Making Tax Digital: Q&A with head of tax policy at Deloitte

Making Tax Digital: Q&A with head of tax policy at Deloitte

Accountancy Age speaks to Bill Dodwell, tax partner at Deloitte and immediate past president of the Chartered Institute of Taxation about what the future holds for the government’s digital agenda

As part of a series of interviews on Making Tax Digital, Accountancy Age speaks to Bill Dodwell, head of tax policy at Deloitte and immediate past president of CIOT, about what the future holds for the government’s digital agenda.

Making Tax Digital was removed from the Finance Bill in April ahead of the debate on the bill in the House of Commons. What does this mean for the digitalisation of tax?

Well, firstly I think the government and the revenues are completely committed to the project, so it’s definitely going to go ahead. Exactly what it means for the timetable I think is a little bit unclear. And that’s not just because it’s come out of the Finance Bill but it’s also because we are in a seven week purdah period where HMRC can’t talk to the world at large about how this project is moving forward, so I think they’re still trying to keep the deadlines they’d put forward.

What I would argue though is that they’d be much better off not trying to push forward with a very hard deadline on April 18 starting quarterly filing but instead to start a transition period where people are encouraged to file from there but mandation comes in a year or two later when it’s a lot clearer and we’ve actually got the software products needed to do this.

Has the government carried out sufficient consultation on MTD?

It certainly didn’t at the start of the project, and I think that has not helped in taking the project forward in the most constructive way.This is a huge scale project and is all about trying to get 3.5m individuals to keep records, to file data in a wholly different manner from what they’ve done before. Trying to get all that to change by this really quite short hard deadline is too challenging, so while the conversation is going on, well it’s that deadline that remains the fundamental issue.

So you don’t believe the government’s time table is realistic?

No, I don’t think it is. I think given the importance and scale of it, it’s much better to get it right than to force it through in a sort of difficult way. You want it to land well, not to land badly.

Do you believe the government’s estimated costs to be accurate? Do these costs pose a real threat to a small business’ survival?

I think information on the cost will actually come out when you start to see new software actually being released, when you start to see real businesses actually try it and pay for it and that sort of thing.

I think it’s so hard to do the guess exercise that the government has done. I’m fine with them doing it in the way in which they’ve done because they have no other data, but even then we are looking at a £1bn cost for business, for this small business sector to do, which is a huge amount to ask them to bear.

Would you support a proposal which would see MTD first applying to businesses with the highest turnovers, and then filtering down to SMEs?

Well, we are starting with businesses with the highest turnovers, that’s the 400,000 businesses above the VAT threshold and so we are doing that already, but is it relevant to a multinational? No absolutely not, and the reason it’s not relevant is because multinationals and indeed large companies have had accounting software and keeping records digitally for decades. The change is really in that microbusiness sector.

Should businesses see MTD as an opportunity to improve their efficiency and embrace the digital world in which we operate?

Yes, absolutely, but I think honestly that businesses – most businesses – try and improve, they try and reduce their costs and they try to improve efficiency, they try to increase their sales, and if they see that digitisation is going to help them then they will almost certainly adopt that automatically, why wouldn’t they? But you don’t need to mandate anything to get businesses to spot the opportunity, is all I would say to that.

What can businesses with little digital experience do to adapt to the measures?

Well, I think that if you’ve got no digital experience, you should see that you have an adviser. About 70% of businesses in this sector already have an adviser so clearly getting some business advice is absolutely the right way forward. If you’ve not got an adviser then you may need to think about getting one to help with the transition. Not necessarily to be a permanent or long term adviser but certainly to help you with the choice of software for example and possibly, as you just said, to identify practical business improvement opportunities as well.

 

Interview by Alia Shoaib, reporter on Accountancy Age.

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