Government urged to delay rollout of Making Tax Digital initiative
A treasury select committee of MPs has urged the government to delay the move to digital self-assessment tax returns known as the Making Tax Digital initiative due to the threat posed to the UK’s small businesses.
The Making Tax Digital initiative, set for introduction in April 2018, will require the owners of small companies to submit tax returns four times a year, as well as providing HMRC with an end of year update.
The review, led by Andrew Tyrie, the Conservative Party MP for Chichester and chair of parliament’s treasury select committee, scrutinised government proposals for tax digitisation.
It reported that Britain’s smallest companies were the economy’s backbone, and concluded that the administrative burden of Making Tax Digital could force such firms into the hidden economy? a suggestion that business owners will avoid declaring sales for tax purposes.
The committee also highlighted insufficient engagement? with the 1.3m micro business owners and freelancers that will be brought into the initiative. In particular, it raised deep concerns? over the inadequate? free tax submission software promised by government.
In assessing the potential impact on small UK businesses, several suggested changes to the plans were outlined in the report.
Under the existing plans, any business earning over 10, 000 will be required to submit tax returns digitally. The committee has proposed to match the entry threshold to the VAT rate, starting at 83, 000.
Tyrie stated that the government’s current timetable for the Making Tax Digital initiative threatened to hurt small firms and advised that there needs to be a delay of the start until at least 2019/20, possibly later.
The committee accepted that the long-term future can, and probably should, be digital.
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.
The Christmas holidays are fast approaching, which means that for many small business owners it's time to start thinking about their self-assessment tax return in preparation for the January rush. more»