Fears Rising About Making Tax Digital

Treasury Committee voice concerns

Making Tax Digital (MTD) has raised a number of concerns over recent months and now Chairman of the Treasury Committee, Andrew Tyrie, has voiced his. 

By 2020, millions of individuals and businesses will be required not just to submit information to HMRC online once a quarter, but also to do all their record keeping in a prescribed format. This will entail the use of designated software packages and would therefore have an impact not only on large businesses whose accounting systems may not be currently compatible with HMRC’s requirements but also small businesses who may still use conventional record keeping methods.

The Institute of Chartered Accountants in England and Wales (ICAEW) recently published a survey that suggested 75% of all businesses and 82% of sole traders would need to change their record keeping systems to comply with the Government’s new proposal for MTD. This provoked Mr Tyrie to write to David Gauke, Financial Secretary to the Treasury, on 26th April in which he states, “If this sample is representative, and if their fears are borne out, then it seems implausible that MTD could generate large savings to business – as the Government is forecasting. On the contrary, the vast majority of businesses may face increased compliance costs.”

Tyrie has called upon Mr Gauke to carry out a thorough impact assessment, being the minimum requirement, before proceeding with the Government’s plans to make digital record keeping mandatory.

Back in March, Gauke was forced to make a public defence of MTD and also quell speculation that taxpayers would have to effectively submit quarterly tax returns, albeit that the tax return will become extinct.

Other misgivings surround MTD such as HMRC’s ability to provide a smooth transition which is highly questionable given its recent track record. The departments PAYE and NIC computer systems have been flawed together with a number of errors contained within its RTI programme. Furthermore, how does HMRC expect to provide effective customer service moving into MTD, given it is to close 137 local offices by 2027 and replace these with regional centres, and nearly a third of its administrative staff will go. Morale within HMRC is already at rock bottom and the lowest among government departments.

There are areas within the UK where you are lucky to pick up a mobile phone signal never mind an internet connection. At the moment MTD is out of the question for people living in such areas although the Tories plan to create a broadband Universal Service Obligation whereby everyone would have the right to Broadband delivering a speed of 10mbps by 2020.

Fears Rising About Making Tax Digital
Treasury Committee voice concerns

Making Tax Digital (MTD) has raised a number of concerns over recent months and now Chairman of the Treasury Committee, Andrew Tyrie, has voiced his.

By 2020, millions of individuals and businesses will be required not just to submit information to HMRC online once a quarter, but also to do all their record keeping in a prescribed format. This will entail the use of designated software packages and would therefore have an impact not only on large businesses whose accounting systems may not be currently compatible with HMRC’s requirements but also small businesses who may still use conventional record keeping methods.

The Institute of Chartered Accountants in England and Wales (ICAEW) recently published a survey that suggested 75% of all businesses and 82% of sole traders would need to change their record keeping systems to comply with the Government’s new proposal for MTD. This provoked Mr Tyrie to write to David Gauke, Financial Secretary to the Treasury, on 26th April in which he states, “If this sample is representative, and if their fears are borne out, then it seems implausible that MTD could generate large savings to business – as the Government is forecasting. On the contrary, the vast majority of businesses may face increased compliance costs.”

Tyrie has called upon Mr Gauke to carry out a thorough impact assessment, being the minimum requirement, before proceeding with the Government’s plans to make digital record keeping mandatory.

Back in March, Gauke was forced to make a public defence of MTD and also quell speculation that taxpayers would have to effectively submit quarterly tax returns, albeit that the tax return will become extinct.

Other misgivings surround MTD such as HMRC’s ability to provide a smooth transition which is highly questionable given its recent track record. The departments PAYE and NIC computer systems have been flawed together with a number of errors contained within its RTI programme. Furthermore, how does HMRC expect to provide effective customer service moving into MTD, given it is to close 137 local offices by 2027 and replace these with regional centres, and nearly a third of its administrative staff will go. Morale within HMRC is already at rock bottom and the lowest among government departments.