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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:
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.
You might avoid a fine if a close relative died shortly before the self assessment deadline, you've been seriously ill, or if you had major IT problems.