Will the House of Lords slow the MTD juggernaut?

24 February 2017

It’s been a few weeks since our last blog on Making Tax Digital (MTD), and it’s time for another update on what’s been happening within the Government juggernaut. There’s been a flurry of activity lately, so I’ve outlined what’s been going on:

Our local MP forwarded our letter to Jane Ellison at HM Treasury.

The good news is that she replied. The bad news, it was the rhetorical party line we’ve already seen time and again from those in charge of the runaway train.

The Treasury Select Committee published a report full of warnings and challenges in anticipation of the draft MTD legislation being published.

It noted it was taking the unusual step of publishing a report …without having had the opportunity to hear evidence from the Government since the legislation and consultation feedback had not, at that time, been published.

The House of Lords Economic Affairs Committee has set up a sub-committee to investigate MTD and the draft legislation being brought forward.

Deadlines for written evidence have now passed. On 22 February Theresa Middleton, Jim Harra and Lucy Pink (all of HMRC) bear witness to the committee at the Palace of Westminster.

The Committee will publish its report at the end of March.

With brinkmanship abundant, and irony entirely absent, HMRC published the outcome of their 12 week consultation at lunchtime on 31 January, meeting their promise to do so “in January”.

There were one or two concessions, including the promise of spreadsheet records surviving the cull, provided they can produce the necessary output to satisfy the digital overlords (which, of course, they’ll struggle to do unless they’re in the hands of IT whizz kids).

On the whole, though, the regime was so far down the line of implementation before the consultation period even ended that the feedback said little more than ‘thanks, but now we’re going to do what we’d already planned to do’.

The headline remains – April 2018 continues to be the intended ‘go-live’ date, even though no-one in Government seems yet to have any idea how that might be achieved.

HMRC also published, alongside their consultation outcomes, draft legislation to be incorporated in the Finance Bill 2017.

As if to stress the fact that they have no idea how any of this will work yet, the legislation is short and in overview form with most of the detail left to be filled in later on by Statutory Instrument, once they’ve decided what it should say.

Jane Ellison sent a further response to one of Andrew Tyrie’s open letters to the Treasury.

Can you guess? No substance, more rhetoric, no change of direction or listening to the warnings being offered from all directions.

I think Andrew Tyrie has given up trying to get a sensible response to his letters. In his reply he’s kept himself to half a page of A4 and a single issue; the cost estimate of the burden on small businesses. Perhaps he thinks he’ll have more luck getting one small answer at a time, rather than lambasting the whole project in each letter?

So what happens next?

Well it’s clear that the Treasury are not going to listen to reason, and are going to do everything they can to just blindly push the Finance Bill as hard as possible towards the statute book.

The Commons have the opportunity to debate the Bill, and if it makes it though the Commons, the Lords also have an opportunity to intervene in its path toward law. Royal Assent has long been a rubber stamping exercise, so unless one of those two bodies stops the Bill, MTD is going ahead in just 13 months’ time.

So there you are:

  1. Brace yourself, it’s happening
  2. If you haven’t attended one of Adam’s Xero workshops yet, get registered. They’re free, and getting rave reviews.
  3. Keep checking our MTD landing page – we’ll be keeping you up to date as things progress.

If you have any questions related to Making Tax Digital, or any of the other issues raised in this blog post, please contact me or your usual UHY adviser.