Government removes Making Tax Digital from Finance Bill 2017

Government removes Making Tax Digital from Finance Bill 2017

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

Legislation to implement the government’s Making Tax Digital initiative has been removed from the Finance Bill 2017, ahead of the debate on the bill in the House of Commons today.

Following Theresa May’s announcement of a general election on 8 June, the CIOT wrote a letter to chancellor Philip Hammond, urging the government to reduce the bill to its core elements, thus allowing complex measures to be debated after the election has taken place.

ACCA welcomed the decision to drop Making Tax Digital. Chas Roy-Chowdhury, head of tax at ACCA, said: “ACCA has raised some serious concerns about the implementation plan for MTD, and we advised at last week’s Treasury Select Committee hearing that it be delayed until after the general election to ensure that there is time for full and comprehensive debate.”

The ICAEW said that the decision to remove the Making Tax Digital regulations was “sensible”.

Anita Monteith, ICAEW tax manager, commented: “This is a sensible decision by government. Making Tax Digital plans remain controversial and need more scrutiny by those who will be affected, and most importantly proper parliamentary debate – a clear roadmap as to how MTD will work in practice is needed.

“MTD is not coming into effect until April 2018, and the announcement of the general election on 8 June 2017 provided an opportunity to withdraw these clauses and Schedule from the Finance Bill which will be debated today and likely to be enacted on 27 April. These seminal clauses and Schedule can be reintroduced after the election which will allow more time for proper scrutiny. Pending reintroduction of the provisions after the general election, the government should prioritise addressing the detailed questions that have been raised about how MTD will work in practice. We believe that this is a logical and pragmatic decision which will help ensure the government gets MTD right the first time.

David Truman, tax partner at Menzies, debated whether the government’s deferral would be temporary or a more permanent measure. He said: “The government’s decision to defer this legislation could be very good news. However, it is unclear if this is a temporary deferral pending a second finance bill after the election or whether it will be more permanent. If this is a temporary deferral, those affected will have even less time to prepare for the legislation and will be left floundering in an information vacuum. It would be far preferable if the government had set a timescale for the deferral – a minimum of one year.”

Other measures to be dropped from the Finance Bill include changes to non-domicile rules and inheritance tax amendments to UK residential properties.

Nimesh Shah, partner at Blick Rothenberg, the London-based accounting, tax and advisory practice, said that it was “unbelievable” to remove the tax provisions.

“It is unbelievable that such important provisions have been dropped at the 11th hour, after the painful amount of work that has gone into the process to finalise the legislation. It is even more disappointing for those non-domiciled individuals who were readying themselves for the changes and arranging their affairs in the run-up to the end of the (5 April 2017) tax year,” said Shah.

“Non-domiciled individuals will now face a period of limbo, waiting for the outcome of the election and publication of the second Finance Bill. This will be the second time in three years that we will have two Finance Acts in a year, adding to yet more tax legislation.

“Moves like this create unstable and complex tax policy, and the government needs to put politics to one side in the interest of certainty for taxpayers,” Shah added.

 

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

Professional Services Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine

Accounting Firms Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021

Making Tax Digital Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource