Schedule a Call
We are not just accountants, we are business owners. We understand the myriad of pressures on your time.
Our focus is your success through combining the latest technology with traditional values.
HMRC have today published their response to the six Making Tax Digital consultations that ran over the summer and have confirmed that the digital tax revolution is set to start in April 2018 but who it will apply to remains unanswered.
Against the backdrop of a damning House of Commons Treasury Committee report published earlier in the month, we had hoped that the implementation date would be deferred by at least a year.
The Treasury Committee issued a forty-eight page report that amounted to a forensic critique of the HMRC proposals for Making Tax Digital.
On the Parliament website committee Chairman, the Right Honourable Andrew Tyrie MP, observed “Carefully introduced, the digitisation of tax records and reporting can be an opportunity greatly to improve the administration of the tax system for the long term. Without sufficient care, Making Tax Digital could be a disaster.”
The committee highlighted significant shortcomings with the current proposals which broadly fall into two categories – burden and engagement. In doing so, the committee echoed many of the points CooperFaure raised in our responses to the HMRC consultation.
Firstly, the report warns that the costs and administrative burdens for very small businesses have been grossly underestimated with the resulting risk that many may go out of business or move into the hidden economy.
Secondly, the report cautioned against both the speed which Making Tax Digital is being implemented and the lack of adequate engagement and consultation with the business community.
The committee recommended five changes to the approach:
Whilst HMRC have made some concessions, the most significant being that businesses will be able to continue to use spreadsheets to record receipts and expenditure and then link them to software to automatically generate and send their updates to HMRC, the start date of April 2018 remains unchanged.
However, two key questions in the consultation were:
As the HMRC report states, the overwhelming view of the respondents is that the £10,000 threshold is too low and that there should be a deferral given to the smallest unincorporated businesses.
However, Government response to these questions was “Given the range of views expressed on this matter, the government will take more time to consider these issues, alongside the fiscal impacts. Final decisions will be made before legislation is laid later this year.”
Having been long promised clarity on Making Tax Digital by the end of January, we are still no nearer knowing who will have to comply with quarterly reporting from April 2018. Given that the implementation date is a mere fifteen months away, this is a disappointing and frustrating outcome.
We will be reviewing the six response documents in full and publishing a detailed newsletter over the weekend.
However, if you have any questions or concerns, please email us at email@example.com. .
The chancellor’s breezy Autumn statement 2023 speech was all about attempting to deliver a boost to the economy through a…
The director’s loan is one area that causes a great deal of confusion for limited companies. What is it and…
On 1 April 2023 there were some important changes to corporation tax. The rate changed, increasing from 19% to 25%…