Making Tax Digital – Letters answered, questions unanswered

7 December 2016

It has been just over a month since the seven consultation documents on Making Tax Digital (MTD) came to the end of their 12 week feedback period and ten days or so after their closure that we heard from the Chancellor that the feedback would be collated and published, alongside draft legislation to facilitate the MTD changes, in January 2017.

That, we imagined, gave the Treasury 2 months or so to collate the vast volume of information fed back and to start to draft the legislation needed to accommodate the seismic shift toward quarterly reporting. It seemed an optimistic timeframe – HMRC’s statistics indicated 5,200 consulted parties including 3,000 in roadshows and roundtables and the balance in written response.

A few days later though, Jane Ellison MP (recently appointed financial secretary to the Treasury, having previously been under secretary for public health) issued a response to the September and October letters from Andrew Tyrie MP to our Chancellor in which Mr Tyrie expressed his concerns and misgivings about the MTD time frames.

Her letter will be a hammer blow to all parties who’d hoped that the consultation, inter-governmental pressure and other lobbying efforts would lead to a toned down timetable and a shift to voluntary adoption. The letter does little more than recycle some 12 month old Government rhetoric about cost savings and business support, before disclosing that far from delaying the implementation:

  • A trial of 1,000 users began in October 2016;
  • A trial of 400,000 was being accelerated to April 2017; and
  • The April 2018 start date for unincorporated businesses and landlords remains.

Looking to implement trials in such a short time after the consultation ends can surely only mean that the Government have already put in place the details of the trial and started on the detail of the fuller legislation, without any intention of listening to or adopting any of the suggestions from the consultation respondents.

The fact that the trial period commences just 12 months before the fuller introduction of the regime also appears to leave little room to learn any lessons or make any changes before the scheme becomes mandatory for millions of taxpayers.

We’ve previously mooted that Andrew Tyrie was becoming the champion of the taxpayer in this regime and, in the light of this most recent letter, his intervention seems more necessary than ever. Given the absence of any substantive reaction to the many misgivings he expressed, it seems likely that we’ll be hearing more from Mr Tyrie in the coming weeks.

That aside though, the next known event in MTD will be the publication of the draft legislation and consultation feedback in January 2017. Will that provide us with any more than Ms Ellison’s letter, or is all we have to look forward to a further barrage of rhetoric surrounding a Government train trundling along its pre-defined and unchanging route?

We will find out after Christmas and will of course keep you updated but in the meantime, if you’d like to discuss how MTD affects you and your tax position, please get in touch with your local UHY tax expert or telephone the author of this blog, Graham Boar, on 01462 687333.

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