AAT responds to the ‘expected’ delay to Making Tax Digital

image: Brian Palmer
Wednesday 26 April 2017 - 11:00

By Brian Palmer, tax policy expert, AAT

“Ever since the Prime Minister called the upcoming General Election, it was to be expected that there would be a delay to the Making Tax Digital (MTD) initiative. As a matter of expediency, in the rundown to an election many vital Bills are truncated on their passage through Parliament. In the case of a Finance Bill, the only sections allowed to stand after the necessary cross-party negotiations are those vital to the short-term wellbeing of the UK economy.

“The post-election scenario(s) for the future of MTD are likely to be as follows:

  • If the current Government is returned with a solid majority, the dropped clauses are likely to be inserted wholesale into an early-summer Finance Bill.
  • If the current Government is returned but in a weaker state, MTD is likely to proceed, but possibly on a slower track and not necessarily in the way set out now.
  • If the current Government is not returned, or enters a coalition, then MTD could change beyond all recognition."

“While the MTD delay may come as a blow to HMRC, there are certainly some positives to be taken from the news.

“AAT has long since been concerned about the original fast timetable for implementation. It was pleasing to hear that our suggestion of raising the initial exemption threshold for unincorporated businesses or landlords to £83,000 was adapted by the Chancellor in this year’s Budget.

“A survey of our 4,200 licenced accountants showed that 71% were concerned no time or cost savings would be delivered by MTD; while 90% had concerns over the potential corruption, misuse or loss of data that the new scheme could bring.

“This delay will allow HMRC more time to learn to public beta test the scheme and work with developers towards the filing of the first quarterly updates, to ensure that the scheme is fit for purpose. It will also give businesses in some areas of the country more time to improve their digital capabilities ahead of their requirements to complete online tax reporting.

“Whatever happens, I am very confident that in the longer run MTD will emerge in some shape or other. We remain in full support of the ambition to make HMRC the most digitally advanced tax administration in the world.”