Making Tax Digital: AAT comments on Government consultation responses

Adam Harper, Director of Strategy & Professional Standards at AAT
Tuesday 31 January 2017 - 17:00

Earlier today (31 January 2017) the Government published a series of consultation responses relating to Making Tax Digital (MTD), the £1.3bn programme to make HMRC the most digitally advanced tax administration in the world by 2020.

AAT (Association of Accounting Technicians) has provided initial comment on the hundreds of pages of Government documentation, and is committed to providing detailed comment in due course.

AAT has indicated that there is much to be commended in the Government’s responses, for example, exemptions for charities; a commitment to look again at late payment penalties; clarification that spreadsheets can be used for data capture and to record receipts and expenditure - a concern for many AAT members and their clients - and that businesses will have the freedom to move from cash basis to using the accruals basis in light of concerns from increasing thresholds.

However, concerns about the overall MTD threshold and timescale remain.

With regard to the Government’s original suggestion that only companies with an annual income of £10,000 or less should be excluded from MTD, and proposals from various other organisations that the threshold should be higher, the Government response states that more time is needed to consider these issues and that “…final decisions will be made before legislation is laid later this year.”

Adam Harper, Director of Strategy & Professional Standards at AAT, said:

“AAT was the first to suggest that the qualifying threshold for MTD should be set at the current VAT threshold of £83,000, falling to the personal allowance of £11,000 over a three-year period.”

This phased approach will assist SMEs whilst simultaneously helping HMRC achieve the best possible policy outcome. Revenue implications are minimal, and yet the phased process of implementation would significantly increase the effectiveness and value for money of the programme.

Adam Harper added:

“It’s good that our proposal is still being considered, but we have repeatedly expressed concerns about a tight timescale for the implementation of HMRC’s plans and we are not sure how a further delay to the decision-making process will help - unless it comes with an overall delay to implementation.”