Software developers are meeting with HMRC next Monday to update them on the latest position on the plans and rollout timetable for Making Tax Digital, with a view to finalising the next steps in the run-up to the launch of quarterly reporting for sole traders and buy-to-let landlords
It is understood that HMRC will not be sharing the findings of the recent raft of consultations with the developers although they are supposed to be published by 31 January latest according to the Green Book issued at the time of the Autumn Statement last November.
At the meeting, HMRC will brief developers on the issues raised in the consultation series and agree the next steps in the Making Tax Digital plan. It is likely that plans for an extensive customer testing pilot will also be fleshed out any testing to date has been limited to a very small audience.
Software companies have to develop and fully test the new reporting software to meet the Making Tax Digital reporting requirements, ready for an April 2018 rollout.
This leaves very little time for the end user to purchase the software, try it out and then start reporting. As yet none of the software providers has agreed to provide free software, although HMRC will be withdrawing all its free online software tools.
This means that many of the smallest business taxpayers would have to purchase software for the first time, unless HMRC can come to an agreement with software companies to provide a free alternative.
There has been vociferous criticism of the timetable, proposed implementation dates and very low threshold of £10,000, which is below the annual tax-free allowance and nowhere near the £83,000 threshold for VAT reporting.
The £10k limit will effectively net nearly all sole traders and buy-to-let landlords except the very smallest.
Last week, MPs from the influential Treasury Committee waded into the argument with warnings that the rushed implementation could jeopardise the whole project and as a result the taxman would fail to deliver the required cost savings set out by HMRC when it made the case for the move to full digitisation of all tax services.
HMRC has still not published the consultation document on Making Tax Digital for incorporated businesses, which was expected before the end of 2016.
An HMRC spokesperson told CCH Daily: ‘We are aiming to publish all the feedback shortly, and are sticking to the date [by 31 January] – a lot of material will be released.’
On the outstanding consultation, he added: ‘We cannot confirm when the incorporated business consultation will be released.’