Making Tax Digital

If you thought it already was, you’re not alone. But HMRC want to go further. Although they say they don’t want any more information than they are already getting they want us all to use special software and send the information digitally directly from the software.

Now call me an old cynic if you like but “thin end of the wedge” comes to mind. HMRC recently tried a pilot scheme sending officers to small businesses to check how they were doing their book-keeping, and to “help” them. The project met with howls of disapproval and was abandoned, probably not because it was unpopular but because it was so labour intensive.

I can just imagine them all sitting around a big table at a staff de-briefing meeting. Someone sitting sleepily stirring his coffee mumbles, “if they all used software they could send their books to us, and we wouldn’t have to go out”. “Hey, you could be onto something lad. We could call it “Making Tax Digital”.

Actually the idea is credited to George Osborne; but whoever had the idea, it is still half-baked. And don’t get me wrong – it makes perfect sense, and accountants have no objection to HMRC taking steps to improve compliance – that’s jargon for making sure everybody pays the correct tax and VAT – . but it is rather rushed. People need time to adapt to new systems. If you agree write to your MP saying it needs to be phased in more slowly.

MTD was due to start in 2018 but was delayed by the election. Now those businesses who are VAT registered will have to start using approved software from 2019. But the details are still hazy.

If you want to read HMRC’s guidance it’s here:

Watch this spot for more details …