Is Brexit going to affect the aim of Making Tax Digital (MTD) by 2020 and when will the consultation documents be released?
In the March 2015 Budget, the government announced their plans to reduce the burden on taxpayers and ensure that a transparent and accessible tax system is in place. As a result, Making Tax Digital was introduced with the vision to be fully implemented by 2020.
The aim of the new tax system is to allow businesses and taxpayers to register, file, pay and update their information digitally 24/7, 365 days a year. HMRC will collect and process information affecting tax in as close to real time as possible, stopping tax due or repayments owed from building up. Taxpayers should be presented with a complete financial picture of their tax affairs in their digital account, able to see and manage all of their liabilities and entitlements together for the first time and equalling the end of the tax return as we know it.
So will HMRC meet the 2020 deadline?
Well... the initial consultation documents where due to be released alongside the March 2016 Budget, but after some doubts were raised the date for their release was postponed. The release was then lengthened by the Panama Papers and now even more so by the EU referendum. So, what now?
Rebecca Benneyworth, tax expert and member of HMRC’s digital advisory group recently stated in an interview with AccountantingWeb, “It’s not HMRC’s fault that politically it was decided not to do it before the vote but they’ve got an even bigger mountain to climb now. We’ve got three months to talk about it, but by then we’re already into the autumn. That’s very late to start building stuff. HMRC has got a stakeholder event in the third week of July; they’re bound to want the consultation documents out before that, so that they can do a little bit of litmus testing.”
So, if Rebecca is correct, we should expect some of the consultation documents to be released in the next week or so.
Brian Palmer, AAT’s tax policy advisor has outlined three ways which HMRC could choose to deliver the MTD roadmap. One route is to release the consultations as planned and continue with the current plans. The second is to create a hybrid consultation taking key elements from each paper. The third option is to postpone the dates by “at least one tax year”.
He finalizes his commentary with what could be a reference to Britain’s exit of the European Union... “While HMRC would like to carry on with MTD as part of business as usual; there is always the possibility that if Ministers’ priorities lie elsewhere and that as a consequence the transition into HMRC’s brave new world might slow.”
There are various ways in which MTD may change over the coming months, HMRC may decide to continue with their pre-Brexit plan or possibly even alter the vision entirely. Nevertheless, why we await the next steps in the MTD plan it is important to ensure at a time of change, business goes on as usual. If you would like to discuss your tax requirements further please contact do us on telephone: 024 7651 8555 or 0121 711 2468.