• Register
Return to: Home > News > Delay Making Tax Digital for business, says House of Lords on Finance Bill draft

Delay Making Tax Digital for business, says House of Lords on Finance Bill draft

The House of Lords Economic Affairs Committee has released a report on the draft Finance Bill 2017 which covers the much anticipated subject, Making Tax Digital (MTD) for business.

The House of Lords Economic Affairs Committee welcomes digitisation, but to ensure that the policy is implemented successfully they have recommended that the government should delay launching MTD until 2020, and make it optional for the self-employed and for small businesses below the VAT threshold.

Lord Hollick, chairman of the House of Lords Economic Affairs Committee, said: “We welcome the Government’s announcement in the Spring Budget that the scheme would not apply to businesses with a turnover below the VAT threshold until April 2019. However, it needs to further delay the scheme’s implementation, and take a more incremental and gradual approach.”

The government’s MTD plans will affect 1.6m companies, 2.4m self-employed people and almost 1m residential landlords. Accountants and those working in business or professional services have shared concerns that the scheme is being rushed, with unnecessary burdens particularly on small businesses, including the mandatory quarterly reporting to HMRC.

According to the Committee, MTD’s benefits and costs should be revised and improved by the government, who estimated ‘tax gap’ savings from the plans, which are not evidence based. HMRC’s own estimate showed that it would take over 10 years for businesses to recoup their aggregate initial outlay.

The recommended delay will allow the testing of whether MTD does reduce taxpayer error, provide time to assess costs to businesses, raise awareness to place support systems, and to receive feedback from users. The government should also examine whether some kinds of business, such as those with seasonal or highly irregular income, should be outside the scheme.

As the full details have not been released for the development of MTD, software companies do not have the technical details or system requirements to create business compliance software. Also, not enough consideration has been given to support those lacking digital skills, according to HMRC’s research 61% of the self-employed need help to interact with the government online.

“Many small businesses and landlords are simply unaware of or not ready to cope with the additional administrative and financial burdens that will be imposed by digital taxation,” Hollick added.

Top Content

    Australia battles with audit quality and governance issues

    The governance issues that have crippled CPA Australia in the past few months have left many of the professional body’s members in public practices in limbo as to their insurance cover. This, combined with a report by the regulator criticising audit quality and global trends such as the impact of technology, makes for challenging times for Australian professionals. Tom Ravlic reports

    read more

    Accountancy profession coy about UK Chancellor post Brexit tax remarks

    UK chancellor Philip Hammond’s remarks to a French newspaper about not wanting to turn the UK into a tax haven after Brexit, contradicting a previous statement, have been met with a defeaning silence by most in the accountancy profession.

    read more

    International Accounting Bulletin Asia Pacific rankings are out

    International Accounting Bulletin has published its 2017 ranking for Asia Pacific countries.

    read more

    The next generation’s take on a profession desperate to attract talent

    To celebrate international youth day, The Accountant asks professionals aged under 35 to share their thoughts on the profession: why they qualify as accountants, whether it was challenging and, now that they are in, how they see the profession and where it is going.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.