Knowledge

Making Tax Digital: Our response to the consultations

Posted on Nov 4th, 2016 | Tax

HMRC are in the midst of their huge Making Tax Digital (MTD) programme which aims to massively simplify and digitise the tax process for businesses and individuals. As part of that work, this summer HMRC published a raft of consultation documents on how the detail of MTD should work when the compulsory elements start arriving from April 2018.

We have been engaging with HMRC throughout the consultation, attending events and working with their researchers, to ensure all of our knowledge about small businesses can be accurately fed in.

We have also involved expert colleagues from across Crunch to prepare a written consultation response. You can download the whole response here, but here are the highlights:

    • We believe HMRC should provide and enforce a kite mark for MTD compatible software. This will ensure trust in the system and help to prevent scammers setting up dummy ‘MTD compatible’ sites to harvest user data.

HMRC needs to lead on providing clear publicity to taxpayers, supported by communications from all those who will be providing data (e.g. banks & pension providers) as well as agents like Crunch.

We do not believe spreadsheets can nor should be classified as meeting the requirements of modern ‘digital record keeping’ as they cannot provide the necessary resilience, checks and connectivity.

We believe that users should be able to send updates to HMRC whenever they choose, including in real time, so that their workflows aren’t affected. Thus a user choosing to provide real time updates to MTD shouldn’t ever need to complete a special ‘quarterly update’ screen.

We believe that Making Tax Digital should be mandatory only for those earning over the personal tax allowance. This is an easy and logical threshold at which to start. We propose those earning between that level and £30,000/year should be given an extra 1-2 years grace for transition. Charities with no tax liabilities should in our view be exempt.

We support HMRC’s proposals to simplify and align the penalty schemes to work in the same way across all forms of tax.

We hope government may respond to the consultation and set some clear guidance in time for the Autumn Statement later this month, we will keep you posted.

 

Useful tools and resources

Business guides

From understanding expenses to starting a limited company, we've a range of jargon-free business guides for you to download and keep.

Invoicing software and templates

Create, send and store sole trader invoices in a snap with our free invoice software. You can also download a selection of invoice templates for all business types.

Take-home pay calculator

Use our Take-Home Pay Calculator to work out your true earnings and see if you could save money with a different company set up.