Making Tax Digital Agenda from HMRC
The digital tax agenda was trailed in the March 2015 Budget when David Gauke MP, Financial Secretary to the Treasury said “This will be one of the biggest – ever changes to the way that people manage and pay their taxes”.
It is clear that the drive to more digital integration of tax data with HMRC is continuing and 2016 sees HMRC enter into private beta testing stages for what is referred to as Standard VAT Accounting but also makes mention of EU Sales Lists and Reverse Charges. At a later date will be the development for some more sophisticated processes such as Partial Exemption.
HMRC have stated that they will ensure free Apps and software are available but acknowledge that businesses may choose to use commercially available tax software packages.
The question needs to be asked as to the levels of digital integration with taxpayers’ accounting systems that is being envisaged? Certainly for small business who may not currently even use any accounting software systems there is already the concern that they face the cost of buying such software in order to be able to submit their tax, including VAT, declarations into HMRC.
More generally what is the impact for larger organisations and, bearing in mind this has a Go Live date of April 2019 – what changes to existing systems or currently planned systems are envisaged?
HMRC feel that the move to a closer digital interface of data will help them in managing Tax & VAT risks and reduce administrative burdens by allowing authorised agents (on behalf of taxpayers) to have access to the tax data on line which HMRC believes will speed up the resolution of queries raised.
We think it would be prudent to ensure that we understand in more detail what this digital integration agenda actually looks like in terms of HMRC’s access to VAT information. It is not clear what HMRC have planned in this area although they do refer to the provision of specialised software to taxpayers free of charge, it does not state the level of integration that will occur in practice.
It may be that the Making Tax Digital agenda from HMRC is simply an improved portal for submission of VAT data but we will be looking for clarity in the forthcoming weeks on the impact of these plans and will update you as we find out more.