Press release: Modest Making Tax Digital concession not enough, says tax body

The Association of Taxation Technicians (ATT) has said that while welcome, the delay to Making Tax Digital for small businesses does not go far enough to allay its concerns about the roll out and implementation.

The Government announced in the Budget that it will provide an extra year, until April 2019, before Making Tax Digital (MTD) is mandated for unincorporated businesses and landlords with turnover below the VAT threshold.1

Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:

“While we welcome this modest concession, this small gesture is not enough to prevent the requirements under Making Tax Digital, such as digital record keeping and quarterly updates, from burdening entrepreneurs. The delay will allow a little more time for those businesses to find a digital solution, but it will still be overly burdensome for small businesses.”

The ATT called on HMRC to postpone the introduction of quarterly digital reporting by at least a year, in May 2016, to allow time for a proper consultation and development of the necessary digital solutions as well as time to allow those businesses to evaluate the solution best suited to them.2 While ATT welcomes today’s delay, it does not take away the fact that in complying with their MTD obligations, small and embryonic businesses will find the cost of complying disproportionately expensive.

A survey of members of the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CIOT) found that 89 per cent of members believed that the timeframe for implementing quarterly reporting should be extended to help businesses.3

Yvette Nunn said:

“We do not doubt that digital interfacing between taxpayers and HMRC is the way to go, but we have always said that those who are within the cross-hairs of this process are sometimes those who are least able to deal with the changes, such as very small businesses.

“Postponing the digital mandation by one year for small businesses, will provide a useful period of reflection and consolidation for HMRC and helpful breathing space for those who will have to deal with these new requirements.  

“We are concerned that HMRC has yet to respond to requests to publish the detail of its costings of what the financial cost for small businesses will be; we worry that the cost and benefits of the system are not as HMRC claims.”

Notes for editors

  1. Businesses, self-employed people and landlords will be required to start using the new digital service from:
     - April 2018 if they have profits chargeable to income tax and pay Class 4 National Insurance contributions (NICs) and their turnovers are in excess of the VAT threshold
     - April 2019 if they have profits chargeable to Income Tax and pay Class 4 NICs and their turnovers are below the VAT threshold
     - April 2019 if they are registered for and pay VAT
     - ​from April 2020 if they pay corporation tax
  2. ATT Press release: HMRC urged to postpone quarterly digital reporting by at least a year, May 2016
    ATT Press release: HMRC right to consult further on penalty plans for MTD compliance, January 2017                                                   
  3. The results of a survey of members of the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) in 2016 strengthened the two bodies’ concern that the timescale for implementing compulsory digital record keeping is unrealistic and must be delayed. Link here.
  4. ATT’s submission on the six formal consultations can be read here. These covered: bringing business tax into the digital age; simplifying tax for the unincorporated business; simplified cash basis for the unincorporated property business; tax administration; voluntary Pay as you go; transforming the system through better use of information; voluntary Pay as you go; transforming the system through better use of information. 
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