Lords brand Making Tax Digital mandation ‘undemocratic’

Members of the House of Lords Economic Affairs Finance Bill sub-committee have described the mandatory uptake of Making Tax Digital as ‘undemocratic’ as they continue their enquiries into the project’s rollout. Calum Fuller reports

In its responses to the consultations, released last week, HMRC confirmed it would beta test Making Tax Digital from April 2017, ultimately peaking at 400,000 participants before the national rollout commences in April 2018.

It intends to do so by commencing with sole traders, landlords and small businesses before scaling upward.

But while the lords agreed modernising the system was desirable, they were unimpressed by the mandatory imposition of digital reporting, with Lord Flight describing it as ‘undemocratic’.

‘The extra cost to companies is going to be miles more than what is being suggested,’ he said. ‘The only rationale that is left is that long term it’s a more efficient technology. The conclusion one draws from that is shouldn’t we advance on a voluntary basis? There will be a number of people who will still be running their businesses at 70 who never want to get up to speed with the new technology. To force people seems to me to be undemocratic.’

In response, Michael Steed, co-chair of ATT’s technical steering group, called for an extension of the timeframe for Making Tax Digital’s introduction, with an early opt-in system to ease its adoption.

‘By extending the timeframe that you want this to happen in and having an opt-in process for a year or two years – a bit like we have a new system for recording benefits in kind and year number one has an optional system – and spread the whole system out, offer some incentives, I think that would allow people to come to it,’ he said.

Already this week, lords in the same committee described the project as ‘ridiculous’.

Lord Bilimoria, founder and chairman of Cobra Beer, said HMRC had a ‘complete lack of any commercial reality’.

On the £10,000 proposed exemption threshold, he said: ‘This, to me, shows they have not consulted properly on this at all. They are not listening to business, they do not understand business. They think it’s going to make things easier by asking them to do things five times a year instead of four times a year. This is not living in the real world.’

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How are HMRC advertising for the 400,000 participants? I have not seen any adverts or encouragement from HMRC. Surely they cannot be contacted "chosen" businesses direct - asking them to be independent volunteers.... or could they! :)