Government ‘must bear the costs’ of new SME tax obligations

The Association of Taxation Technicians (ATT) has called on the government to take primary responsibility for assisting businesses to meet their new obligations under HMRC’s Making Tax Digital (MTD) programme.

The organisation also gives particular attention to raising taxpayers’ awareness about related cyber security issues.

The appeal is made in ATT’s response to the HMRC consultation ‘Bringing business tax into the digital age’.

In its response, the ATT emphasises that if digital record keeping and quarterly profit reporting are made mandatory from April 2018 as HMRC proposes, there will be many businesses without any significant experience of keeping digital data secure that will be forced down an unfamiliar path, making them vulnerable to cyber crime, as well as being hit with new costs.

The ATT has also reacted to a letter to the Financial Times newspaper today by Jim Harra, HMRC’s director general of customer strategy and tax design. In the letter Harra recognises that MTD would involve significant change for some businesses and gives an assurance that HMRC is looking at the provision of additional assistance with transitional costs.

Yvette Nunn, co-chair of ATT’s Technical Steering Group says there are real practical concerns about the security risks and the potential for businesses becoming victims of cyber crime.

‘If taxpayers who are running businesses have to use their phones or laptops to keep details of all their business transactions, there is a major risk of data being accessed maliciously. Our experience suggests that many businesses are not sufficiently cyber savvy,’ she says. ‘They are unprepared for having to keep their data safe in a digital world.’

Forcing people down the digital route when they are unprepared for it could be putting them at the highest risk of being targeted by cyber crime and fraud, Nunn adds.

‘We believe that if HMRC is taking away the element of choice from a taxpayer over how they keep their business records and whether they engage digitally with HMRC, it needs to take the primary responsibility for educating taxpayers on cyber security.’

Government should invest in financial support to help businesses comply

On the wider question of what assistance businesses may require in order to meet the proposed obligations, Yvette Nunn says the government must be prepared to invest whatever amount of financial support is required to ensure that taxpayers can reasonably meet the requirements for digital record keeping.

‘It is important to appreciate that very many taxpayers are fully meeting their tax obligations with the use of manual record keeping systems. For them, the compulsory change to digital record keeping offers no advantage,’ she adds.

‘If quarterly digital reporting were not being introduced on a mandatory basis then there might be the possibility of having a discussion about a reasonable level of financial support. However, where it is effectively being forced upon everyone, we don’t think there is a reasonable level.

‘It will take whatever it needs to take to get everyone on-board and if the government is unable to invest to that extent then it really does need to rethink the mandatory aspect of the MTD proposals.’

Further reading on digital record keeping

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