3,000 advisers respond to contentious Making Tax Digital consultations

21 Nov 2016

HMRC has received thousands of written responses to the six consultations on Making Tax Digital, the radical overhaul of the tax filing system, which is set to be rolled out from April 2018

The plans have been criticised for being too rushed by tax advisers and businesses, who are calling for a delay in the planned April 2018 rollout date for quarterly reporting for buy-to-let landlords and unincorporated businesses.

The responses are currently being reviewed by HMRC, a process which generally takes about three months following the closing date for a consultation, in this case 7 November. If the process runs as normal, HMRC is likely to report back by early February with time for further details in the March 2017 Budget.

From the outset the tax profession has called for a more measured approach to the implementation timetable but to date HMRC has repeatedly stressed that it is fully committed to starting quarterly reporting in 2018.

The final decision on the timetable may well be taken at ministerial level. An HMRC spokesperson told CCH Daily: ‘We are reviewing the responses to the consultations and Ministers will make decisions in due course.’

The consultations proposed that unincorporated businesses and landlords with annual turnover/income below £10,000 should be exempted from the requirement to keep digital records and provide quarterly updates, and asked for views on whether that threshold was set at the right level.

The £10,000 threshold was viewed as a random figure by many across business and the accountancy profession, as it did not correspond with the personal allowance of £11,000 for 2016-17, which is set to rise to £11,500 in 2017-18.

Many have called for use of the VAT threshold as the entry level point for Making Tax Digital quarterly reporting, in the preamble to the closing date for the consultations for the smallest companies.

Incorporated businesses

In August, when the bulk of the Making Tax Digital consultations were published, HMRC confirmed that further details on the approach for incorporated businesses would be published by the end of the year.

At the time, CCH Daily was told that this would take the form of a policy paper, but in the latest communication, HMRC spokesperson said: ‘We still plan to publish the consultation on incorporated businesses shortly

A policy paper normally sets out the government’s plans on a specific policy, while a consultation paper seeks the public’s views on those proposals, HMRC confirmed.