ACS has welcomed calls from a House of Lords Finance Sub Committee on Making Tax Digital plans to delay the proposals until at least 2020.
Government proposals, originally published through six consultation documents in August 2016, aim to introduce a fully digital tax system with the intention of reducing errors in tax reporting. The proposals are due to be implemented by 2018, with a one year extension announced by the Chancellor in the Budget to 2019 for businesses under the VAT threshold (£83k turnover in 2017, £85k in 2018).
The Lords Select Committee on Economic Affairs, Finance Bill Sub-Committee’s report on the draft Finance Bill 2017: Making Tax Digital for Business recommends a series of measures to ensure that the policy is implemented successfully. These include:
- Revise and improve its assessment of Making Tax Digital’s benefits and costs
- Delay the scheme until 2020 to allow a full pilot
- Make keeping digital records and quarterly reporting optional for businesses with a turnover below the VAT threshold
- Look again at which businesses are included in the scheme
During an evidence session of the Lords Committee in February, ACS called for convenience retailers to be given more time to adjust their business practices to be able to comply with the digital tax reporting requirements, whilst also raising concerns about the accuracy of the Government’s impact assessment, noting that many small stores will have to invest in both hardware and software to meet the needs of the Making Tax Digital proposals at a time when costs in other areas of their business are increasing.
ACS chief executive James Lowman said: “We are pleased that the Lords Committee has listened to our concerns about the impact of introducing the Making Tax Digital plans but we remain concerned about the ambitious time frames being put forward by the Government. Implementation by 2018 would put significant pressure on thousands of small stores that do not currently have sufficient connection speeds or mobile coverage, and the Government’s extension to 2019 for those businesses under the VAT threshold will not affect the vast majority of our members. The Government should delay these proposals until at least 2020 to give businesses time to prepare.”
ACS submitted written evidence to the Making Tax Digital proposals in 2016. The full submission can be found on the ACS website here: https://www.acs.org.uk/download/hmrc-making-tax-digital/