Feedback from MPs and the Tax and Accounting Profession combined with the pressures of the upcoming general election has led to the removal of the Making Tax Digital for Business proposals from the Finance Bill as it was rushed through the House of Commons following just four hours of stage debate.
There are indications that HMRC will need to make further changes including a slower implementation process in order to satisfy the two committees scrutinising the proposals.
According to an assessment by the Treasury, Making Tax Digital (MTD) was expected to save small businesses £240m by 2021-22 while the transition costs would be £870m for SMEs, £980m for all businesses in total. The FSB puts the transition costs higher, at £2,770 per business per year.
MTD is one of 72 clauses dropped from the Finance Bill on 25 April when it was cut by an estimated 80% in volume prior to the expected enactment on 27 April.
Other clauses removed include: the reduction of the dividend exemption to £2,000; non-domicile changes (including the changes on IHT on residential properties owned through overseas companies); changes to corporate loss relief; and changes to interest deductibility.
Treasury officials have indicated that it will not necessarily follow that all measures dropped will be reintroduced in a Finance Bill later this year so watch this space!
For further help or information get in touch with Kelly Walton at [email protected].