The House of Lords' Economic Affairs Committee believes the UK government should look to delay its plans for regular digital tax returns until 2020 to allow for a full and proper pilot.
Making Tax Digital was due to be introduced in April 2018, but now will not apply to businesses with a turnover below the VAT threshold, as announced by the Chancellor of the Exchequer, Philip Hammond, in the Spring Budget 2017.
However, the committee of peers believes the Chancellor should consider delaying it until the end of the current Parliament, citing “unnecessary burdens” being placed on small firms at a time when other changes are being introduced.
The Committee is welcoming the digitalisation of the UK tax system, but believes a series of modifications should be considered to ensure the policy is implemented successfully.
It believes a pilot would enable the Government to test whether digital tax reporting can reduce taxpayer errors and actual costs to businesses, whilst receiving valuable feedback from business owners.
Lord Hollick, Chairman of the Economic Affairs Committee, said: “Many small businesses and landlords are simply unaware of or not ready to cope with the additional administrative and financial burdens that will be imposed by digital taxation.
“However, this does not go nearly far enough and it needs to further the delay the scheme’s implementation, and take a more incremental and gradual approach based upon the evidence from the pilot.
“This scheme coincides with changes to business rates and dividend taxation, all of which will impact some small businesses.
“A full pilot will ensure the software works and provide hard evidence of the additional financial and administrative burdens on businesses.
“It will also provide evidence in place of the widely disbelieved assessment of costs and benefits of the introduction of Making Tax Digital.”
Your local TaxAssist Accountant will work with you to prepare for when Making Tax Digital is currently due to be introduced from April 2018 for some businesses.
HM Revenue & Customs will not be offering software to help you report quarterly, so we have already partnered with Intuit QuickBooks to help make managing your accounting records easy, wherever you are.
If you would like us to help you through these changes then call us today on 0800 0523 555 or use our online enquiry form.
Image: UK Parliament