whilst the Committee agree that Making tax digital will increase the efficiency of tax collection, this should be done not just in a way that improves tax yield, but also taking into account the reasonable needs of millions of taxpayers.
This will require a great deal of care and sensitivity on the part of HMRC, a concept that might be foreign to the department!
A large proportion of the UK’s businesses, particularly millions of small businesses, are presently not well equipped to move over to digital record keeping and reporting. Furthermore, they may not well be ready for several years to come.
On the evidence that the Committee has seen thus far, the Government appears intent on sticking to its original schedule for implementing Making tax digital which only leaves little over a year to complete the work. This is over-ambitious. Crucial concerns raised by the Committee are still to be addressed, including the need for adequate, free software; the overall costs and benefits of the project, the proposed speed of implementation and the fact that it will be mandatory for the vast majority of businesses within two years time. Such a fundamental reform of the UK tax system requires much wider debate and consultation. As such, the Committee considers a start date of April 2018 for mandatory Making tax digital to be wholly unrealistic and recommends a delay until at least April 2019. However, this may be unlikely.