PTD0001

Written evidence submitted by Crundell & Co Accountancy Ltd, Community Accounting Services Ltd

Progress with making tax digital enquiry

I’m a qualified accountant and I run my own accountancy practice and I help around 400 clients with their annual accounting and taxation requirements

In my professional opinion Making Tax Digital for tax is not workable and does not provide any tangible benefits or value for money

It will move us from a simple system of submitting one tax return per year to a system of submitting four quarterly updates, an adjustment and then a final submission, so six returns required in total. This will add unnecessary complication and administrative burden for small businesses, make them less productive and increase their costs significantly.

HMRC have already advised that they do not intend to use the four quarterly updates, so the filing of these really is nothing more than an administrative burden and an opportunity for HMRC to impose late filing penalties to tax payers.

A requirement of MTD will be for taxpayers to use bookkeeping software, this is on average around £25 + VAT per month, with additional accountants fees for helping with the additional five filings that will need to be made of approx. £50 + VAT per time, the average client will see their costs increase by approx. £550 + VAT (£660) and for no benefit at all.

Despite HMRC’s assertion that there will be free software to use, there is currently nothing available that would meet the requirements of MTD filing and so clients only option is to pay for software.

HMRC must realise that using software will only improve record keeping if users are actually trained to use it properly AND most importantly they know what outcome the software should be producing. This will not be the case for the majority of users, and using software will actually increase the amount of errors created in clients records, compared to traditional methods such as a manual cashbook or spreadsheet.

In addition to this HMRC’s plan to keep taxpayers below a certain threshold on the current self-assessment system is crazy – how will have two tax systems in place make the process easier, it won’t, it will add unnecessary complication and admin.

Accountancy professional bodies have been advising HMRC of the issues for years, but they don’t want to listen, the fact that this project has been delayed time and again since 2015 clearly shows that it is not workable.

HMRC have been extremely blinkered in their approach and unwilling to listen to professional opinion and guidance.

The current self-assessment system works well, it does not need to be replaced. If the ultimate aim for HMRC is quarterly tax payments, these could easily be brought in under the current self-assessment system, our clients would actually welcome that move!

The amount of money wasted on this project is staggering, this could have been used by HMRC to improve its service, which are in constant decline, increase staff training and staff numbers so that taxpayers can be properly served.

May 2023