Call 01992 444466

Update on Making Tax Digital

 

Our previous update on this topic was on 30 August 2016 following the publication of consultation documents by HMRC.  There was a very significant response to these, most of which was unfavourable.

The House of Commons Treasury Committee has considered the HMRC proposals and published a report on 17 January 2017 which has identified a number of serious shortcomings with the HMRC proposals.

The Committee highlighted the additional costs and administrative burdens for very small businesses which they felt might either drive them out of business or into the “hidden economy”.  They also felt that the proposed changes were being introduced too quickly.  Both of these issues could adversely affect millions of taxpayers and their relationship with HMRC.

The original proposal was for all businesses with a turnover in excess of £10,000 per annum to be in MTD, with a requirement to make four quarterly reports every year and a final “sweep up” report after the end of the year.  The Committee considers that turnover threshold to be much too low and proposes instead the VAT threshold, which is currently £83,000 per annum.

The original timetable was for the changes to be introduced from April 2018, but the Committee suggests these should be delayed until April 2019, and possibly later.

The Committee also suggests that there should be proper pilot schemes evaluated before the proposals are implemented.  HMRC have apparently run some pilots on an invitational basis but the Committee has pointed out that the people who are most likely to be adversely affected are also those who are most likely to have declined any invitation to take part in the pilot!  The suggested pilot schemes will need to cover the full reporting cycle of four quarterly reports and the end of year update.

The provision of appropriate software is also an issue.  The Committee points out that there will need to be adequate free software available for smaller and less complex businesses, but the Government has yet to set out how this may be accomplished.

The Government will consider the Committee’s report and respond in due course.

Nimbus Green Hosting Logo

© 2024 HB Accountants | Privacy Policy | Disclaimer | Terms of use | Website by Origin 1

Logo of the Institute of Chartered Accountants in England and Wales

HB Accountants is the trading name of HBAS Limited, a company registered in England with registration number 5085258. The registered office of HBAS Limited is Plumpton House, Plumpton Road, Hoddesdon, Hertfordshire EN11 0LB, England. Registered for VAT number 866062806.