In our previous post about Making Tax Digital (MTD), we spoke about how we had achieved slight success and the MTD scheme had been put off until next April. This is still the case, however it’s a bit more transparent now that the reason it was put off was because of the snap election called by Theresa May.
In hindsight, Philip Hammond’s decision to “postpone MTD until 2018” looks more like a tactical manoeuvre to delay the introduction of what would have surely been be extremely unpopular legislation, that would have impacted 4 million self-employed business owners/voters, until after the anticipated “landslide” election victory.
With a very different election outcome, the Tory party “clinging” to power and the potential for a further general election, it may be that the Government ditch the MTD proposals altogether as just too risky.
With the recent election, and with the result the Conservative party ended up with, there has been a slight reshuffle in the cabinet. Most notably, and most importantly for us, Liz Truss has replaced Jane Ellison as Secretary to the Treasury. Jane Ellison was the previous Secretary of the Treasury, however she has been replaced after she lost her seat in the general election to Labour MP Marsha de Cordova.
Liz Truss, who was previously the Minister of Justice (despite the fact she trained in accounting, not law… makes sense) has now taken on the role of sidekick to Philip Hammond. So far since the election, neither Philip nor Liz have mentioned anything about the MTD scheme. Whether that’s a good or bad thing we simply can’t say just yet.
What is Making Tax Digital?
For those of you that are unaware, MTD is a government scheme that will cost you more in taxes. The basics of it can be summarised in one point:
- Force everyone to complete 4 tax returns a year instead of 1.
On paper it doesn’t look great, and we can see this being a large expenditure for the majority of businesses. If you’re VAT registered as an Unincorporated Business, a Landlord or a self-employed Contractor/Freelancer, you will be liable to file your tax returns 4 times a year on a quarterly basis.
The government has said that this will all be possible through free downloadable software, similar to online accountancy software, which will make tax returns easier. The only problem is that it doesn’t exist yet. It’s entirely possible to use online accountancy software in this way, but the government has released no information on the technology they’re planning to use. There is much speculation on whether Philip Hammond and his team have thought this through properly and planned for it to truly benefit small businesses and the British public.
The scheme was highly criticised in both the House of Commons and the House of Lords as “Shortsighted”.
Is Making Tax Digital going Ahead?
As far as we know, the MTD scheme has still been postponed until April 1st 2018. We’re certainly not expecting them to bring it in any sooner. The villain of this piece, Philip Hammond, is still the Chancellor of the Exchequer and in charge of the treasury. The only real difference is that Liz Truss has been appointed as his trusty sidekick.
Both Mr Hammond and Mrs Truss have previous experience within accounting and finance. We would like to think this would mean that they have independent businesses best interests at heart; sadly however, it wouldn’t surprise me if that wasn’t the case.
What we need now is some clarification over what to expect in April next year. Is the government planning to go ahead with the MTD scheme? If so, are they looking to amend it in any way or will it stay the same? Can the government justify these drastic measures on small independent businesses?
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