HMRC's tax reveal: Was mid COVID crisis the right time?
When the Government recently revealed a new roadmap for Making Tax Digital (MTD), many accountants were no doubt taken aback – by the timing, in the middle of a pandemic, if nothing else.
You may have been scratching your head and thinking ‘why now?’ or ‘haven’t I and my clients got enough to contend with already?’.
Why is HMRC moving forward with Making Tax Digital during the COVID crisis?
With so many businesses struggling to simply survive this year, let alone look ahead to 2022, these were very reasonable questions.
Yet, when you look deeper, you can see why the Government and HMRC announced the plans, including for income tax and self-assessment, and why they are pushing forward.
COVID speeds up move to digital
The FSB says we’ve seen a decade of acceleration towards a digital, cashless society, in just six months due to the COVID crisis.
HMRC and the Government have seen that too. They have been looking at the current circumstances and learning. They see a natural affinity with MTD.
Most people are buying online, businesses are going contactless only, with no cash – to reduce spread of coronavirus.
UK looks to remain at forefront of technology
There are so many things happening to make society more digital. And it’s a global phenomenon.
So, rather than asking why would HMRC ‘unpause’ MTD, we should ask why would they not? They want the UK to be leading on it to help the economy thrive, not lagging behind.
I think of a couple of real life examples recently that demonstrate the acceleration of digital transactions in our economy.
During the summer, I took my kids to beach. There, an ice cream hut – a little business – had changed to entirely contactless payments, in the middle of the beach! Even my local barbers and fish and chip shop – two very traditional businesses – have almost totally dispensed with cash lately with a preference for contactless payment.
Could we see tax in real time?
From HMRC’s point of view, they are seeing businesses creating digital records at the point of sale – cashing up done as money comes in. You’ve immediately got the information that needs to go to Government.
So, you can start to see how the idea of an invisible tax authority and, eventually, tax in real time get closer to a reality.
What next for MTD?
We expect more details to emerge about the MTD roadmap in due course. Indeed, I will be speaking to one of HMRC’s MTD specialists at IRIS Live from 16 November. You can sign up here to hear from them directly.
- MTD – featuring HMRC
- Digital evolution: the complete practice blueprint
- Going cashless – featuring the Small Business Commissioner
- How to weather the storm – featuring the FSB
Is HMRC on the right path?
Yes, and they need help. That’s our role, as the largest online filer of documents to the UK Government.
As IRIS has always done, we’ll continue to be ahead of the game on changing legislation.
Busy season in the pandemic
How can accountants prepare to succeed despite the COVID crisis this tax busy season? Watch our video and download our guide.