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The announcement of the next steps in the making tax digital programme came as a surprise, but I can see the logic. HMRC has been emboldened by the successful implementation of the coronavirus support schemes and, like everybody else, will be trying to predict what life will be like when we emerge from the crisis.
What struck me was that HMRC seems now to be looking at digitalisation in a wider perspective. When the original digital proposals came out they seemed to exist in a vacuum, looking at the tax return process as an end in itself rather than as part of creating a modern tax administration system. I am pleased there is now an acknowledgement that the tax management framework is no longer suitable for a modern digital economy. I can see that a move towards real-time payment will be unpopular but it seems logical.
I am an advocate of radical thinking and now is surely the time to challenge existing orthodoxy. Here is a thought. Do most small business need to prepare annual accounts? People are concerned with what is left at the end of the week or month so annual figures might have little relevance. In a good month the business pays more tax; in a bad one it pays less or even receives a repayment. Technology could surely deliver this in a way that would have been impossible only a few years ago.
I can see some readers throwing up their hands in outrage at such a suggestion. Perhaps I am way off the mark. But now is the time to think the unthinkable. I’m sure that the combined readership of Taxation could come up with lots of ideas for reform: let’s hear some of them.
