The Chartered Institute of Payroll Professionals
Policy Bi-Monthly Newsletter – September 2016
Making Tax Digital consultations published 16 August 2016
The anticipated Making Tax Digital (MTD) consultations have been published and due to the scale of the reforms, HMRC has brought out six separate documents, each focusing on specific customer groups or specific elements of the Making Tax Digital changes.
At Budget 2015 , the government set out the vision for a transformed tax system. The MTD Roadmap , published in December 2015, set out the government’s plans to deliver a fully digital tax service by 2020.
These reforms are ambitious and radical and there is a lot to design and develop before 2020 and HMRC recognises the importance of consulting widely with interested parties to help shape these changes. The consultation period will run for a full 12 weeks until 7 November 2016. Although this is the start of the formal consultation period, HMRC has been engaging extensively with stakeholders since Making Tax Digital was announced in 2015 and much of the content of these consultations has been informed by that engagement. Overview for small businesses, self-employed and smaller landlords Alongside the six consultations HMRC has published a document which provides an easier way to respond to the Making Tax Digital consultations than the full formal consultations. It is specifically aimed at small businesses, the self- employed and landlords and includes a summary of the main issues and selected questions, with links to the full consultations at various points, if more detail is required. CIPP comment As these consultations are specific to certain MTD elements and groups, they will not be of interest to everyone; however the Policy Team will be reading the documents in detail to assess which areas are relevant to payroll professionals and employers in general. There will most certainly be some surveys coming your way on the Making Tax Digital reforms and we will endeavour to space them out to allow time for your input. Making Tax Digital: Bringing business tax into the digital age This consultation considers how digital record keeping and regular updates should operate. The proposals allow tax to be integrated into day to day business activity and enable businesses to provide a single update for multiple taxes, while offering maximum flexibility. Making Tax Digital: Tax administration This consultation covers aspects of the tax administration framework that need to change to support Making Tax Digital. It also sets out proposals to align aspects of the tax administration framework across taxes, including the simplification of late filing and late payment sanctions. Making Tax Digital: Transforming the tax system through the better use of information This consultation focuses on how HMRC will make better use of the information they currently receive from third parties to provide a more transparent service for customers that reduces end of year under and over-payments. Making Tax Digital: Voluntary pay as you go This consultation looks at options for customers covered by the requirement for digital record keeping to make and manage their voluntary payments. It considers how voluntary payments will be allocated across a customer’s different taxes and explores the best way of dealing with the repayment of voluntary payments. Business Income Tax: Simplifying tax for unincorporated businesses This consultation seeks views on changing how the self-employed map accounting periods onto the tax year (reform of basis period rules). It also seeks views on extending cash basis accounting to larger businesses; reducing reporting requirements for businesses and also removing the need to distinguish between capital and revenue for businesses using cash basis accounting. THE SIX CONSULTATIONS
Business Income Tax: Simplified cash basis for unincorporated property businesses This consultation considers the extension of cash basis accounting to landlords.
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