Cherry raised concerns in a hearing with the Treasury Select Committee chaired by Conservative MP Andrew Tyrie. He told the committee that timing of the move to a digital tax system was too ambitious and was wrongly focused on starting with small and micro businesses and sole traders, rather than large businesses as had been the case in previous major projects such as real time information (RTI) and auto enrolment pensions.

‘We very much agree with the pathway, but over a much, much longer time that businesses can get to grips with,’ he said. ‘It is the amount of money that HMRC has been able to attract from the Treasury which is driving this, and not something that will help businesses to comply. Our members want to comply.

‘They want to make tax simpler and they want to get it right first time. At the moment, they can’t see how they can get anywhere near that.’

The cost of complying was also cited as a prohibitive issues for small businesses, Cherry said, with the FSB estimating costs could run as high as £2,770 per year for businesses.

‘That is a huge cost and a fairly valid estimate even though we don’t know the full detail of what quarterly reporting is going to mean in practice at the moment,’ he said, before adding mandatory reporting was ‘wrong’ given that 75% of businesses do not keep accounts electronically.

Cherry went on to tell the committee that he was ‘quite astonished’ that the FSB had initially been unable to engage in the testing process of Making Tax Digital as HMRC rejected repeated calls for the involvement of small business.

He said: ‘FSB has offered to hold roundtables, find members across the whole spectrum of businesses, both digitally enable and not digitally enabled to help HMRC go through the testing on this. We were not even going to be allowed to participate until we made the point to the minister in the first tranche, and that surely is wrong. We have 170,000 members across the UK and I’m pleased to say the minister took that on board, and we should be getting some of our members genuinely to facilitate that testing.’

ICAEW head of tax faculty Frank Haskew and ACCA head of taxation Chas Roy-Chowdhury added their institutions held reservations over the consultation process with HMRC.

‘We support the principle of what the government is trying to do, but the fundamental parameters of all this have already been set it seems,’ Haskew said. ‘We’re consulting really on the detail, we’ve already decided that the government is going to implement this under a certain timetable.’

Essential reading

Read our extensive Making Tax Digital analysis, timetable and consultation details here