There have been more calls for the government to delay Making Tax Digital. Most accountancy and small business organisations, Landlord’s associations, the National Union of Farmers and online accountancy companies like Zooconomics are already against Making Tax Digital.
The latest group to ask the government to delay Making Tax Digital are the House of Lords Finance Bill Sub-Committee. They have released a highly critical report on Making Tax Digital and have written to both Theresa May and the chancellor, Philip Hammond, calling for Making Tax Digital to be delayed.
The House of Lords committee agreed with many of the points we at Zooconomics, and others in the accountancy profession, have been making. Their central points are:
- The government’s calculations on how much extra tax will be paid as a result of introducing Making Tax Digital do not add up.
- The government’s estimate of how much Making Tax Digital will cost small businesses are wrong
- Seasonal businesses such as farming and tourism are going to be heavily hit by Making Tax Digital and should be excluded
- Not enough thought has been out into looking after ‘digitally excluded’ businesses who do not have the skills or a fast enough broadband connection to file their accounts online
- The software that Making Tax Digital relies on is not ready yet and HMRC has not provided the software companies with the information they need to make it
- HMRC’s publicity campaign around Making Tax Digital is very poor and most businesses don’t know about it yet
- HMRC are promising lots of support for small businesses to adjust to Making Tax Digital but it is unclear how they are going to do this
Are the government listening?
Perhaps the most damning part of the House of Lords report is when they talk about the government’s consultation process. They say that:
“Not consulting stakeholders at the outset of the policy development process constituted a failure to comply with the Government’s own guidelines on tax policymaking”
The Lords go onto say that while the HMRC were holding consultation’s on Making Tax Digital to listen to industry opinion there is a difference between ‘hearing and listening’. In other words the government has been told about the problems with Making Tax Digital but is ignoring them and ploughing on regardless.
What the Lords want
The House of Lords main recommendation is that the government should delay Making Tax Digital until at least 2020. They want a proper pilot programme to be put in place and to allow time for the software and HRMC support systems to be made ready.
At Zooconomics we think that the government should go further and scrap Making Tax Digital entirely. It is a badly thought out plan based on dodgy evidence which will cause havoc among small businesses and the self-employed.
#saynotoMTD – Find out how you can join our campaign to Say No to Making Tax Digital
You can find the full House of Lords report and their letters to Theresa May and Philip Hammond asking them to delay Making Tax Digital at http://www.parliament.uk/business/committees/committees-a-z/lords-select/economic-affairs-finance-bill-sub-committee/news-parliament-2015/finance-bill-report-published/