The Finance Bill Sub-committee has published its report on the Draft Finance Bill 2017: Making Tax Digital for Business. The report recommends that the Government should delay the digitisation of tax for businesses until 2020.

The Sub-Committee has recommended a number of amendments to the Bill to ensure the policy can be implemented effectively:

• Revise and improve its assessment of Making Tax Digital’s benefits and costs 

The Government's estimate of the 'tax gap' savings are fragile and not based on adequate evidence. The assertion that the scheme will initially cost businesses £280 does not reflect the reality of the initial expenses businesses will incur.

• Delay the scheme until 2020 to allow a full pilot

This delay will allow the Government to test whether Making Tax Digital does reduce taxpayer errors, assess the actual costs to business, and receive valuable feedback from business users. It also gives the Government time to raise awareness and put in place support systems for those who lack digital skills.

• Make keeping digital records and quarterly reporting optional for businesses with a turnover below the VAT threshold

For smaller businesses the requirement to report quarterly to HMRC will impose an unnecessary burden, and will be of limited use.

• Look again at which businesses are included in the scheme

The Government should examine whether some kinds of business, such as those with seasonal or highly irregular income, should be outside the scheme.

You can read the report in full on the UK Parliament website.

Got a Question?

The team at Johnston Carmichael will be keeping a close eye on digital tax developments and will provide you with regular updates on HMRC’s digital agenda. Visit our dedicated Making Tax Digital page for more information.

If you have any questions in the meantime, please get in touch with me at Susie.Walker@jcca.co.uk or your usual Johnston Carmichael contact.