Making Tax Digital (MTD)
The Institute of Chartered Accountants in England and Wales (ICAEW) has stated that they are “extremely concerned with the proposal to make quarterly digital reporting compulsory. We are yet to be convinced that this will reduce the administrative burdens on business, particularly the smallest businesses. We also believe digital transformation needs to be done in parallel with the overall simplification of tax policy”. The Federation of Small Businesses has also voiced concerns as have some MP's.
The main issue is that HMRC want to make quarterly reporting compulsory for all taxpayers and if this is to work properly tax agents will need access to HMRC's systems.
HMRC are saying it will be simple and straightforward but many disagree. Professionals are saying the process may prove costly, time-consuming and a burden on many taxpayers for little, if any, value.
The worry is that many small and micro businesses will struggle to convert and maintain their records digitally by 2018 and they are unaware of their new reporting requirements. Some think that legal challenges under the human rights infringement may follow in relation to people with disabilities or those who live in areas with limited internet access.
There will be consultation later in 2016 on the sanctions and penalties to accompany MTD. There will also be consultation on a possible de minimis rule although how this would operate is uncertain.
It looks like MTD will be subject to further scrutiny and consultation before it gets anywhere near close to being implemented. We will stay close to the dialogue and keep you informed when there are any further developments to report.
If you would like more information, or would like to discuss your tax affairs in general, please contact our Tax Partners Steve Crompton or Chris Barrington on the details below:
Partner – Head of Tax
direct dial: 01942 292541
mobile: 07790 840394
direct dial: 01942 292505
mobile: 07730 436070