Government freeing of small
businesses from new reporting rules backed by Tax experts
THE Chartered Institute of Taxation (CIOT)
has welcomed HMRC's decision to exempt many small businesses from new Tax
reporting obligations, laid out in a series of consultations by the Government.
The Institute also welcomed confirmation in the consultation documents that
people considered to be digitally excluded will be exempt from obligations under
the new Making Tax Digital (MTD) project. Furthermore, the CIOT supports HMRC's
plan for a 'soft landing' on penalties during the first year for businesses when
it comes to fulfilling their new MTD obligations.
The CIOT will now begin a detailed assessment of the 6 consultation papers on
MTD that have been issued by HMRC.
Adrian Rudd, Chair of the CIOT's Digitalisation and Agent Strategy Working
Group, said:- "We welcome the announcement that small unincorporated
businesses will be exempt from the requirement to keep digital records and
quarterly reporting, and the deferral of mandatory MTD reporting for the next
tier of small businesses. It is a step in the right direction in terms of HMRC
taking into account that all businesses in the UK do not have the same time,
resources or ability to manage such a huge change.
The CIOT has had significant dialogue with HMRC since the MTD proposals were
announced. We look forward to engaging with our members and HMRC on the detailed
policy design of MTD so that it works effectively for Taxpayers, agents and HMRC.
The proposals remain ambitious and wide ranging, and the CIOT encourages HMRC to
take heed of feedback received to date, and during the consultation process, to
ensure that MTD is fully tested and fit for purpose for those larger businesses
who will have to comply from April 2018 onwards."
Today is the start of the formal consultation period but HMRC has been engaging
with stakeholders such as CIOT since MTD was announced last year. HMRC has said
that much of the content of today's consultations has been informed by that
Adrian Rudd, said:- "Just because someone can use a smart phone to make
calls and send text messages, does not mean that they will be able to keep
accounting records on a smart phone or other digital device. HMRC must not
underestimate that many people have difficulty using technology, and it is
reassuring that HMRC have confirmed both that those who are digitally excluded
will be exempt from MTD, and that there will be a 'soft landing' on penalties
during the first year of a business's MTD obligations. Financial support will
also be available to some businesses to enable the transition to MTD.
We also welcome the parts of the consultation on simplifying elements of the Tax
system, a system that is becoming increasingly complex, even for individuals and
businesses with the most straightforward of affairs.
Even with reduced complexity, many Taxpayers will continue to use agents to file
their returns, for instance because they remain fearful of making a mistake, or
because they would rather concentrate on running their business. MTD needs to
allow Taxpayers the choice of authorising their agent to do as much or as little
as the Taxpayer instructs them to do, and development of MTD for agents must
keep pace with that for Taxpayers themselves. HMRC's plans to allow agents to
access their client's accounts through third party software is welcome, but
Taxpayers might need assistance at a more granular level, such as basic
recording keeping and submission of quarterly updates, and agents should be able
to assist with that, too."