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On page 8 we are pleased to publish an open letter to the chancellor from Mark Morton. I have no doubt that many readers will be nodding in agreement as they read his comments about making tax digital.
I have never been in any doubt that HMRC should embrace the digital agenda, but the current plans are now nearly a decade old. Ten years ago, making a quarterly spreadsheet of transactions and sending it ‘down the wires’ to HMRC might have been regarded as digital innovation but given the advances in technology since 2015, it looks increasingly bizarre.
We are at a crossroads with this project. The change of government gives an opportunity for a complete rethink. I don’t for a minute believe that MTD should be scrapped – that would be absurd in an environment where digital interaction has become the norm for so many people. But there is an overwhelming case for going back to basics and working out, in conjunction with all stakeholders, what a truly digital tax system might look like. Nothing, including real-time reporting and payment of tax, should be off the table.
But any redesign must, as a first principle, benefit both taxpayers and HMRC. For taxpayers that should include a reduction in the time spent dealing with their tax obligations by automating much of the process. But it should also mean that taxpayers get much earlier certainty about their tax position. In the current design there is an unfair imbalance between the taxpayer having to file every quarter but HMRC still having enquiry powers based on the annual tax return cycle.
Will there be a rethink? There should be. This really is the last opportunity.
If you do one thing…
Review HMRC’s new guidance on selling via digital platforms.
