Government shelves Making Tax Digital

The unpopular Making Tax Digital scheme -- which requires freelancers to report their tax ‘at least quarterly’ -- has been omitted by the government from a bill to make it law.

Made on Tuesday, the omission follows concerns on behalf of self-employed people that the snap general election affords too short a time for MPs to properly scrutinise MTD’s impact.

There is also concern about the scheme’s cost for the average freelancer.

By omitting clauses in Finance Bill 2017, designed to pass MTD into law, the government appears to believe that the concerns are valid, and deserve addressing once polling day passes.

But whether MTD’s shelving is purely temporary -- in that the MTD measures will be passed in a post-election bill, or permanent, meaning MTD has been ditched, is unclear.

The latter seems unlikely in light of the many advantages that HMRC has said the scheme will bring, on top of the political promises made about ‘ending the era of the costly and complex tax return.’

However, according to yesterday’s Daily Telegraph, a spokesman for chancellor Philip Hammond has declined to say that MTD would be re-introduced after June 8th.

As to what the government has actually stated since omitting MTD from the bill, it is that the online digital accounts will re-emerge, although the new timetable -- likely to include a postponement to MTD’s pilot -- is unclear.

“The [government’s] statement today that, if re-elected, they will legislate ‘at the earliest opportunity’ for the clauses dropped [from the Finance Bill] is helpful”, says Bill Dodwell of the Chartered Institute of Taxation.

“It would be even more helpful if they could clarify whether they intend the original timings to apply to all the clauses dropped or whether some will have their introduction delayed until a later point.”

Like advisers at the ACCA, a chartered tax body, Dodwell welcomed MTD being omitted from the bill --because it will be “good for the quality of legislation.”

However, he also acknowledged that the government’s move causes “uncertainty” for freelancers and others who stand to be affected by the scheme.

 

26th April 2017

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