A welcome break on the digital tax drive

News of further exclusions and potential delays in the UK government’s digital tax drive offers a welcome break for many contractors, according to a leading specialist.

Some 1.3 million small firms will now no longer be required to update HMRC quarterly or keep their records digitally, adding to the 1.6 million already excluded from the new rules. HMRC is also considering delaying the deadline to go digital for a further tranche of businesses.

Nova Contracting Director Marcus Green said: “This will be a welcome break for many contractors and freelance workers. Although the new exclusions only apply to businesses with an annual income below £10,000, HMRC is also considering extending the deadline for firms with higher turnover, although they haven’t yet specified an upper limit.”

The delays can also be partly attributed to the summer’s EU referendum, and the ensuing changes at Number 10 and the cabinet. And back in May, the Association of Taxation Technicians (ATT) urged a delay to the proposals of at least a year, in order to avoid embarrassment to itself and the government should the project go askew.

Marcus continued: “It does not mean the end of the government’s digital tax drive, but it does give a clear signal that HMRC recognises the challenges as well as the opportunities of contract working.

“Digital tax accounts, if successfully implemented, will help employment providers and contractors to keep track of earnings, pensions, savings and liabilities, but the change must not be rushed through.

“We already work with agencies and contractors to provide year round tax planning services and will monitor the current consultations on Making Tax Digital closely to ensure that we are prepared for any further developments.”