Making Tax Digital: Transforming the tax system through the better use of information

• AAT supports the use of third party information because, as stated in paragraph 1.6 of the consultation document, "customers will never have to tell HMRC information it already has".  
• AAT strongly disagrees with the proposal taxpayers should have to go back to third party information providers in order to get them to rectify errors.  
• AAT recommends that contractors should be brought within the scope of third party information providers for the purpose of the operation of the Construction Industry Scheme (CIS).  

General notes on the six Making Tax Digital consultations held in 2016

• AAT wholeheartedly supports the ambition to make our tax system the most digitally advanced tax system in the world. However, AAT is concerned about the timetable for implementation.  
• AAT is concerned about the costs Making Tax Digital (MTD) will place on businesses and taxpayers. A recent survey of AAT Licensed Accountants found that well over three quarters were concerned about software costs and time spent familiarising themselves with the new processes. Almost half are concerned about hardware costs and other as yet unknown costs. 
• It has been difficult to fully respond to each of the six MTD consultation documents given so much technical uncertainty remains. HMRC must delay implementation if significant technical difficulties arise rather than proceeding regardless. Proceeding under such circumstances risks both reputational damage and reduced compliance. 
• AAT favours a phased implementation programme for MTD. The threshold should be set at £83,000 (the current VAT threshold) falling to £11,000 (the personal allowance) over a three year period. This will help the business community whilst simultaneously helping HMRC achieve the best possible outcome.