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Treasury Select Committee releases Making Tax Digital report

The Treasury Select Committee has published a report on Making Tax Digital (MTD), detailing how it intends to implement tax digitisation.

The government plans to ensure that all businesses – although there will be exceptions – maintain digital copies of their accounts, with quarterly updates submitted to HMRC.

However, the Treasury Select Committee has expressed concern over business expenses, which includes costs related to maintaining and updating digital records.

Businesses will be asked to start maintaining digital records, as well as reporting for National Insurance and income tax, from the 1st April next year, or on the same date in 2019, dependent upon the size of the company, and from April 2019 in the case of VAT. The changes are expected to affect between 2.5 million and 5 million businesses.

Not everyone is on board with the idea, however. ICAEW Tax Faculty chief Frank Haskew said:

“The Treasury Select Committee has called the current MTD proposals ‘over-ambitious’. To implement by April 2018, the government are not giving themselves enough time to address the issues raised by the committee. They should minimise the burden and make MTD voluntary, at least for smaller businesses, if it works, they will adopt it.”

MTD will cost £1.3 billion and will signify a central change in how organisations communicate with HMRC. An “end-of-year reconciliation” will follow quarterly updates to confirm that the tax activity for the year was recorded accurately.

The new requirements will mean a transition for many businesses. This is why it is always wise to employ the services of an accountant in the Wirral, to ensure that no mistakes are made during yet another basic rule change by HMRC.

Posted by Louise
January 19, 2017
Tax

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