A number of MPs losing their seats combined with a reshuffle that sees top jobs at the Treasury changing hands
means the plans are likely to go on hold.
The Government’s priority will no doubt be to review the abandoned Finance Bill 2017 which was cut by 80% to 140 pages against the planned 762 pages of legislation in order to pass it before parliament was dissolved for the snap general election. At the same time, it will be critical to make the final decisions on Making Tax Digital, particularly the thresholds, implementation dates and plans for larger businesses and limited liability partnerships.
Even prior to the election there were serious reservations about the rushed timetable for the introduction of Making Tax Digital – unincorporated businesses, landlords and the self-employed registered for VAT are due to start reporting quarterly from 1 April 2018.
There is cross-party concern about the plans, with MPs from across the House criticising the rushed nature of the implementation, lack of information about the real costs for business and criticising a general lack of understanding about how businesses operate. This is particularly true in relation to over reliance upon digital pathways that simply aren’t available in more rural parts of the UK and make it impossible for businesses to comply with the new HMRC tax reporting requirements.
It’s likely despite any delay the direction of Making Tax Digital will not itself be affected as there are significant cost and proposed revenue savings for HMRC with its introduction.
The current uncertainty leaves taxpayers and their advisers not knowing which rules to apply in many every day scenarios. In some cases, taxpayers will have made significant decisions on the basis of previous announcements and the published Finance Bill: in others, they will have had to reach decisions uncertain as to what version of the law will be applied. The inconclusive election result puts a particular question mark over the controversial plans for quarterly reporting and mandatory digital records for all but the smallest businesses.
The team here at Bedrock will of course be monitoring the situation to ensure that we continue to provide the most up to date and considered advice to accountants and their clients.
