Peers urge delay to Making Tax Digital

 In News

Members of the House of Lords (HoL) have urged the Government to delay implementation of the new Making Tax Digital scheme.

Peers have asked that the initiative be delayed until 2020, following the conclusion of a comprehensive pilot scheme.

What concerns do peers have about Making Tax Digital?

HoL representatives have described the Government’s predicted “tax gap” as “fragile and not based on adequate evidence”.

Initial estimates predicted this change would cost business owners – including SME owners, freelancers, contractors and landlords – £280 each. Peers dispute this figure, estimating it would be much higher in practice.

Lord Hollick, the HoL Economic Affairs Committee chairperson, said: “Many small businesses and landlords are simply unaware of or not ready to cope with the additional administrative and financial burdens that will be imposed by digital taxation.”

Peers have also called on the government to:

  • Make quarterly tax reporting optional for businesses with turnover below the VAT threshold
  • Think again about whether businesses with an irregular income (such as seasonal businesses) should be included

Philip Hammond gave some ground in last month’s budget. The Chancellor promised to delay the implementation of quarterly reporting for businesses whose turnover is below the VAT registration threshold.

Under the Making Tax Digital plans, businesses will be required to administer their tax records in a specific digital format and submit tax returns on a quarterly basis.

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