Proposed digital tax reforms should be postponed since the ‘pace of change’ will affect self-employed people.
CALLS have been made to postpone the government’s proposed tax reforms for the self-employed due to the “speed of change” with which they are being implemented.
The Association of Taxation Technicians (ATT) is encouraging the government to postpone a major reform in how trading profits are taxed, arguing that additional consultation and a clear path for small firms are needed.
The ATT is particularly concerned that affected small businesses will not have enough time to submit feedback to the government before the change takes effect, owing to the “speed of change” that some enterprises are experiencing.
Jon Stride, Co-Chair of the Technical Steering Committee of the organization, expressed support for the tax simplification objective but expressed reservations about how it was being handled.
“The idea to tax firms on profits earned during the tax year is reasonable and would simplify problems for unincorporated businesses in the long run,” he said.
“We also support implementing the reform ahead of the income tax Make Tax Digital (MTD) deadline.
“However, if it is to succeed for businesses and the government, it is critical that the design and implementation be well examined and not rushed. Given the current state of business, both this adjustment and the MTD implementation should be postponed by a year.”
The ATT’s main issue is that the consultation period for this major change is only six weeks long, less than half of the 12-week period recommended by the government and falling during the summer vacation season.
The ATT recommends that the consultation date be extended until September 30, 2021.
“Pushing both the start of MTD for income tax and this new suggestion back would give time to ensure that the base period transition works as smoothly as possible – and it would also allow for a full 12-week consultation process,” Stride explained.
“HMRC’s consultation acknowledges the wide variety of problems that will need to be carefully considered when designing the appropriate legislation to execute the basis period change.
Stride also revealed the organization’s request that HMRC publish a thorough roadmap outlining the self-later employed’s consultation stages.
“Regardless of whether there are delays to the plans, it is critical for HMRC to provide a clear indication of the steps towards implementation of the basis period adjustments between now and April 2022 so that businesses and their.”Brinkwire Summary News”.