How keen is the UK, in embracing HMRC’s Making Tax Digital (MTD) initiative? Are we lagging behind other countries in adopting a digital system and have we gone far enough to digitise all business processes, rather than just the integration with the tax system?
The OECD’s Tax Administration 2022 Report builds a compelling case for digital taxation, something that is happening globally. Many tax administrations want to automate tax compliance, reducing the administrative burden for tax payers, and one assumes, ensuring tax is collected efficiently.
The pandemic also showed the benefit to the tax payer of a digitised system. Targeted support in the in the shape of the Self Employment Income Support Scheme, was facilitated by the digital records held by HMRC and, we are told the response could have been more effective had we been further down the digitisation route. Taxpayers increasingly expect financial services to be delivered in this way, and this includes an expectation of a joined up service from HMRC.
Indeed the pandemic forced many individuals and businesses to speed up their digitisation processes.
Though many see the benefits of a digitised system, some believe that the UK is more sceptical about HMRC’s Making Tax Digital (MTD) programme. Alex Baulf, Senior Director of Global Indirect Tax at Alvara, wrote in a recent article for Taxation magazine:
“ HMRC’s MTD strategy pales in comparison with the digitisation of VAT compliance that is emerging across the rest of Europe.”
“Because HMRC has not mandated e-invoicing or introduced transactional level e-reporting, many businesses, accountants and advisers, have seen MTD as a compliance requirement rather than a catalyst for broader process, data and finance transformation”.
At Bates Weston, we have always advocated that digital record keeping brings significant benefits to our clients. Keeping on top of their finances in real time and bringing our insights to their financial position can really drive improvements in business performance.
Mr Baulf’s experience seems to be that not all accountants or businesses view MTD in this positive light. Some see it as yet another burden, rather than a way to streamline processes, produce better quality data and reduce tax errors.
If you would like to talk with us about digital record keeping, please do get in touch with Stuart Hulland, partner at Bates Weston.
