Tax experts questioned the published estimates of additional tax revenue, which have been cited in support of the UK tax authority’s Making Tax Digital (MTD) reforms, and told a House of Lords committee that a disproportionate share of compliance costs will fall on the smallest businesses under the current proposals.
The timetable for further consultation and implementation remains too tight, tax professionals said when HM Revenue & Customs published on January 31 its responses to the August 2016 consultations …
HMRC’s current estimate is that the transitional costs for businesses will average “about £280 per business over the period 2017/18 to 2020/21.”
Michael Steed said most people feel that the £280 estimate is “quite optimistic, and often wildly optimistic.” A more realistic estimate of the “just to get you going” costs charged by an accountant would be two or three times that amount, he said.
Tina Riches said her firm had looked at the additional cost involved in liaising with a client four times a year. The cost of the extra interaction could be “in the region of £2000 plus VAT per client a year,” she said.
Rebecca Benneyworth told the committee that the Administrative Burdens Advisory Board, which challenges HMRC on administrative burdens and costs, is discussing the matter of transitional costs with HMRC and small businesses. “I regard some of this costs stuff as work in progress,” Benneyworth said. However, for some businesses, the transitional costs would be “disproportionately large.”
Watch: Finance Bill Sub-Committee hearing February 8 (and see below)