A high-profile tax expert has labelled HMRC’s Making Tax Digital (MTD) regime – set to hit landlords next year - as ‘pointless and costly’.
While HMRC insists digitally reporting taxes quarterly, not annually, should make it easier for people to keep on top of tax affairs and see real-time data about their finances, this is a weak attempt to justify the introduction of MTD, believes Fiona Fernie (main image), partner at tax advisory firm Blick Rothenberg.
“It begs the question, what is the point of MTD?” she asks.
It’s possible to obtain these benefits by using an up-to-date spreadsheet and the Government Gateway, says Fernie, who doubts government claims that those already using MTD are reporting saving on admin time, reductions in input errors and increased confidence in managing their tax affairs.
“It’s not possible to determine whether people are making more accurate returns because they use MTD. Data entry is just as likely to be done incorrectly on an MTD platform as on a spreadsheet or the Government Gateway.”
The cheapest software on the market costs £150, while HMRC also estimates that training and transitional costs for small businesses will add up to £330. This means landlords will have to fork out at least £480 to comply with the rules.
“The concept that taxpayers are hit with an obligation to file additional returns but will not be provided with the means to do so unless they incur a cost feels unfair,” adds Fernie.
“This appears to fly in the face of the taxpayers’ charter which specifically states: ‘We’ll provide services that are designed around what you need to do, and are accessible, easy and quick to use, minimising the cost to you.’”
Making Tax Digital starts in April 2026 for sole traders and landlords with qualifying income over £50,000 and extends to those with incomes over £30,000 in April 2027. It will be further extended to sole traders and landlords with income over £20,000 from April 2028.
Tags:
Comments