Two major tax bodies have called for delays to be made to the implementation of compulsory digital record keeping, which forms part of the government’s Making Tax Digital (MTD) initiative.

A survey of members of the Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) found that many tax professionals believe their clients will require substantial assistance in the move to digital record keeping.

An overwhelming majority of those surveyed said that the timescale suggested as part of the MTD initiative did not allow enough time for a digital transition to be made.

If, as a limited company, a contractor submits their own tax and handles their own accounts, going digital could have a major impact, especially if problems are encountered. Those who currently use this method may be tempted to seek expert help, as the two bodies have pointed out.

“Taxpayers will need considerable support and guidance to avoid a major struggle to make the move to digital record keeping and quarterly reporting because the timetable is unrealistically tight,” said John Cullinane, CIOT’s tax policy director, “There is widespread agreement that digitisation can bring efficiency and other benefits to HMRC and taxpayers alike. The government appears to be forcing the pace in the belief that requiring even very small businesses to 'go digital' in a tight timescale will transform their record keeping and reduce the tax gap, helping HMRC to recoup its investment in the project. Our survey results heighten our fears that this current aggressive approach by HMRC may have the opposite effect, with more haste meaning not just less speed, but maybe even see compliance levels go in the wrong direction.”

Cullinane added: “There is a significant risk that small businesses will fall into non-compliance, whether deliberately or inadvertently, unless HMRC reconsiders the timetable for mandating MTD. What is at stake is the spirit of voluntary compliance within our tax system that sees over 90% of all that is due collected without significant intervention from the authorities.”

According to the survey, 89% believe that the timeframe for implementing quarterly reporting should be extended to help businesses. More than half of members thought that the vast majority of their clients will need help with moving to digital record keeping.

Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said: “All the evidence the ATT has got is that MTD will lead to significant costs and burdens for small businesses in additional accounting systems and support from their accountants. The survey shows that HMRC must help smaller businesses and those who are the most vulnerable in society to adapt to MTD. We firmly believe that HMRC is moving too fast and too quickly on MTD. How can HMRC fully digest the feedback from stakeholders within the proposed timescales?”

The government has previously stated it wants the HMRC to one of the most digitally-advanced tax administrations in the world by 2020.

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