Results of a survey of members of the Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT) have reinforced the two bodies’ concerns that the timescale for implementing compulsory digital record keeping is unrealistic and must be delayed.
Many tax professionals believe that businesses will require substantial assistance in managing the move to digital record keeping and the concerns about taxpayer compliance led to an overwhelming majority of survey participants calling for an extension to the deadline.
Key findings in the survey included:
·89% of members believe that the timeframe for implementing quarterly reporting should be extended to help businesses.
·95% consider that compulsory digital record keeping and quarterly reporting will place an additional burden on businesses.
·90% consider that compulsory digital record keeping and quarterly reporting will place an additional burden on their own practice.
·33% report that at least three-quarters of their clients will need to move from paper/hard copy accounting records to digital records.
·Over 50% thought that the vast majority of their clients will need help moving to digital record keeping.
·68% consider that the vast majority of their clients will need help with their MTD reporting obligations, including filing their quarterly updates with HMRC and completing their ‘End of Year’ activity.
·87% called for the £10,000 exemption from mandatory reporting under MTD to be increased. Some even suggested that the VAT registration threshold of £83,000 is a better level.
John Cullinane, CIOT’s Tax Policy Director, said:
“Taxpayers will need considerable support and guidance to avoid a major struggle to make the move to digital record keeping and quarterly reporting because the timetable is unrealistically tight.
There is widespread agreement that digitisation can bring efficiency and other benefits to HMRC and taxpayers alike. The Government appears to be forcing the pace in the belief that requiring even very small businesses to ‘go digital’ in a tight timescale will transform their record keeping and reduce the tax gap, helping HMRC to recoup its investment in the project. Our survey results heighten our fears that this current aggressive approach by HMRC may have the opposite effect, with more haste meaning not just less speed, but maybe even see compliance levels go in the wrong direction.
There is a significant risk that small businesses will fall into non-compliance, whether deliberately or inadvertently, unless HMRC reconsiders the timetable for mandating MTD.”