HMRC have announced that a year-long pilot scheme of the ‘Making Tax Digital’ programme is to be implemented for ‘hundreds of thousands’ of taxpayers.
This comes only days after MPs in the Treasury Committee issued a 50-page report calling for a delay in the implementation of the ‘Making Tax Digital’ programme.
The ‘Making Tax Digital’ programme will require businesses to start keeping and reporting a digital record of income tax and National Insurance from 1 April 2018 or 1 April 2019, depending on the company size.
The recent report issued by the Treasury Committee recommends that the programme should be delayed until “at least 2019/20, possibly later”. In addition, they suggest that the threshold for reporting through the ‘Making Tax Digital’ programme should be raised from £10,000, as currently proposed, to £83,000 to match the VAT threshold.
The committee have criticised HMRC’s previous pilot efforts as these have been carried out on an invitation-only basis. The report suggests that this could throw the value of the information into question, as the businesses that could be adversely affected by participating in the pilot, will be more likely to decline the invitation to take part.
Despite these criticisms, HMRC have defended the programme and have confirmed that the year-long pilot scheme will go ahead. An HMRC spokesperson said: “Making Tax Digital will modernise the tax system, helping them get their tax bills right with the least administrative burden…We’ve consulted business at every step and have already made changes as a result to exempt the smallest businesses…We welcome the committee’s support for the digitisation of the tax system, and will consider its recommendations carefully.”
Tax Partner, Nick Haines, said: “Pushing Making Tax Digital through quickly could lead to horrendous results for both taxpayers and tax advisers. We are still waiting for a response from HMRC to the many letters submitted by professionals in reply to the Consultation paper. HMRC need to have a detailed review of their proposals and the impacts they will have on taxpayers and professionals alike, rather than proceeding with a pilot of a scheme that is not, in my view, fit for purpose. Digitalisation of the tax system may ultimately be a positive step for businesses, but it needs to be right.”
To read the full Treasury Committee report, click here.