Should HMRC Delay Plans For Digital Tax Accounts?


HMRC has already delayed the consultation about digital tax accounts until after the EU referendum on the 23rd of June, but now experts are warning that this may not be long enough. They say that in order to avoid limiting how long businesses have to respond to the consultation, the whole digital tax account system should also be delayed.

The team of accountants have said that if the digital tax system isn’t put back by a year, it’s likely that the five consultation documents will be released all at once, rather than in a series of stages. This will be the case if HMRC stays with its test launch date of April 2017.

A spokesperson for the Association of Taxation Technicians says that it believes businesses would have to respond to HMRC by September, and that the current timescale is ‘overly ambitious’. The association even went as far as to say that it would be ‘impossible’ for HMRC to fully consider views and points raised by businesses in a six month period, which is the timeframe currently set. Within six months, taxpayers would have to give their thoughts on all of the topics of the consultation- such as the scope of the system, software and penalties.

Such a short time frame of consultation could have a ‘detrimental’ effect on the final design of the system, impacting on when it will be ready to be released. This is without considering the time that it will take to develop add on systems for businesses who need assistance to comply. Back in March, a survey found that 82% of businesses will be made to change the way they store records in order to comply.

The Making Tax Digital project will be the biggest change to tax paying since the use of a PAYE system was introduced back in 1945. Going ahead with implementing it without allowing proper time for a consultation and time to test the system will put any benefits of a digital system at risk. This could potentially result in a system which is not fully fit for purpose being launched ahead of time.

Lastly, the Association of Taxation Technicians said that if the project fails, the level of embarrassment for HMRC would be ‘huge’, particularly as the Government has approved £1.3 billion of taxpayers money to be spent on implementing it.

For more information about making tax digital, contact HMRC.