HMRC has just published its plans for Making Tax Digital, following a series of consultations with the business community throughout 2016. But how will the Essex business community be affected by the HMRC response?
Francis Whitbread, Tax Partner at UK200Group member firm Edmund Carr, based on New London Road, Chelmsford, said, “The Government’s announcement of the results of the consultation on Making Tax Digital (MTD) seems to me, for those who remember their early 1970s pop music, a classic Johnny Nash: ‘There are more questions than answers.’
“Given the fact that the implementation date for Making Tax Digital for many UK businesses is 6 April 2018, it is disappointing to see HMRC have not been able to provide details of compliant software for MTD. Do they have any idea how long it takes to successfully introduce a client to a new accounting system? What we need now is some substantive information on software providers, the form the quarterly summary will take and other issues.
“Another question: the purpose of MTD, we are told, is to remove the scope for taxpayer errors and the consequent underpayment of tax, remove the worry and uncertainty that comes with an HMRC enquiry, and give businesses a better record of how they are faring. How will requiring businesses to submit data on a quarterly basis achieve those objectives? Presumably, HMRC will be reviewing the data for anomalies and investigating accordingly. The problem is, if adjustments for items such as stock and amounts owing to and by the business are only dealt with on a once a year basis, as HMRC anticipate, the quarterly data will be of limited use for analytical review purposes.
“Finally, where does the accountancy profession fit into MTD? Although the largest number of responses to the consultation came from accountants, limited notice seems to have been taken of their views. Whatever HMRC may think, it is taxpayers’ agents who are currently the main reason why their clients pay the correct amount of tax, by ensuring their tax returns are a correct and complete record of the business’s activities in the accounting period in question.
“MTD will not work unless accountants and tax advisors continue that role, something which the government replies do not really acknowledge. The possibility of agents having direct access to their clients’ digital tax records has again been ignored. As accountants, our primary concern is our clients. We do not want MTD to place another administrative burden on them and have the skills to prevent that happening, but only if we are allowed to play a full part in the process.”
Francis Whitbread’s firm, Chelmsford-based Edmund Carr, is a leading member of the UK200Group, the UK’s leading membership association of independent chartered accountancy and law firms across the UK, whose firms act for a total of around 150,000 SME clients.
The UK200Group views Making Tax Digital as the key issue for SMEs in the next few years, and views it as imposing a burden on smaller firms. As such, it has set up a Digitalisation Taskforce to ensure that it can assist business owners with the transition to digital tax accounts and reporting, provide a dialogue between the SME community and HMRC and the Office for Tax Simplification, and campaign for clarity on Making Tax Digital.
In November 2016, in its response to the HMRC consultations, Andrew Jackson and the UK200Group predicted that Making Tax Digital would present a significant burden to small businesses. The response can be found here: http://www.uk200group.co.uk/news-and-blog/News/PressComments....
The HMRC response can be found here: https://www.gov.uk/government/news/digital-tax-revolution-mo...
Interviews with Francis Whitbread are available on request.
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About the UK200Group:
The UK200Group was formed in 1986, and is the UK’s leading association of independent chartered accountancy and law firms, with connections around the world.
The association brings together around 150 member offices in the UK with more than 500 partners who serve roughly 150,000 business clients. Its international links in nearly 70 countries give its members access to expertise across the globe.
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