Small businesses to get a break?
Many of you who run small businesses will have heard of plans by the Treasury to implement a new tax regime. Branded rather enthusiastically as Making Tax Digital, essentially HMRC would like you to pay your tax every quarter. In other words moving much closer to the PAYE regime for employees. This scheme was due to be implemented this Autumn despite suspicions that HMRC themselves would not be ready, concerns about the software and the implications for cashflow for small businesses themselves.
In fairness, government consulted widely on the issue. Today we had a report from the Treasury Select Committee and you may be relieved to hear that it has concluded that we are all not ready for Making Tax Digital!
“In the view of the Committee, a start date of April 2018 for mandatory MTD is wholly unrealistic. Whether a start date of 2019, for the 2019/20 tax year, would be possible will depend on the exact shape of the Government’s proposals. These have yet to be published. But on the evidence that the Committee has seen so far, this also looks unlikely.”
Interestingly the Committee seem to have grasped the core issue firmly by the throat in their summary “The average cost to business of implementing MTD cannot be substantiated until there is more detail of the requirements and more examples of the software. However, the cost is likely to be significant for a small business. There will be both implementation costs and continuing costs. Evidence given to the Committee suggests that under the current timetable, the total cost to business (including software, hardware, training, agent fees and, above all, time) might exceed the total benefits in improved tax yield.” Hear hear!
It remains to be seen of course if the Treasury will take on board the recommendations of the Committee, but at least someone out there is listening!