HMRC plans ‘year-long’ Making Tax Digital pilot

HMRC has confirmed plans to undertake a year-long pilot of Making Tax Digital for ‘hundreds of thousands’ of taxpayers following criticism at the hands of MPs in the Treasury Committee

The tax authority is currently committed to having Making Tax Digital fully operational by 2020, with the pilot scheme to run from April 2017 until April 2018.

The current plan is to start quarterly reporting from April 2018 for landlords and self-employed, with micro businesses next to come online.

Last week, the Treasury Committee criticised HMRC in a 50-page report, which called for a delay to the project’s implementation. The introduction of the entire Making Tax Digital should be pushed back ‘until at least 2019/20, possibly later’, the committee said. 

In particular, the committee called for more substantive and wide-ranging pilot schemes, highlighting that while HMRC had undertaken pilots of its own, businesses participating do so at HMRC’s invitation. The committee harbours concerns that such an invitation-only model may undermine the value of information collected as businesses which could be adversely affected are more likely to decline.

Software developers have also been invited to participate in the pilots, by asking their clients to sign up to trials. Again, this is arbitrary and it is difficult to tell how many businesses have actually signed up.

In the first six months of 2017, testing is scheduled for digital reporting of income from letting property, while participating taxpayers are to report additional sources of income through their digital tax accounts.

An HMRC spokesperson said: ‘Many businesses find it hard to get their tax bills right. Making Tax Digital will modernise the tax system, helping them get their tax bills right with the least administrative burden.

‘We’ve consulted business at every step and have already made changes as a result to exempt the smallest businesses and pilot the programme with hundreds of thousands before it is rolled out.

‘We welcome the committee’s support for the digitisation of the tax system, and will consider its recommendations carefully.’

Calum Fuller |Assistant editor, Accountancy magazine (up to 2018)

Calum Fuller is former assistant editor of Accountancy magazine and Accountancy Daily, published by ...

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