The timetable for Making Tax Digital has been thrown into doubt over the election reshuffle. The key individuals supporting and directing Making Tax Digital (MTD), David Gauke and Liz Truss, have been promoted to new roles, leaving the tax system changes to be headed by someone new. David Gauke has been promoted to Secretary of State and Liz Truss to Chief Secretary of State; MPs have commented this will be frustrating for the MTD plans as both were heavily involved in the modernisation of the tax system. The greatest lose is, arguably, Jane Ellison who as Financial Secretary to the Treasury was responsible for MTD.
It is imperative that Ellison’s successor gets up to speed as quickly as possible because there are a number of pressing issues to be resolved before the proposed implementation in April 2018. Firstly, the Finance Bull 2017 was more or less abandoned and it is essential that this is revived and reorganised. Similarly, there will need to be final decisions on thresholds, implementation dates and plans for larger businesses and limited liability partnerships as part of the digitisation of tax.
Cross-party reservations about the rushed timetable for the introduction have been voiced; with serious criticisms about the hurried nature of implementation, lack of information about the real costs for businesses and lack of understanding about how businesses operate. Further concerns include the costs for small businesses and the lack of rural broadband which could hamper businesses’ ability to submit quarterly. Ensuring there is sufficient infrastructure for this would put additional pressure on timings which are already a real concern for businesses and advisers.
There is little question that the idea of digital tax is supported, but businesses are urging the government to make a statement to clarify the intentions on the Finance Bill proposals.
Confirmation of plans and timetables would reduce the current uncertainty, particularly as accountants and businesses advisers are unsure which rules apply on daily basis. Additionally, there are frustrations that businesses are making decisions according to previous announcements, or on the promises of future versions of law. This predicament has only been exacerbated by the uncertainty of the election results.
The ambitious timetable does call into question whether so many businesses need to be compelled to adopt a cloud system immediately. Notably, there are still a number of complexities of tax which need to be translated into functioning software. A delayed timetable would permit businesses a longer transition period to consider which system would be best for their business.
Yet, moving to the cloud remains a smart investment for businesses for looking to stay on top of their finances. With increasing links between devices and more services available via the cloud, cloud accounting is an easy way for businesses to manage all their financial information in one place. Costs for cloud services are typically much lower than traditional accounting packages; the monthly costs are easily managed and can be increased or decreased according the features you might require.
The majority of cloud accounting software offer similar functionality; bookkeeping, invoice processing, inventory management and payroll management. Seeking professional guidance will ensure you are compliant and your accounts are correctly set-up, but do ensure you select your provider according to your business needs.