Members of a leading business group are calling on Chancellor of the Exchequer Philip Hammond to rethink plans for Making Tax Digital.
The UK200Group of independent accountants and lawyers has warned that the backlash against Making Tax Digital (MTD) could be just as great as the recent outcry over the rise in National Insurance Contributions (NICs) for the self-employed - announced in the Budget and then dropped a week later.
Francis Whitbread, partner at UK200Group member firm Edmund Carr, said, "The Chancellor's u-turn on the proposed increase in National Insurance Contributions for the self-employed suggests that those advisers, civil service mandarins, or whoever suggested the policy to Mr Hammond in the first place, have no idea of what goes on in the real world of SMEs."
Whitbread added: "I have a nasty suspicion this is not the only case of Mr Hammond being misinformed. I wrote to the Chancellor before Christmas setting out a number of concerns about Making Tax Digital (MTD). I received a reply on his behalf from HMRC assuring me my fears were groundless. In the recently published consultation on MTD the concerns expressed by the accountancy profession over a number of areas were similarly ignored."
Whitbread had this advice for Philip Hammond: "If you want to avoid another embarrassment with MTD similar to the one you have just had over national insurance for the self-employed, consult with the people who really know, my fellow accountants and tax advisers, before it is too late."
Andrew Jackson, chair of the UK200Group Tax Panel and head of tax at Fiander Tovell, said: "The proposed NI changes would cost each self-employed person a few hundred pounds; HMRC's estimates are that MTD will cost each business £280, but this is clearly an underestimate. It would be a great shame if businesses are spared a hike in NI, only to have a more costly MTD burden foisted on them."
The UK200Group represents chartered accountants and lawyers who together work with over 150,000 SME clients, including charities, construction firms and healthcare businesses.