Tax institutes call for delay to MTD
Results of a survey of members of the Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT) have reinforced the two bodies’ concerns that the timescale for implementing compulsory digital record keeping is unrealistic and must be delayed.
Many tax professionals believe that businesses will require substantial assistance in managing the move to digital record keeping and the concerns about taxpayer compliance led to an overwhelming majority of survey participants calling for an extension to the deadline.
Key findings
Key findings in the survey included:
- 89% of members believe that the timeframe for implementing quarterly reporting should be extended to help businesses.
- 95% consider that compulsory digital record keeping and quarterly reporting will place an additional burden on businesses.
- 90% consider that compulsory digital record keeping and quarterly reporting will place an additional burden on their own practice.
- 33% report that at least three-quarters of their clients will need to move from paper/hard copy accounting records to digital records.
- Over 50% thought that the vast majority of their clients will need help moving to digital record keeping.
- 68% consider that the vast majority of their clients will need help with their MTD reporting obligations, including filing their quarterly updates with HMRC and completing their ‘End of Year’ activity.
- 87% called for the £10,000 exemption from mandatory reporting under MTD to be increased. Some even suggested that the VAT registration threshold of £83,000 is a better level.
John Cullinane, CIOT’s Tax Policy Director, said:
“Taxpayers will need considerable support and guidance to avoid a major struggle to make the move to digital record keeping and quarterly reporting because the timetable is unrealistically tight.
There is widespread agreement that digitisation can bring efficiency and other benefits to HMRC and taxpayers alike. The Government appears to be forcing the pace in the belief that requiring even very small businesses to ‘go digital’ in a tight timescale will transform their record keeping and reduce the tax gap, helping HMRC to recoup its investment in the project. Our survey results heighten our fears that this current aggressive approach by HMRC may have the opposite effect, with more haste meaning not just less speed, but maybe even see compliance levels go in the wrong direction.
There is a significant risk that small businesses will fall into non-compliance, whether deliberately or inadvertently, unless HMRC reconsiders the timetable for mandating MTD.”
This reaction and these percentages feature across the entire spectrum of the profession i.e. those who know the capabilities and limitations of the taxpaying public, which HMRC blatantly does not.
So far as I can see, the proposals are set to achieve the diametric opposite of that which HMRC claims as its objectives. There will be additional cost and admin burden for businesses and the profession, there will be endless scope for error and inaccuracy amongst those who try to go it alone (encouraged to do so by HMRC) and non compliance among those who fall between the two stalls.
It will, as always, fall to the profession to tidy up the mess and try to make “it”, whatever “it” ultimately proves to be, work, probably in the customary unsatisfactory fashion.
The Treasury and HMRC has available, FOC, the vast hands on knowledge base that is the entirety of the profession, via the easily accessible medium of the Professional Bodies. Inexplicably they choose to ignore this when making major decisions, preferring to consult only after it is largely too late and then always to reject or oppose the views put forward in a defensive and adversarial fashion.
What would we not give for a tax system that was efficient and sensibly user friendly for all concerned – one which quite simply worked properly? Our views and suggestions are always made with this alone in mind – anything else would be counterintuitive. This is also presumably, that which the Treasury and HMRC strive to achieve, so why are our opinions routinely sought after the main event and then opposed?
The answer, despite the hollow rhetoric about working together, is that HMRC and the Treasury view us (the profession) fundamentally as opponents rather than as a valuable and usable resource.
I firmly believe that this is largely why we have always had a hopeless and hapless tax system and, unless this inexplicable and possibly subliminal attitude changes, it will be why we always will.
So it is not all bad news….oh sorry,it is!
Terrible idea, should be shelved until 2020, or at least a high threshold applied, like £100k min. With the adjustments that will be required to accommodate Brexit, do these tinkerers really have the time to bind down British business with more vampiric red tape?
As a bookkeeper and also someone who is trying to get their business off the ground, I believe that quarterly reporting for tax would be beneficial for HMRC but not for a lot of businesses. I personally think if they want Tax to be digital it should become an option to put in your taxes in when you can whether it is four times a year, twice a year or even once a year. Too many people are not computer literate and may not even be able to afford such things as the internet. Unless the HMRC are going to provide companies with free access to the internet they cannot expect small businesses to spend more on training or getting another person or company to upload their information.