MTD (Making Tax Digital) : Part Two – a little glimmer of hope!
The Treasury Select Committee (TSC) has released their Report on Making Tax Digital and it is scathing of HMRC’s programme for MTD.
The Chairman of the TSC said “Without sufficient care, MTD could be a disaster. Implemented carefully, with long transitional arrangements where necessary, and, having drawn on information from fully inclusive pilots, Making Tax Digital could be designed for the benefit both of the economy and of the tax yield, but with a rushed introduction, it will benefit neither”.
The TSC have criticised the digitising of business records and quarterly reporting, especially for small businesses and have commented adversely on the speed at which HMRC proposed the implementation of MTD. “Just over a year is too short a lead time for such a fundamental change …and there should be a comprehensive set of pilots of the end-to-end system before it is made mandatory for all businesses.”
The TSC also expressed concerns that the envisaged cost benefits of MTD to the Exchequer would not materialise and that the collateral damage to millions of small businesses up and down the country would be very significant.
Four crucial areas of concern were specifically commented upon in the Report:
- the threshold of £10,000 should be raised to the VAT threshold of £83,000
- the proposed timetable – an April 2018 start date – should be postponed until at least 2019/20 or even later
- comprehensive pilots of the proposed system are essential, covering the full cycle of four quarterly updates and an end of year reconciliation and these must be evaluated before MTD goes “live” for the first tranche of small businesses
- software availability is key and this must be fully trialed and free for small and less complex businesses
So we must now await the Government’s response to the Consultation but at least the TSC’s Report offers some glimmer of hope that we are not to be prematurely bullied into MTD.
We will report further when the Government’s response is made public.