UK select committee questions timetable for digital tax reforms

By on 20/09/2016 | Updated on 24/09/2020
Andrew Tyrie, MP

A senior MP in the UK has called for more consultation before the government implements its flagship tax digitisation programme.

In a letter last week to the British chancellor, Philip Hammond, chair of the Treasury committee Andrew Tyrie MP said there was “considerable cause for concern” over many of the proposals in the ‘Making Tax Digital’ initiative, which is expected to enter the legislative process next year.

Launched in 2015, Making Tax Digital (MTD) aims to create a fully digital tax system by 2020 and transform HM Revenue & Customs into what its chief executive Jon Thompson described to Global Government Forum earlier this year as “one of the most digitally advanced tax administrations in the world”.

The government is hoping to incorporate proposals from the MTD in the 2017 finance bill and roll the programme out between 2018 and 2020.

A long-awaited consultation on the MTD proposals was launched in August – but with that consultation due to close on 7 November, Tyrie questioned whether this period of time was long enough for stakeholders to fully understand the implications of the changes and respond to them properly.

One of the key elements of the programme is a proposal to require all businesses to handle their tax affairs online. In his letter to the chancellor, Tyrie said evidence given by businesses to his committee last week revealed a “good deal of concern” about MTD and what these new accounting responsibilities would mean for small companies.

He acknowledged that the MTD proposals could improve customer experience of the tax system for “a growing number of people who are able to engage digitally”. But he warned against rushing to implement the programme without proper debate and development of the proposals.

“Implemented carefully, it could do some good. But it could also do much harm,” Tyrie wrote. “The consultation is therefore crucial. It needs to be meaningful. There may be a case for delaying the implementation of MTD.

Tyrie said there may some merit in piloting the new systems envisaged by the programme. “From this, the lessons from customers’ experiences can be learnt, and well before digital reporting is made mandatory,” he said.

“HMRC’s proposals are major changes. There remains considerable cause for concern with the proposals. Better to get it right than to stick to a rigid timetable,” he concluded.

A Treasury spokesman said in response to Tyrie’s letter: “Millions of firms already manage their tax digitally, with 98% of corporation tax returns and 99% of VAT returns submitted online.

“We recognise that the transition represents a large change for some, which is why we are introducing it gradually between 2018 and 2020, as well as giving the smallest businesses extra time to prepare. We are also exploring options to give additional financial support to help some businesses.

“Over the coming months we will continue to work with businesses and professional bodies to make sure we get a system that works and that is fit for the twenty-first century.”

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See also:

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Officials must be free to challenge ‘group think’, says UK civil service chief


About Ben Willis

Ben Willis is a journalist and editor with a varied background reporting on topics including public policy, the environment, renewable energy and international development. His work has appeared in a variety of national newspapers including the Guardian, Daily Telegraph and Times, as well as numerous specialist business, policy and consumer publications.

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