The latest Committee report stated that it was concerned that the Treasury did not give sufficient reasons for changing the dates of the tax year and reporting requirements for businesses.

The Basis Period Reform and Uncertain Tax Treatments report stated that a ‘compelling case’ has not been made to reform ‘either as a simplification or as an essential prerequisite for introducing Making Tax Digital (MTD) for Income Tax.’ However, the Committee ‘does not recommend that it should be abandoned now’.

The Committee did welcome the government’s recognition that further work needs to be done on the adverse effects of basis period reform on businesses that cannot align their accounting period with the tax year. The report states that before any final decisions are reached, the government must ‘reassess the additional compliance costs which businesses will bear as a result of the reform’.

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