I only had time to blog yesterday on the report I had written in anticipation of appearing to give evidence before the House of Lords Economics Affairs Committee yesterday. I duly did so: the video of the hearing is here.
I admit it is disappointing that the hearing will get little coverage: Brexit is taking the focus off so many issues of importance in the UK. However, these things tend to have a long fuse, and my experience has always been that the messages is reports of this type do get through and have impact, and that few things I have written have ever had much initial impact.
That said, the Lords hearing was good: their Lordships genuinely wanted to hear what all three of us wanted to say, and there was a lot of common ground between what I, John Whiting of the Office for Tax Simplification and Robin Williamson of the Low Income Tax Reform Group has to present. I also know that the ICAEW has got the message on what I had to say, so have some of the accounting websites, and that without a shadow of a doubt their Lordships will be taking the evidence on costs forward.
They were also very obviously doubtful as to the merit of starting with small businesses, imposing the measure on businesses turning over less than the VAT threshold and starting anything in April 2018. Of course this may not stop the government and HMRC, but this committee has a long track record in highlighting issues of concern and so I hope something will follow. It is time for HMRC to listen. If it does the effort of writing 10,000 words on the issue in a couple of days will have been worthwhile.
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Richard the Lionheart !
Back in 2009 HMRC reckoned increasing the turnover threshold for the three line account from £30,000 to the VAT registration limit of £68,000 would produce cost savings to businesses of £54 million.
http://www.accountingweb.co.uk/tax/business-tax/tax-return-simplification
This at 2009 prices for just £30k to £68K turnovers just for the year end, when in theory proper financial accounts still need to be kept. Presumably the figure has been reduced for the negative effect of the loss of benefits from the discipline of doing your year end tax work properly. All these savings are now lost.
I always doubted these savings. Perhaps HMRC should apologise for past errors?
Self-Employed keep records so that they can prepare Financial Accounts.
So that the owner can see how their business is doing and for bank/financial assistance. Tax returns are made up from Financial Accounts. The time in transferring the data to the Tax return is minimal.
if this is the end for 3 line accounts, good riddance.
My fear is that HMRC believes that MDC will somehow replace having trained experience staff working all over the country in the locations where evasion takes place.
I wholly agree with your last para
Many thanks for your contribution.
Having heard the hearing in the background, it is at least clear that the Lords Committee are grasping the potential scale of the impact of MTD on small businesses, and the need for HMRC to answer many more questions. Indeed some Lords seemed to be stunned by how unaware HMRC appears to be of the potential problems.
It looks like the software developers will be pushed to supply the products required in the current timescale (indeed, they are still waiting for HMRC’s final specifications). Also, the ‘free’ software that HMRC have promised, may end up having strings attached as the developers clearly hope to make some money from the users at some point.
The ‘free software’ looks sinister
Er…….. ” well done”