Making Tax Digital
Face-to-face events, webinars and feedback during the consultation period

Overview

Making Tax Digital (MTD) is at the heart of our plans to make HMRC one of the most digitally advanced tax authorities in the world. HMRC published the consultation documents for Making Tax Digital on 15 August 2016. This marked the start of our formal consultation period which will run until the closing date for comments on 7 November 2016.

There are six consultations that set out the design of MTD and seek views from businesses, individuals, agents, representative bodies and the software industry to help shape it. We look forward to you participating in the consultation process and reading your responses and ideas.

The six consultations cover:

Bringing Business Tax into the Digital Age:
Includes how digital record keeping and regular updates will operate and an initial assessment of impacts. The consultation confirms that updates will comprise only summary data and HMRC systems will only be updated when businesses choose to or are required to provide an update.

Business Income Tax – Simplifying Tax for Unincorporated Business:
Options to simplify tax for unincorporated businesses, including how the self-employed map accounting periods onto the tax year, extending cash basis accounting and reducing reporting requirements for unincorporated businesses.

Business Income Tax – Simplified cash basis for unincorporated property businesses:

Extending the cash basis accounting to unincorporated businesses, simplifying arrangements for landlords.

Voluntary Pay As You Go:
How the voluntary pay as you go arrangements announced at Budget16 will work. This is a voluntary arrangement and businesses will not be required to pay more regularly if they don’t want to.

Tax Administration:
Changes to the tax administration framework to underpin compliance with MTD and ensure we have fair and proportionate penalties.

Transforming the Tax System through Better Use of Information:
How HMRC will make better use of the information we currently receive from third parties to provide a more transparent service for customers.

Stakeholder Engagement
Although this marks the start of our formal consultation period, we have been engaging with stakeholders since MTD was announced at Autumn Statement 2015 and much of the content of the consultations has been informed by that engagement.

Main changes following stakeholder engagement
One of the areas of particular concern to stakeholders has been the mandatory nature of the changes for businesses, particularly the smallest, and their ability to be ready in time for the April 2018 introduction for unincorporated businesses.

Introducing these reforms for businesses on a voluntary basis is simply not financially viable. The £1.3bn of government investment in the transformation of HMRC’s services is underpinned by the benefits the transformation will deliver but only a fraction of these benefits would be achieved through a voluntary model.

However we recognise these are serious concerns. To address them we have made some significant changes to the scope of the reforms:

• We will remove a further 1.3m of the smallest businesses from the scope of the changes by exempting all unincorporated businesses with an annual turnover of less than £10k from digital record keeping and quarterly updates. These businesses will still benefit from new software products and many of HMRC’s other steps to phase out the annual tax return, but they will be able to choose whether or not to opt in to the new digital record keeping and quarterly update requirements,

• We will use the consultation period to consider the scope to defer the introduction of the changes until 2019 for a further group of the smallest businesses still within scope, consulting on the detail, to give them the additional time to prepare if they need it – something many stakeholders have been asking for,

• We will explore options to provide additional financial support to help support some businesses as they transition to digital record keeping and quarterly updates.

In Summary

It’s crucial we continue to involve agents in the detailed design of these changes to ensure they work in practice and achieve our objective to make tax administration more effective, more efficient and easier for taxpayers.

The formal consultation period will offer an excellent opportunity to continue to shape the approach to Making Tax Digital and ensure it works for everyone and we hope you’ll continue to work closely with HMRC during the consultation period to help us shape these changes.

We’ve updated this page on GOV.UK to include the most up to date details on the face-to-face consultation events and webinars we have planned. We’ll continue to update this page as and when we confirm further locations so keep checking it for further events near you.

There will also be 2 webinars specifically for agents on Monday 19 September and Tuesday 25 October 2016. Select the webinar you want to attend on the GOV.UK page and follow the on-screen instructions to register.

We’re also running a Survey Monkey as an easier way for you to get involved in providing feedback.