Making Tax Digital (MTD) and the Impact of Brexit

Posted by Capium on Jan 23, 2017 12:00:00 AM

 

Making Tax Digital (MTD) was announced in the March Budget of 2015, with the details being provided in the Autumn Statement 2015. The program was announced to initiate building of a transparent and more efficient taxation system, which would be fit for this digital age where everything is digitised.According to Jane Ellison, financial secretary to the Treasury,

 

“We are committed to a transparent and accessible tax system fit for the digital age, and Making Tax Digital is at the heart of these plans. This new system will make the UK’s tax administration more efficient and straightforward, and will offer businesses greater clarity when it comes to paying their tax bills. By replacing the annual tax return with simple, digital updates, businesses will be able to concentrate on putting people and profit, not paperwork, first.”

 

However, after the announcement, there were many uncertain responses from businesses that were unsure what this meant for their corporations. They felt that although on paper, it sounded like the perfect transition to the digital age, replacing spreadsheets and systems prone to faults, but in reality, there were many unspecified parts that were not discussed and which might create problems when the system is implemented. For instance, in our conversations with our clients, we have discovered that they are unsure about the workload and costs that this change would bring on the businesses.

 

In a survey, the opinions were split three-way with 38% people responding that they felt positive about the change, 34% feeling negative, and 28% feeling indifferent.

 

In the MTD Roadmap published in December 2015, the timeline for the implementation of the change was outlined, with the testing and online billing processes starting from the January to June 2017 timeframe, and the completion of the transition by 2020.

Timeline

timeline

How Has Brexit Affected MTD?

MTD is not a small-scale change. When implemented, it will be the biggest change in the world and a change on that scale requires a proper process in an environment that is ready for the change. The post-Brexit feelings have been uneasy to say the best, and the delays in the Financial Plan of 2016 brings about a shadow of doubt if the HMRC would be able to meet the deadline for the Digital Tax Accounts in April 2018.

However, delays may not be a negative aspect, as it is possible that with time, and more provision of details about the implementation of MTD and its consequences, the unease would rest.

So, What Should We Expect?

Well, ready or not, MTD is going to be implemented. Whether businesses are ready for it, or not, would be detrimental in the consequences that follow. One thing is clear, though. The importance of skilled accountants would be more than ever, as there would be a need for a professional to deal with the new, complex procedure.

 

Answering the most-asked question of “how will it affect me?” here are the changes that are expected to occur, in the words of David Gauke, MP:

  • Bureaucratic form-filling is eradicated — taxpayers should never have to tell HMRC information it already knows;
  • Unnecessary time delays are eliminated — the tax system operates much more closely to ‘real time’, keeping everyone up to date and removing the risk of missed deadlines, unnecessary penalties, debts arising and errors in the system being carried forward from one year to the next; and
  • Taxpayers have access to digital accounts — with the information HMRC needs automatically uploaded, bringing an end to the tax return.

Conclusion

With the new tax system in place, you will be able to access real-time data, and enjoy a more simplified taxation process. There will be a need for an efficient system in place, and this is why we are working closely with the HMRC and our clients to ensure that whenever MTD is implemented, you will be provided with software aids that help you in your practice, making it more efficient.

Topics: Making Tax Digital

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