The deadline set by HMRC for the digitalisation of tax is ‘unachievable’ according 76% of tax professionals in a survey revealed by Brewer Morris.
The survey identified that the 76% of respondents felt that the deadline of 2020 is ‘unrealistic and unachievable’ due to the lack of resources at HMRC and the time required to develop systems. However, there is support for tax digitalisation, from 69% of respondents.
Also, many regarded how the implications of Brexit will be dealt with as there is a shared view that the upcoming changes will cause an additional administrative burden and a major technology shift. Experts have also informed MPs previously that the Making Tax Digital project must be reset.
Matthew Gravelle, partner at Brewer Morris, said: “Tax digitisation is clearly a hot topic among tax professionals in the UK. Respondents to our survey clearly feel that HMRC could provide more support and advice as well as setting a more achievable deadline.”
There were particularly strong opinions from those working in SMEs and owner managed businesses, with the majority suggesting that a revised deadline of 2025/26 is more ‘realistic’ and would give businesses enough time to implement relevant software, train staff and iron out potential issues to ensure a smooth process.
Dawn Register, BDO tax partner, told Accountancy Age that she agreed with the sentiment towards a more digital tax system, however there are multiple, serious concerns to be broached by HMRC.
“Unlike online personal banking, tax is incredibly complex and doesn’t lend itself to DIY way of working,” said Register. “How will vulnerable people be dealt with? What about security, of if the systems are down and HMRC doesn’t pick up the phone?”
If these and other concerns are not dealt with, then Register wants “flexibility” on the current deadlines outlined by the taxman. “They have to be [flexible]. It will affect small businesses and the economy”
Additionally, the survey found that the biggest challenges the tax professionals faced were organisational; hiring IT literate staff; quarterly reports; resource investment; cultural resistance; and cost management. Also, some tax professionals stated that HMRC are using this to increase revenue via penalties.
Matthew Gravelle added: “It will be interesting to see what responses HMRC receive because of the six consultations that are currently in process, and whether HMRC put specific concessions in place to help companies deal with the change in processes before the deadline.”
In the same research, 94% of tax professionals do not feel that the plans put their jobs at risk due to the opportunity potential that it provides, including consultancy work.
Some 143 tax professionals were surveyed across various disciplines and seniority. Full details of the research will be published in an upcoming report available in December by Brewer Morris and Vacancysoft.
Following the government’s removal of the Making Tax Digital clauses from the Finance Bill, have we seen the last of the digital tax initiative? Brian Palmer of the AAT is confident of its resurrection post-election
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
ACCA and the ICAEW welcome the decision, which provides an opportunity for the measures to be discussed in full following the general election on 8 June