Controversial plans to digitise tax returns for businesses and the self-employed called Making Tax Digital (MTD) have been dropped from the Finance Bill 2017 but it is possible they will only be delayed because of the announcement of the snap election in June.
A number of groups, including the Chartered Institute of Taxation (CIoT) had warned the Government that the new Bill would not have long enough to be properly considered before Parliament recesses and it looks as though Chancellor Philip Hammond has taken heed.
The MTD policy has been dropped from the Bill, which will be the last to be debated in the Commons before Parliament adjourns before the Election. According to some sources, the decision means the scheme will be delayed by at least a year, while others believe it could be scrapped altogether.
The measures would have meant that small businesses would have had to file multiple tax returns a year, in addition to VAT returns. Worst hit would have been the self-employed, as those with turnovers of at least £85,000 would have had to have filed at least five returns per tax year from April 2018. Currently, small firms and the self-employed are only obliged to file tax returns online or by post once a year.
Accounting bodies have welcomed the news, saying that the delay will mean that implementation plans can have a “full and comprehensive debate”. In addition, other controversial measures, such as interest restriction, loss relief carry forward and the dividend allowance reduction can be subject to the “necessary scrutiny” before being passed into law.
Even the House of Lords economic affairs committee had warned against the changes being brought in too quickly, with a spokesman saying that the programme would impose “unnecessary burdens on small businesses”.