50-page report calls upon Government to delay Making Tax Digital

The Government must respond to a 50-page report calling for an immediate delay to Making Tax Digital (MTD), which has been put forward by MPs in the Treasury Committee.

The report, which calls for a one-to-two year delay to MTD, says that the project has the potential to be an “expensive disaster” unless it is pushed back “until at least 2019/20, [or] possibly later”.

Under current plans, MTD will be phased in from April 2018, imposing a new obligation upon landlords and self-employed individuals to report to HM Revenue & Customs (HMRC) on a quarterly basis. Small and medium-sized enterprises (SMEs) and larger companies will shortly follow, and the Revenue says that all tax will be ‘100 per cent digital’ by 2020.

In its report, the Treasury Committee has laid out recommendations for HMRC to consider before powering ahead with current proposals. The Committee has called for:

  • A delay of one to two years for the implementation of MTD.
  • HMRC’s proposed exemption threshold of £10,000 to be raised to match the VAT threshold of £83,000.
  • MTD pilot schemes to be more substantive and designed to gather clear information over the entire reporting cycle.

Committee chairman and Conservative MP Andrew Tyrie, said: “This is not a minor matter. These reforms will affect millions of taxpayers. [HMRC’s] cooperation and trust are both hard won and easily dissipated. Without them, more of the yield could be at risk than any putative extra revenue from MTD.

“If the Government gets it wrong, the culture of mutual trust and goodwill between HMRC and the vast majority of taxpayers – which still exists in the UK and which helps to keep the tax gap down – could be jeopardised”.

“The pilots need to be designed to gather information over the entire reporting cycle – four quarterly updates and an end of year reconciliation. These need to be evaluated before full implementation and Parliament needs to see the evidence that this has been done”.

The Committee’s report added: “The Committee has yet to see evidence strong enough to justify a threshold below the VAT threshold, £83,000. It may exist, but the Government needs to assemble and publish it”.

A long-awaited Government response to six Making Tax Digital consultations opened in August 2016 is expected to be published by the end of January. The Government is also expected to respond to the Treasury Committee’s 50-page report.

Posted in Business News.