Making Tax Digital – uncertain policy, uncertain future
HMRC have been promising big changes on the horizon with their tax digitalisation strategy. First announced in the 2015 Budget, the vision for a transformed tax system and the end of the tax return was laid out.
Every individual and business will have access to their own secure digital tax account. It will operate like an online bank account that enables them to interact with HMRC digitally.
The intention is that by 2020, most businesses, self-employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account. These changes were to be introduced for some businesses from April 2018, and be phased-in by 2020, giving businesses time to adapt.
Since it was first announced, there has been much speculation regarding how Making Tax Digital will work in reality. The idea of no more tax returns, while appealing, has started to be replaced with the thought that tax digitalisation will involve the maintenance of a robust set of information on a quarterly basis rather than an annual basis, involving more work rather than less.
Where this saga ends who knows? The obvious conclusion is that a move to quarterly information naturally leads to quarterly payments, but this is just another form of speculation and uncertainty at this stage.
However uncertainty is growing towards the project after a stakeholder event that many believed would have announced the release date of the project’s consultation documents was cancelled this week. It is hardly surprising as the new Prime Minister is still trying to get her government in order post referendum result.
On 12th July, HMRC issued the following statement: “Following the early change of prime minister announced yesterday, HMRC’s executive leadership will need to be available to ministers at all times during the remainder of the week.
“Unfortunately, this means that we will have to postpone the HMRC Stakeholder Conference on Thursday 14 July. We’re sorry for the short notice and inconvenience, and we will be in touch with a new date as soon as we can.”
In respect of the now overdue consultation documents, HMRC also stated: “The political landscape has rapidly changed this week. We currently intend to publish the MTD consultation documents in the summer but understandably it won’t be this week.”
So at this stage it’s simply a case of ‘wait and see’.
If you have any immediate Making Tax Digital questions please contact your local office or send an enquiry as we are interested in discussing this with you.