Evidence of high costs could halt Making Tax Digital
Jim Harra, HMRC’s director of customer strategy and tax design was the key speaker at the 2016 Hardman lecture, given at the ICAEW headquarters in London.
Among a range of topics, Harra talked about Making Tax Digital and answered a number of questions from the floor. The head of taxation at ACCA, Chas Roy-Chowdhury, asked about the level of costs that taxpayers would be expected to bear during the implementation of MTD. However, the majority of questions concentrated on the implications of MTD for small businesses.
A number of accounting firms gave examples of clients with small businesses who are used to submitting their records once a year and do not use any accounting software packages. MDT will mean that such companies will either have to sort out their own figures or pay an accountant four times a year to prepare the quarterly reports. This could mean that costs would rise from approximately £500 per year to sums well in excess of four figures, amounts that small businesses may not be able to afford.
Harra accepted that there will be transitional costs, but HMRC does not yet have sufficient data to assess the full impact of implementing MTD. He stressed that was the reason why HMRC was keen on consulting widely because this was the best way to understand the true costs. Only then could government decide whether there should be assistance towards the costs of delivering MTD. Harra also pointed out that anyone who already uses accounting software may well find their costs decrease rather than increase. He assured his audience that if MTD cost small businesses as much as £2,770, an amount suggested by one of the questioners, then he would definitely ‘go back to the drawing board’. The aim was that by keeping digital accounting records, small businesses would benefit in the long term.
Accentra Technologies have a wide range of cloud-based payroll and accounting systems which will help users comply with the MTD implementation. Contact Accentra for more details.