Lords committee commends tax agency for process used to develop and roll out digitisation project
A group of peers tasked with scrutinising draft finance legislation has praised the way HM Revenue and Customs used public consultation to develop its Making Tax Digital for VAT initiative.
In a letter to chancellor Philip Hammond, Lord Michael Forsyth, chair of the Lords Finance Bill Sub-Committee, welcomed HMRC’s publications of the penalties and interest provisions for the reform to digitise tax reporting and record-keeping.
Forsyth’s letter, which set out the sub-committee’s interim recommendations on the legislation, noted that the Making Tax Digital penalties and interest provisions would not be included in the finance bill. However, he said the peers commended the three-stage consultation process HMRC had used to develop the provisions.
- Making Tax Digital VAT pilot goes live
- ‘There is incredible demand out there to do this’ – HMRC to roll on with Making Tax Digital
- HMRC reveals compatible software for digital VAT returns
“Several witnesses [to the inquiry] told the sub-committee they valued this process and the time and effort HMRC put into it. We have no doubt that it has contributed to the broad support that this new framework clearly commands,” he wrote.
Forsyth noted that witnesses had raised some concerns about the reform, which he said the sub-committee would address in its upcoming report.
The rollout of the programme has been delayed from initial plans, with businesses not mandated to begin using the Making Tax Digital for Business system until April 2019, and then this will only be to meet their VAT obligations. This is compared to an original rollout across business taxation intended to start with income tax in 2018, followed by VAT and corporation tax in consecutive years. Making Tax Digital will not be mandated for taxes other than VAT until at least April 2020, following concerns from small businesses.
In April 2017 Hammond said he would delay the start date of the digital tax reforms for the smallest businesses, after businesses and the Treasury Select Committee raised concerns about the speed at which they were going ahead.