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Iam encouraged by much that I read in the documents about tax administration issued on tax day. I was particularly pleased to see the recognition of the need to reform the TMA, which has been creaking at the seams now for many years. I have always thought that it was wrong to spatchcock the new making tax digital (MTD) requirements into what was essentially a Victorian administration framework based on paper returns and assessment. I hope that, at the very least, MTD implementation can proceed hand in hand with updating the TMA.
It concerns me that MTD is still being looked at through the lens of benefits to HMRC. There is nothing wrong in that – the more efficient HMRC is, the better it is for all of us. But what will really be transformative is making the system more efficient for taxpayers and their agents. Some developments – in particular the investment in the personal tax account – may do this, but I am not convinced that enough thought has been given to the benefits that any of this will bring to small businesses.
HMRC, in my view, has never properly articulated the advantages quarterly reporting will bring, despite being given plenty of opportunities to do so. If there were a benefit, businesses would accept, however grudgingly, the new requirement but at the moment it all seems a pointless burden.
I want MTD to succeed and I have always supported the concept but it is vital that, over the coming months, HMRC looks at this in the round rather than simply from its own perspective. It must then find effective ways to communicate the benefits of the new system.
