|
The influential Parliamentary Committee acknowledged the possible benefits that digitalisation of the tax system could bring, but also warned that it could be a disaster.
Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, said: "Carefully introduced, the digitalisation of tax records and reporting (MTD) can be an opportunity greatly to improve the administration of the tax system for the long term.
"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 Committee identified a number of 'serious shortcomings' with current plans mainly concerning the costs and administrative burdens, and the timings.
Welcome
The report was welcomed by a number of professional bodies who had been warning the Government not to rush into the changes.
Bill Dodwell, President of the Chartered Institute of Taxation (CIOT) said: "We welcome the Treasury Committee’s interest and involvement in Making Tax Digital. Tax digitalisation and quarterly reporting will be a huge change affecting millions of taxpayers.
“With a change this big it is more important to do it right than to do it quickly.
“So the Committee is right to call for a delay in the project’s implementation. Rushing it through to deliver by April 2018 is just too short a timescale. There are hundreds of different providers of accounting software – in many cases adapted for specific industries and trades. Right now we have no idea how many of these will be ready and tested in time.
Advertisement 
“The Committee is right to call for comprehensive pilots of the proposed system. There has been some limited piloting to date, but they need to be more extensive, with a range of taxpayers and tax advisers, and especially with those who naturally struggle with IT and firms with complex systems that need to be adapted. The pilots need to cover the whole reporting cycle and address behavioural issues rather than simply digital functioning. Pilots will need to build up gradually, bringing in a wider range of users.
“We are also pleased that the Committee agrees with us that the threshold for Making Tax Digital and quarterly reporting should be raised substantially from the proposed £10,000. A consensus is growing that the VAT threshold of £83,000 would be a more sensible cut off point.
“We think HMRC will need to consult thoroughly with businesses, their tax advisers and professional bodies and relevant charities in the period up to full implementation to ensure it works for HMRC, taxpayers and their representatives.”
Pre-emptive
Making Tax Digital is highlighted in the Better Budgets report by CIOT, the Institute for Government and the Institute for Fiscal Studies, as a current example of starting consultations at too late a stage.
The report states: “In this case, two major decisions had already been taken before consultation started – to require all businesses to maintain accounts online and to make quarterly online returns to HMRC. Those pre-emptive decisions were felt to have big implications for many small businesses – but were made without consultation and without them being able to challenge the assessment of compliance costs.”
--
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
-
Susie Hughes © Shout99 2017
|
