It's time for a conversation on MTD, writes Paul Aplin (ICAEW and A C Mole & Sons)
I have written in Tax Journal a number of times about making tax digital (MTD). My view all along has been that digital technology holds great potential for improving tax administration and compliance, but that it must be introduced in a way that avoids creating yet another administrative burden for small and micro businesses. That view has been widely shared.
One of the first decisions the new Financial Secretary to the Treasury, Mel Stride, took was to narrow the scope of MTD to VAT reporting for VAT registered business with sales below the VAT threshold, with no further rollout until April 2020 at the earliest. That very welcome decision recognises genuine concerns and creates time for the market to drive take-up of digital record keeping and for an extended pilot programme.
The MTD clauses inevitably featured in the second reading of the Finance Bill on 12 September. The minister reiterated that the government will not mandate MTD for other taxes until it is clear that the programme has been shown to work well and added that there would be an opportunity for businesses to use the system voluntarily as the pilot progresses. I hope that businesses and agents will take full advantage of that opportunity, as it represents a real chance to influence the shape MTD takes and to help ensure that it delivers for businesses as well as HMRC.
As the minister was making his comments on 12 September, HMRC was holding its annual stakeholder event at HM Treasury. At that event, HMRC’s chairman Edward Troup said that a conversation was needed to take MTD forward. I asked how we could best start and then maintain that conversation. Jon Thompson felt that it was important for HMRC to go out to talk to businesses in order to try to understand their perspective. He is absolutely right. Every time we have been able to facilitate such contact, agents, businesses and HMRC have gained from the process.
At my firm we have invited HMRC to join – as ‘observers’ – our regular in house sessions on MTD and digital developments. They hear at first hand our discussions on software and apps; on what we like and what we don’t; on what works and what doesn’t; on client reactions and on marketing, pricing, client support, training and recruitment. The more we can help HMRC understand the practical and technical issues involved, the more chance there is of MTD going with the grain of business needs. That is just one example of how a conversation can develop.
Similar conversations are taking place between the ICAEW Tax and IT faculties and HMRC.
We are at a tipping point in the use of digital technology, where software and apps and the platforms they run on hold potential advantages for even some of the smallest businesses. MTD may be one catalyst for change, but it is not the only one: the market will (and should) be the most powerful driver. Increasing numbers of businesses will use digital tools to get the information they need and the tax information HMRC needs will emerge as a by-product. A natural momentum will build.
The minister has said clearly that further mandation is off the table until the programme has been shown to work. That is precisely what many of us asked for, while emphasising we were in favour of better use of digital technology. It is now time to focus on realising the potential the technology holds and for an extensive, open dialogue between businesses, agents, professional and representative bodies, software developers and HMRC. A conversation in fact.
Home >Articles > Making tax digital: where are we now?
Making tax digital: where are we now?
It's time for a conversation on MTD, writes Paul Aplin (ICAEW and A C Mole & Sons)
I have written in Tax Journal a number of times about making tax digital (MTD). My view all along has been that digital technology holds great potential for improving tax administration and compliance, but that it must be introduced in a way that avoids creating yet another administrative burden for small and micro businesses. That view has been widely shared.
One of the first decisions the new Financial Secretary to the Treasury, Mel Stride, took was to narrow the scope of MTD to VAT reporting for VAT registered business with sales below the VAT threshold, with no further rollout until April 2020 at the earliest. That very welcome decision recognises genuine concerns and creates time for the market to drive take-up of digital record keeping and for an extended pilot programme.
The MTD clauses inevitably featured in the second reading of the Finance Bill on 12 September. The minister reiterated that the government will not mandate MTD for other taxes until it is clear that the programme has been shown to work well and added that there would be an opportunity for businesses to use the system voluntarily as the pilot progresses. I hope that businesses and agents will take full advantage of that opportunity, as it represents a real chance to influence the shape MTD takes and to help ensure that it delivers for businesses as well as HMRC.
As the minister was making his comments on 12 September, HMRC was holding its annual stakeholder event at HM Treasury. At that event, HMRC’s chairman Edward Troup said that a conversation was needed to take MTD forward. I asked how we could best start and then maintain that conversation. Jon Thompson felt that it was important for HMRC to go out to talk to businesses in order to try to understand their perspective. He is absolutely right. Every time we have been able to facilitate such contact, agents, businesses and HMRC have gained from the process.
At my firm we have invited HMRC to join – as ‘observers’ – our regular in house sessions on MTD and digital developments. They hear at first hand our discussions on software and apps; on what we like and what we don’t; on what works and what doesn’t; on client reactions and on marketing, pricing, client support, training and recruitment. The more we can help HMRC understand the practical and technical issues involved, the more chance there is of MTD going with the grain of business needs. That is just one example of how a conversation can develop.
Similar conversations are taking place between the ICAEW Tax and IT faculties and HMRC.
We are at a tipping point in the use of digital technology, where software and apps and the platforms they run on hold potential advantages for even some of the smallest businesses. MTD may be one catalyst for change, but it is not the only one: the market will (and should) be the most powerful driver. Increasing numbers of businesses will use digital tools to get the information they need and the tax information HMRC needs will emerge as a by-product. A natural momentum will build.
The minister has said clearly that further mandation is off the table until the programme has been shown to work. That is precisely what many of us asked for, while emphasising we were in favour of better use of digital technology. It is now time to focus on realising the potential the technology holds and for an extensive, open dialogue between businesses, agents, professional and representative bodies, software developers and HMRC. A conversation in fact.
