Danny McCance 27 Jun 2018 10:38am

Calls to delay Making Tax Digital

The British Chambers of Commerce (BCC) has called for Making Tax Digital (MTD) to be delayed after finding almost a quarter of UK businesses (24%) have not heard of the programme

Less than a year out from its introduction, only one in 10 businesses surveyed said they knew “a lot of details” on the switch to a digitised system, according to research from the BCC and Avalara.

The majority (66%) of business surveyed said they only know “some details” or only knew the Revenue’s flagship programme by name, while 25% of those that know about it have made no preparations.

MTD was one of 39 projects on a list given to MPs at the beginning of this month that HMRC may have to put on hold to focus on Brexit, which could cost the Revenue “billions”.

“The government’s aim to modernise the UK’s tax system is admirable, but in view of low business awareness and the impending challenges of Brexit, it would make sense for HMRC to delay the implementation of MTD in order to get this change right,” said Mike Spicer, director of economics and research at BCC.

He said that ministers must “face up to the reality” of what HMRC is up against and delay implementation to allow it to support businesses through the immediate issue of Brexit.

“The government has been consulting and engaging with businesses, agents and representative bodies since MTD was first announced in 2015 to ensure it is a success, raising awareness and ensuring stakeholder views inform the design of the service,” a HMRC spokesperson said.

The Revenue says it will continue to work with small businesses, stakeholders and the accountancy profession to ensure everyone knows what is required.

Under the new programme, VAT-registered businesses are expected to meet their VAT obligations if turnover is above the VAT threshold by April 2019.

Based on the success of the programme, the scope for MTD could be widened, but not before April 2020 at the earliest.

It is a significant change in the way HMRC is to address the part of the tax gap caused by taxpayer error, which currently stands at £9.2bn for 2016 to 2017.

The research also suggested that businesses are dissatisfied with support from HMRC.

When asked to rate the overall service, 60% gave the Revenue a three out of five, and only 6% of those who claim to know about MTD have contacted HMRC for advice – compared to 51% who contacted an accountant.

A report from the Public Accounts Committee in January said HMRC may have “bitten of more than it could chew” in regards to the transformation project (of which MTD is a part).

Following stakeholder feedback the government made significant changes to the timetable and scope of MTD in July.