Mel Stride on Making Tax Digital, and what we can expect from HMRC before Brexit

Mel Stride, financial secretary to the Treasury, started out as a business owner before he entered politics. While he is no longer involved, the trade exhibitions business is still running and has perhaps given him a unique perspective on life in a small business.

Here, we catch up with Stride on all things related to small business tax and compliance.

One of the first things you did in the role was to slow down the pace of the Making Tax Digital process. What future development can we expect?

[Digital is] definitely the right way to go, it’s good for businesses when they get engaged with this, to interact with HMRC on a digital basis. There is quite a substantial tax gap around SMEs. Some people making mistakes, sometimes there are simple errors, which costs 9bn pounds a year.

But I recognise that the pace of change that we originally had was too quick. So, what we decided to do was to limit that and roll out VAT and for businesses above that threshold from 2019 and no earlier than 2020 will we include other areas of tax.

Find out more about Making Tax Digital:

• HMRC urged to delay Making Tax Digital amid alarming? new findings
• Six need-to-know facts to help you prepare for Making Tax Digital
• New Making Tax Digital timetable lifts three million small firms out of transition

What vision do you have for HMRC?

HMRC is going through a transformation at the moment, it’s reconfiguring. It was engaged in that process prior to the referendum and of course now were on a clear direction of travel towards an exit from the EU. That’s really changed the game, so shaping HMRC is right up there at the top of the priority list among other things making sure we get Brexit right.

We need to make sure we get our customs regime in place, so that whether we have a transition period or not, that from day one the UK is ready with its customs regime mainly doing business with 27 EU states.

There’s a lot of work going into making sure that weve got the legislation in place, possibly looking for up 5, 000 more people engaged in the customs processes.

What are your main priorities for the months ahead?

Really, way up on my list is making sure the EU side of things is properly handled. That means on day one we will have the customs legislation in place.

Secondly, is to keep bearing down on tax avoidance and evasion. I don’t think the vast majority who pay taxes fairly and all the time should expect some people to get away with it. Im quite determined that the tax system should be fair. The third thing I want to do is make absolutely certain that we continue to support business through the tax system.

From your point of view, what are the main challenges that small businesses are struggling with in terms of understanding tax and financial legislation?

I think the general level of tax is always a drag on activity, so that’s why weve come down from 28% in 2010 for large business, 21% for SMEs to 19% today and weve already legislated for that to decline a further two per cent (17%) over the next couple of years.

So, I think one of the things is inevitably tax, there’s the burden of national insurance, which is a tax on jobs, so were always aware of what we can do there, which is why we have the employment allowance worth 3, 000 a year to those with staff, so valuable to small businesses.

Then things like business rates, an important area where on the tax side where we try to keep those numbers as low as possible.

Read more HMRC content:

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• HMRC risks vilifying small business owners

Having been part of both the political and business landscape, do have tips on tax compliance from the get-go?

I would get myself a good accountant and Id expect that individual to answer many questions and provide sensible guidance.