The Commons Treasury Select Committee has recently published its report into the HMRC Making Tax Digital project. The Committee recognised the benefits that could arise from electronic tax reporting, but made strong recommendations to HMRC regarding the income level at which taxpayers would come within the scheme and the timetable for the introduction of the scheme.
HMRC have proposed that people with incomes in excess of £10,000 should all be within the scope of Making Tax Digital. The Committee echoed the views of the tax profession by suggesting that an entry level set at the VAT registration threshold of £83,000 would be more appropriate. Furthermore, the Committee said that the proposed introduction date of April 2018 would be “wholly unrealistic” and that a more realistic date would be 2019/2020 at the earliest. The Committee also recommended more comprehensive trialling of the system ahead of implementation. The Committee made a number of other recommendations that are set out in their report.
There has been considerable concern since the Making Tax Digital project was first set out by HMRC that it would prove difficult to comply with and, in many cases, taxpayers would choose to opt-out rather than engage with the new system. The report has been welcomed by the Chartered Institute of Taxation. Ecovis is positive about improvements in technology to make tax administration less onerous. It is essential that the new system, when it is introduced, is functional and credible in the eyes of the people expected to use it. A delay, as suggested by the Committee would be a welcome opportunity for advisers and taxpayers to explore the requirements of Making Tax Digital and also, it is to be hoped, for HMRC to put some effort towards encouraging taxpayers by explaining the benefits of the new system.
“Ecovis takes a positive and optimistic view of technology developments in accounting and tax and whatever the scheme looks like when it is, ultimately introduced, we intend to be leading the field in the use of the technology to help our clients to manage their businesses more efficiently.”
Jamie Allen, Director of Online Services, Ecovis Wingrave Yeats LLP