Making Tax Digital - our response

farmer using laptop_7665

In brief...

HMRC has been consulting on a number of consultations on 'Making Tax Digital' which will make it mandatory for the self-employed to keep records digitally and to report more frequently from 2018.

The NFU has sought members’ views and concerns and used the large number of responses received to inform our formal consultation responses.

We will continue to seek changes to HMRCs proposals over the coming months.

The key points we highlighted in our responses:

  • The NFU does not support mandation of digital only forms of tax compliance.
  • The NFU proposes an exemption for the 5% of the population without access to high speed broadband.
  • We believe the proposed timetable for implementation is wholly unrealistic.
  • More thought needs to be given to more complex businesses and how they will  report under Making Tax Digital and ways of reducing the potential burden
  • The suggested alignment of VAT reporting and MTD reporting needs to be further explored before mandation.
  • Farm businesses are often as complicated and large as incorporated businesses with accounting and taxation affairs at least as complex.
  • We believe farm businesses should be exempted or if not exempted only mandated at the same time as incorporated businesses.

NFU members can read our full submissions to the consultations in the ‘related documents’ section at the bottom of this page.
 

Background

The government’s plans for Making Tax Digital are radical, far reaching, and ambitious.  They include a number of different areas and the consultations reflect this. They cover:

  • how digital record keeping and regular updates will operate;
  • options to simplify tax for unincorporated businesses, including how the self-employed map accounting periods onto the tax year, extending cash basis accounting and reducing reporting requirements for unincorporated businesses;
  • extending cash basis accounting to unincorporated property businesses, making life simpler for landlords;
  • how the voluntary pay-as-you-go arrangements announced at this year’s Budget will work.


What has the NFU been doing?

During the last year the NFU has regularly attended HMRC digital stakeholder groups to discuss the proposed new obligations and our concerns over rural broadband infrastructure, additional costs and increased administrative burden. Many of the suggested benefits such as predicting your tax liability do not seem realistic for a farming business. We have also organised farm visits for HMRC senior officials to discuss their proposals.

We asked members for their views and concerns on these proposals and were pleased to receive so many responses. We have tried to capture as many views and concerns as possible in our formal consultation responses.
 

While there was some acknowledgement from HMRC in their consultations of digital exclusion and the cost of implementation we feel these have been underestimated.


We also believe HMRC has failed to make a convincing case that these reforms will benefit businesses. In addition we feel insufficient attention has been given to more complex unincorporated businesses. Farms are a clear example of this with special tax and accounting rules; they may also be vat registered; be partnerships; have multiple income streams; and are unlikely to use the cash reporting basis meaning a significant number of accounting adjustments will be made solely at year end. 
 

How members can help further

The NFU is urging members to continue to contact us with views and concerns and provide us with evidence of how these proposals will affect your business. You can email us here. We would also encourage members to raise their concerns with their MPs. 



  • Posted by: Alison HousePosted on: 02/03/2017 17:26:02

    Comment: How are family farms going to cope with this. WE are not trained accountants ,even they can find it hard to sort out ,