HMRC digital tax delays to benefit large businesses with complex arrangements
Where your all-digital tax returns could be dealt with: the HM Revenue and Customs offices, 100 Parliament Street, London. Image by Claudio Divizia (via Shutterstock).
The Government’s plans to create an all-digital tax system have been hit by a setback this week, as it was announced that HMRC’s digital switchover has been delayed till 2019. The changes to the UK’s tax system aims to streamline the process of filing tax returns, making it easier for small businesses and private landlords. This week, it emerged that the switchover to a fully online system would complicate things for larger businesses.
As a consequence, large businesses will be given more time to sort out their taxation arrangements. The Chairman of the Treasury Committee, Andrew Tyrie, stressed that delays are likely beyond the 2019 deadline. In a letter to the Chancellor of the Exchequer, Philip Hammond, he said that:
“Implemented carefully, [Making Tax Digital] could do some good. But it could also do much harm. The consultation is, therefore crucial. It needs to be meaningful. There may be a case for delaying the implementation of MTD. A year’s extension for an unspecified group of businesses may not be enough.”
In an earlier post on the Peach Wilkinson blog, we stated how digital tax could make handling your tax records as easy as purchasing goods online. Part of the plan includes a £10,000 turnover threshold that may benefit micro businesses, freelancers, and private landlords.
‘Worryingly Short’ timetable
On the Accountancy Age website, tax advisors have decried the worryingly short roadmap from the present system to one that is 100% digital. The Association of Taxation Technicians has expressed some concern over the size of the threshold; they think it should be indexed to the same personal allowances as Income Tax.
Frank Haskew of the ICAEW tax faculty stated that the proposed exemption would be of little help to small businesses. He stated that many of them wouldn’t be paying tax anyway. His words on the digital tax threshold: “the exemption should be set at a level of turnover where most businesses are likely to be paying tax.”