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Making Tax Digital
HMRC have issued a series of consultation documents outlining further plans for the government's Making Tax Digital (MTD) initiative.
HMRC have published six consultation documents on MTD. The six consultations set out detailed plans on how HMRC propose to make tax digital and to simplify the tax system. The consultations look at the following areas:
- How digital record keeping and regular updates will operate - this considers compulsory digital record-keeping and quarterly 'updates' to HMRC and an End of Year declaration within nine months of the end of the period of account.
- Options to simplify tax for unincorporated businesses, including changes to basis periods, extending cash basis accounting and reducing reporting requirements for unincorporated businesses.
- Extending cash basis accounting to unincorporated property businesses.
- Voluntary pay as you go arrangements, where taxpayers can pay what they want when they want, subject to the normal payment on account rules. Regular direct debit arrangements and quarterly payments on account are also being considered.
- Changes to tax administration, including changes to the enquiry regime, penalties for late submission of quarterly updates and End of Year declarations and also the late payment of tax.
- How HMRC will make better use of the information which they currently receive from third parties, including updating of PAYE codes more regularly and coding out of bank interest via PAYE.
Commenting on the plans, Jane Ellison Financial Secretary to the Treasury said:
'This new system will make the UK's tax administration more efficient and straightforward and will offer businesses greater clarity when it comes to paying their tax bills.'
However professional bodies have expressed their concerns about HMRC's proposals. Frank Haskew, Head of the Tax Faculty at the Institute of Chartered Accountants in England and Wales, said:
'This is not the time to be rushing through fundamental changes to business processes that are likely to result in major upheaval and extra costs, especially when the business benefit to the UK has not been clearly demonstrated.'
Under the Government's plans, the changes to the tax system will be introduced gradually between 2018 and 2020. We will keep you informed of developments.
Internet link: GOV.UK MTD