17 March 2017
On Friday 17 March, slightly ahead of their loose deadline of the end of March, the subcommittee of the House of Lords Economic Affairs Select Committee published their report into the Government’s proposals on Making Tax Digital (MTD). There are, I’m afraid, no prizes for guessing what their findings were, since they include:
- rubbishing the estimations of how MTD will close the tax gap, calling them “very fragile and little more than guess work”;
- rubbishing the estimation of the cost impact on businesses, and calling for a much fuller and stratified assessment of the cost/benefit analysis on businesses;
- proposing exemptions for diversified or seasonal businesses, citing in particular agricultural businesses;
- noting the widespread ignorance of MTD amongst the business sector as a whole, and calling for a structured information and education campaign as part of the roll out;
- noting that the software businesses intended to be providing the services for the trial starting in 3 weeks don’t even have HMRC’s APIs or criteria as yet, leaving them hamstrung in their ability to write suitable programmes;
- calling for a proper pilot scheme lasting until at least January 2019, and for mandatory roll out to be delayed until no earlier than Apr 2020;
- slamming the ‘consultation’ process, noting initial failures which “constituted a failure to comply with the Government’s own guidelines on tax policymaking” and calling the time available for consultation on draft legislation “woefully inadequate”.
That’s really just the tip of the iceberg. The report is a damning indictment of the process from start to finish and if it was a report published with regard to any private sector entity it would almost certainly have triggered both a dramatic drop in share price and the rolling of a few sacrificial heads from the upper management.
Philip Hammond and Jane Ellison must, by now, be the only two of the UK’s 64 million population who think that MTD in its current form remains viable.
As yet there is nothing in the House of Lords’ report to suggest an intention to block the draft legislation intended to open the door to MTD, but I’d say it reads like a last chance warning to HM Treasury to get their house in order and to start treating the universal criticism and warning over the policy with at least a small amount of respect.
It’s hard to believe things have been able to get this far without HM Treasury re-appraising the MTD roll out, and surely there must come a point where they do so?
Let’s see what next week brings, because at the moment if you blink, you’ll miss another twist or turn in this roller coaster ride.
We will of course keep you updated here on our blog, but if you have any further questions regarding Making Tax Digital, please contact me.