Apply your RTI lessons to MTD, taxman told

Lessons that the taxman should learn from RTI’s bungled introduction should be applied to his Making Tax Digital programme.

Issuing this recommendation, a tax charity said a newly published review of RTI shows that although it benefited HMRC, the 2013 initiative actually disadvantaged “many” businesses.

To head off the same happening with MTD, the Revenue must learn lessons on “consultation, communication and implementation” -- three areas of RTI it admits it bodged, added the ATT.

“HMRC [acknowledges it] did not sufficiently understand the costs to small businesses of real-time reporting,” says Yvette Nunn of the Association of Taxation Technicians (ATT).

“[Officials must] … consider whether they are making the same mistake again with MTD. Many businesses…regard the government’s estimates of their costs, in both time and money, as unrealistically low.”

The review of RTI was published last month, with the express aim -- three years after it was introduced -- of seeing if it has achieved what it set out to do and, if not, what can be learned.

On page 38, HMRC concedes: “We acknowledge the reservations expressed by some employers, agents and their representative bodies that we did not sufficiently understand the cost to small business of real time reporting.”

But Nunn believes MTD’s cost is far from the only issue facing the smallest ventures, even though both the transitional and ongoing costs of RTI to such firms came in higher than predicted by HMRC.

“For small businesses in particular, there is a further lesson for HMRC from the introduction of RTI about the importance of appropriate targeting of communications and guidance.

“Recent research has already highlighted that many small businesses remain unprepared for the introduction of MTD”, she said. “Communications and guidance need to reach all affected by the programme.”