Despite the clear support for the aims of HMRC’s digitisation programme, the need to proceed based on sound evidence and clear methodology is a constant theme in the Committee’s comments and the evidence they draw upon.
—Chas Roy-Chowdhury

The House of Commons Treasury Select Committee has today published a report on Making Tax Digital (MTD), identifying a number of “serious shortcomings” with current plans.

Chas Roy-Chowdhury, head of tax at ACCA (the Association of Chartered Certified Accountants) says:

HMRC are right to focus on digitisation, but more evidence is required

“The depth and breadth of the Committee’s concerns are quite clear from this report, and indeed from the timing of its publication. ACCA shares some of these concerns, and has raised them with the Committee.”

“Despite the clear support for the aims of HMRC’s digitisation programme, the need to proceed based on sound evidence and clear methodology is a constant theme in the Committee’s comments and the evidence they draw upon.”

Quarterly reporting will place undue extra burden on SMEs, who are already struggling

“If the impact of changes to reporting obligations is that profits and productivity fall, then the tax system will not be meeting its objective.”

“The Committee refers to evidence from ACCA members, amongst others, which suggests that introducing quarterly reporting in the currently envisaged format runs the risk of costing society more than it gains.

“HMRC’s job is to collect taxes effectively and efficiently, and our members would welcome any changes to the tax system which improve those measures—but all the evidence at present indicates that mandatory reporting on too widespread a basis will have the opposite effect.”

Timing is crucial

“Big businesses can often require a full two year lead time for changes to core record systems.

“Among the broader context of post-Brexit uncertainty, there is a risk that two substantial revisions to VAT reporting in short succession will become a major headache.

“We share the Committee’s concerns that the VAT timetable may need to be revisited from the initial 2019 rollout date.”

Cooperative compliance and Public Accounts Committee enquiry

“In addition, the Treasury Committee concerns about possible risks to the existing culture of cooperative compliance in the UK find an echo in the PAC’s current enquiry into the reorganisation of HMRC’s physical presence across the country (to which ACCA will be responding next week).

“We share the Committees’ concerns that an eagerness to grasp the benefits of new ways of working before businesses are ready to embrace them could be counterproductive.”

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Notes to Editors

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 188,000 members and 480,000 students in 178 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 100 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: