Members of the CIOT and ATT have expressed their concerns about HMRC’s Making Tax Digital Proposals in a survey conducted by the professional bodies.
Despite HMRC’s protestations to the contrary, respondents make it clear that Making Tax Digital will place additional burdens upon taxpayers and their advisers, with significant numbers of their clients being forced to make the move to digital record keeping.
Key findings in the survey of CIOT and ATT members:
- 89% believe that the timeframe for implementing quarterly reporting should be extended to help businesses.
- 95% consider that compulsory digital record keeping and quarterly reporting will place an additional burden on their clients.
- 90% consider that compulsory digital record keeping and quarterly reporting will place an additional burden on their practice.
- 33% report that the vast majority (defined as at least 75%) of their clients will need to move from paper/hard copy accounting records to digital records.
- More than half of members thought that the vast majority of those clients will need help with moving to digital record keeping.
- 68% consider that the vast majority of their clients will need help with their MTD reporting obligations, including filing their quarterly updates with HMRC and completing their 'End of Year' activity.
- 87% have called for the £10,000 exemption from mandatory reporting responsibilities under MTD to rise. Some respondents suggested the VAT registration threshold of £83,000 is a better level.
John Cullinane, CIOT’s Tax Policy Director, said:
“Taxpayers will need considerable support and guidance to avoid a major struggle to make the move to digital record keeping and quarterly reporting because the timetable is unrealistically tight.
“There is widespread agreement that digitisation can bring efficiency and other benefits to HMRC and taxpayers alike. The Government appears to be forcing the pace in the belief that requiring even very small businesses to 'go digital' in a tight timescale will transform their record keeping and reduce the tax gap."
“There is a significant risk that small businesses will fall into non-compliance, whether deliberately or inadvertently, unless HMRC reconsiders the timetable for mandating MTD."
“We are also concerned that advisers will be unable to cope with the amount of help needed by their clients. Based on the proposed timetable, our members will have to not only help their clients with their tax obligations under the current regime, they will also need to help them transition into MTD from April 2018. HMRC will need to gear up to provide an increased level of support during this period.”
Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:
“All the evidence the ATT has got is that MTD will lead to significant costs and burdens for small businesses in additional accounting systems and support from their accountants. The survey shows that HMRC must help smaller businesses and those who are the most vulnerable in society to adapt to MTD.
“We firmly believe that HMRC is moving too fast and too quickly on MTD. How can HMRC fully digest the feedback from stakeholders within the proposed timescales?”
The CIOT and ATT have expressed their hope that HMRC will take the results of their survey into account when considering the results of their consultations, which remain open until 7 November 2016.
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