MTD faces growing delay demand
Professional bodies have added their voice to accountants’ concerns about the Making Tax Digital timeline for implementation, with many still believing that a delay does not go far enough.
In a letter to Chancellor Philip Hammond, Treasury select committee chair Andrew Tyrie suggested a pilot scheme. “From this,” he writes, “the lessons from customer’s experiences can be learnt, and well before digital reporting is made mandatory.”
He concludes: “Better to get it right than stick to a rigid timetable.”
In the letter Tyrie outlines his concerns over the availability of free software and how long it will remain free, how the quarterly reporting will align with universal credit, and the impact of the £10,000 exemption, especially for business whose turnover is just over the threshold.
Profession supports delay
Joining the dissent, the CIOT's president Bill Dodwell told the Treasury committee during a hearing on the UK's tax policy on 6 September that the groups view is that [MTD] is “too rapid” and making it compulsory is going to make the rollout “very challenging”.
The ATT is also urging the government to listen to Tyrie’s advice. ATT president Ralph Pettengell said: “It is in no-one’s interest to rush the introduction of MTD and end up with a range of problems for both businesses and HMRC when proper consideration of suggestions and further detailed consultation could assist the achievement of making HMRC into one of the most digitally-advanced tax administrations in the world by 2020.”
It wouldn’t be the first time the government took a more measured approach to introducing a digital change. AccountingWEB's consulting tax editor Rebecca Cave cites the gradual move from paper to online filing for PAYE as already setting a precedent from 2004 – 2009. Online filing for VAT returns was also introduced gradually before it became compulsory from 1 April 2010 for businesses with turnover over £100,000.
Backing a delay in a previous article, Cave wrote: “It would give the software companies the time to develop low cost or free apps to be used by this tier of businesses. The delay will also allow accountants more time to introduce their clients to digital methods of keeping business records (the exact format of which is another detail to be decided).”
A delay doesn’t go far enough
However, ACCA’s head of taxation Chas Roy-Chowdhury tells AccountingWEB that a delay is “just kicking the can down the road” and not dealing with the real problem, which he says is mandation.
“We can defer it as much as we want, but we need to get to the heart of the problem, and the heart of the problem is the additional admin burden that the new system is going to bring… The whole mandation issue is ill-conceived.”
Roy-Chowdhury argues that small businesses are already fearful of what a post-Brexit world might bring, and the MTD mandation would impose an additional burden on small businesses.
He adds: “Our members are going to have to incur costs which they will not be able to recover in fees, and the whole framework is completely unnecessary. It's not there to help small businesses as the spin the government puts out on this - it's there to try and fill the tax gap.”
The consultation documents themselves were originally supposed to have been published in Spring 2016, but were knocked off schedule thanks to the EU referendum campaign and the Panama papers fallout.
What do you think? Should MTD be delayed to fit a more realistic timeline or will that just prolong the inevitable?