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Finance Bill 2017: Digital Tax “scrutinised” by Lords

A Sub-Committee has been created to analyse Making Tax Digital in the Finance Bill 2017.

The House of Lords Economic Affairs Committee has set up the Sub-Committee to inspect the Making Tax Digital (MTD) proposals within the Finance Bill 2017 through an inquiry.

The government plans to implement MTD by 2020, for businesses and individuals, requiring quarterly submissions of financial information to HMRC.

There are areas of MTD that raise concerns, such as whether the measures and exemptions for the digitally excluded will be enough, and whether the proposed timetable is “unrealistic”, from the perspectives of the software industry, different taxpayer groups, intermediaries and HMRC.

The Sub-Committee, chaired by Lord Hollick, invites the contribution of written evidence on the policy and the draft clauses, particularly from affected small businesses and landlords. Evidence on the first and second clauses should be submitted by 3 February 2017, with contributions on the rest of the draft clauses by 15th February 2017.

Draft clauses of the Finance Bill 2017 are expected to be published later this month with more detail. The final details will be confirmed in Budget 2017 and legislation introduced in the Finance Bill 2017.

Bill Dodwell, Chartered Institute of Taxation (CIOT) president, said: “The sheer volume of tax changes makes it difficult for the government to consult effectively, early and widely enough on all the measures they bring forward. Parliament and taxpayers struggle to keep up with all the changes.”

Following the Autumn Statement, the government published the draft of the tax legislation to show its commitment to tackling tax avoidance and evasion, as well as its intention to lower corporation tax to 17% by 2020.

A report was recently released by the CIOT, the Institute for Fiscal Studies (IFS) and the Institute for Government (IFG) stating that the government “must change” the way it makes tax and budget decisions as the current tax policy making process is “not fit for purpose”.

Jane Ellison, financial secretary to the Treasury, said: “This report places a really strong emphasis on the value of telling people in advance when and how we are going to change tax policy in the future. I share the same aim as the report, to make our tax policy better. There are 4 key themes it raised which I think really go to the heart of what you need for sensible tax policy; stability, direction, professionalism, and teamwork.”

The Sub-Committee is looking for evidence on the impact on businesses, the tax gap and HMRC resources. These are the key concerns of professionals in accounting and the financial services, as well as the consequential penalty revisions that they may receive.

Ellison concluded: “The UK is forecast to be the fastest growing major advanced economy in the world this year and we are making sure we are prepared to meet the challenges and seize the opportunities presented by Brexit.”

The Sub-Committee is keen to address the adequacy of the proposed measures to simplify the calculation of taxable profit.

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