Last night Jane Ellison, the Minister previously responsible for Making Tax Digital (MTD), lost her Battersea seat in the General Election. What does her loss and a hung Parliament mean for MTD?
If the MTD timetable is to remain as it is, the next Chancellor will need to appoint a new Financial Secretary who will require time to familiarise themselves with all the logistical and technically complex MTD issues, just as Jane Ellison had to do when she acquired the brief from David Gauke.
Certainly MTD will not be high on the list of priorities for the next Government, with stability the first goal before the start of Brexit negotiations. MTD is unlikely to return for serious discussion before MPs break for their summer recess in mid July, so the autumn looks a better bet.
But would a minority Government of any colour wish to push through MTD on an unsuspecting small business community at any point soon? Surely the votes of small business owners and landlords up and down the land are too risky to alienate from the proposed roll out next April, with the probability of another General Election sooner rather than later a strong possibility?
Would not the most sensible way forward be to allow the MTD pilot to run its two year timetable fully, to test the processes and software, before MTD goes live? That would mean a revised start date from April 2019.
Is the ground also fertile for another compromise? Making MTD mandatory for businesses has always been a contentious point, but with rapid technological change already taking place, won’t the underlying principles of MTD happen relatively quickly anyway? A move to a non-mandatory MTD existence may be a way forward in such choppy times.
I suspect the answers to all of these questions will be driven primarily by political considerations, rather than HMRC’s stated desire to limit business record keeping mistakes in an effort to reduce the tax gap.
Author: Guy Smith, Head of Technical Research