Government urged to delay digital tax reform

(2 minutes to read)

CIOT: ‘The Government is keen to build trust in the tax system, but rushing in changes to its fundamental building blocks, in order to make possible the introduction of a policy which remains controversial, will not help that aim’.

Changes are to be made with regards to Making Tax Digital for Income Tax Self-Assessment and the way sole traders and partnerships calculate their taxable profits each year.

However, the Chartered Institute of Taxation (CIOT) has voiced concerns, urging the government to delay such proposals, as both will put ‘major pressure on businesses and advisers already reeling from the impact of the Covid-19 pandemic’.

The reform of the basis period rules is due to commence from April 2022 – the CIOT is not only concerned about how little time businesses and their advisors have to prepare for the changes, but also highlights that for some, it leaves them having to find the money to pay tax earlier than they might otherwise have.

Richard Wild, Head of Tax Technical at CIOT, said, “We strongly recommend that any changes to the basis period rules are deferred by at least a year to allow for more thorough consultation, greater understanding of the wider impacts of the change, such as the interaction with MTD for ITSA, and a longer lead in time to allow businesses, agents and HMRC a chance to prepare.”

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HMRC’s Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) project will see unincorporated businesses having to keep digital records and report their income every quarter from April 2023.

The CIOT argues that for many businesses, a period of stability and rebuilding is needed after the pandemic.

Richard Wild explained, “We recommend that mandation of MTD for ITSA, which is currently due to start in April 2023, is also deferred to allow the basis period rules to ‘bed in’, provide adequate time for software development and testing, and again ensure businesses, agents and HMRC are prepared.

“The government is keen to build trust in the tax system, but rushing in changes to its fundamental building blocks, in order to make possible the introduction of a policy which remains controversial, will not help that aim.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

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Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
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  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
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  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
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If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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