Suren Thiru, head of economics at the British Chambers of Commerce, said that although the idea to modernise the UK’s tax system was a good one, the timing “couldn’t be much worse”. He said: “In the current environment, is an added cost and administrative burden and there still isn’t adequate understanding or preparation among businesses to make its rollout a success right now.
“HMRC’s already stretched resources will be focused on Brexit and changes to tax and customs process, so there is a heightened risk for confusion and disorder.”
Meanwhile HMRC is also accused of causing confusion by sending out mixed messages over whether it is going ahead with Making Tax Digital. In November its chief executive suggested to the Public Accounts Committee that it does not have capacity to deal with the tax changes and a no deal Brexit, raising questions over whether businesses could be off the hook in this event.
HMRC wrote to VAT registered businesses as well as those just below the threshold in Feburary to notify them of the change, but Anita Monteith of the Institute of Chartered Accountants said this should have happened six months earlier to ensure businesses had time to prepare.
She said: “Awareness letters should have started being sent six months earlier but the problem was that the software hadn’t come soon enough.”
A Treasury spokesman said: “Making Tax Digital will transform how businesses keep their records and send information to HMRC, avoiding costly errors and seizing the opportunities of digital technology.
“We’ve given the smallest businesses more time to prepare by slowing the pace of its rollout, so that only those with a turnover of £85,000 will need to file digitally for periods from 1st April, and only for their VAT obligations.”