THE introduction of digital tax accounts for small businesses and self-employed individuals is to be debated in parliament after a petition calling on government to scrap the plans received more than 100,000 signatures.
The petition, started by small business owner Paul Johnson less than a month ago, is demanding that the government scrap plans to make small businesses and self-employed individuals report their tax data quarterly through their digital tax accounts. The issue will go before parliament on 25 January.
According to the CIoT’s Low Incomes Tax Reform Group (LITRG), forcing small businesses to submit information digitally – part of wider plans to digitise HMRC – will cause problems for companies run by non-computer literate owners or those who do not keep sophisticated tax records.
LITRG chairman Anthony Thomas branded the government’s approach “simplistic”, adding it “betrays a worrying ignorance of how most businesses actually operate”.
“It is very harsh that the smallest businesses with the lowest profit margins may be required to undertake significant investment and training in computer technology simply in order to comply with HMRC’s reporting requirements, and for no other purpose.
“Instead of mandation, HMRC should develop software that is so much more convenient and easier to operate than any alternative that people will naturally choose to use it, as is already the case with online self-assessment filing.”
Confirmation of the parliamentary debate follows news that Andrew Tyrie, who chairs the Treasury Select Committee, had written to the Treasury demanding more information on the introduction quarterly digital tax accounts.
In a letter to financial secretary David Gauke, Tyrie raised concerns over the prospect quarterly tax returns online.
“Understandably, there has been a lot of concern about so-called quarterly tax returns. Without a good deal more information, and clarity about information that has already been provided, these concerns will continue to grow,” the Financial Times reported him as saying.
He added: “Consultation is taking place now and implementation will take place between 2018 and 2020, but this is the sort of detail that, given the greater scope that has developed over the last five years for consultation on tax policy, might better have been provided before the Autumn Statement.”
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Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs