HMRC told it is heading for a ‘major row’ over tax digitisation

HM Revenue & Customs defended its Making Tax Digital proposals on 22 February as peers on a House of Lords committee questioned HMRC’s assumptions about the tax gap and warned that the department is heading for a “major row” unless it modifies its approach …

“From the evidence we have heard, alarm bells are going off over this whole project,” Lord Andrew Turnbull said. There is widespread support for setting an initial exemption threshold at the level of the VAT registration limit, currently £83,000, and then reducing the threshold gradually over a period of years, he noted.

HMRC’s evidence on the tax gap showed that “the smaller businesses” were those in “the greatest need of help to get their tax right”, said Jim Harra, director general for customer strategy and tax design. The government consulted on the criteria for a deferral of MTD for some businesses with turnover above £10,000, and will make a decision before legislation is published, he added …

Read: My news story for Tax Analysts, 25 February (paywall)

Read: Parliament: Finance Bill Sub-Committee inquiry: Draft Finance Bill 2017

Watch: Parliament TV: Finance Bill Sub-Committee hearing 22 February (see below)