CIOT has renewed calls for HMRC to reconsider its implementation plans for its move to Making Tax Digital, saying that experience from a similar initiative by the Australian revenue authorities suggests the current timetable is ‘extremely challenging’ and granting advisers access to client accounts is 'fundamental'
In a blog, John Preston, who takes up his post as the new president of CIOT today, points out that HMRC and the Australian Taxation Office have constructively exchanged detailed information regarding each other’s approaches, while the professional bodies in both countries are entirely supportive of the principle of their respective Making Tax Digital projects.
However, CIOT says a significant difference is that the Australian system ‘is not being seen or driven as a significant opportunity in itself to achieve an early reduction in the tax gap. Accordingly, there is no attempt to make quarterly record keeping compulsory for smaller businesses before focusing on larger businesses.’
Another difference is that there is a recognition by the Australian tax office that allowing tax agents to have full access to their clients' records from day one is a fundamental and necessary requirement to the scheme’s success.
It is hard to compare Making Tax Digital with the Australian tax environment as Australia only had 2.1 million business trading in 2014-15 whereas the UK had 5.4 million small and medium sized enterprises in 2016, which is over 99% of all businesses.
Preston welcomed the one year deferral from mandatory Making Tax Digital requirements for UK businesses under the VAT threshold (£83,000), announced in the recent Budget, which he said ‘took some account of the unprecedented technological and logistical challenges which will be faced by the many small businesses and landlords which are not currently maintaining digital records or interacting with HMRC on a frequent basis.’
He goes on to write: ‘But we remain of the opinion that the timetable for mandatory quarterly reporting remains extremely challenging, with the many complexities of tax still needing to be translated into functioning software, and the diverse nature of businesses accommodated, not to mention how their agents can support them.’
Preston contrast this with the ‘less stringent’ timeframe for changes in Australia. He also points out that the approach there has seen the gradual introduction of a number of specific online tools for individual taxpayers and businesses, as well as agents.
The Australian tax office has published a ‘blueprint for reinvention’ which it says ‘reflects what the community wants from the ATO – the kind of experience they want to have when they participate in the tax system’ and which commits to delivering changes ‘progressively’ in the years ahead.
The ATO reinvention blueprint is here.
