Making Tax Digital: Voluntary pay as you go

• A survey of AAT Licensed Accountants found that 27% believe the voluntary pay as you go process described in the consultation document is a good idea. 26% thought it was not a good idea and the largest number of respondents (47%) were unsure. 
• AAT is very clear that this system must remain entirely voluntary and that mission creep must be avoided in order for this to be a success.  
• AAT believes the display of voluntary payments should be as clear and simple as possible to encourage active customer engagement. AAT focus groups found display examples provided in the consultation document were neither clear nor simple and would likely have the opposite effect of that intended.  
• All voluntary payments should be used to pay off whichever tax first becomes due. The alternative is for the system to clearly allow taxpayers to allocate payments for particular taxes.
• There should be no restrictions on repayment shortly before a liability becomes due. 
• HMRC needs to educate both agents and businesses about the merits or otherwise of undertaking voluntary payments.

General notes on the six Making Tax Digital consultations held in 2016

• AAT wholeheartedly supports the ambition to make our tax system the most digitally advanced tax system in the world. However, AAT is concerned about the timetable for implementation.  
• AAT is concerned about the costs MTD will place on businesses and taxpayers. A recent survey of AAT Licensed Accountants found that well over three quarters were concerned about software costs and time spent familiarising themselves with the new processes. Almost half are concerned about hardware costs and other as yet unknown costs. 
• It has been difficult to fully respond to each of the six MTD consultation documents given so much technical uncertainty remains. HMRC must delay implementation if significant technical difficulties arise rather than proceeding regardless. Proceeding under such circumstances risks both reputational damage and reduced compliance. 
• AAT favours a phased implementation programme for MTD. The threshold should be set at £83,000 (the current VAT threshold) falling to £11,000 (the personal allowance) over a three year period. This will help the business community whilst simultaneously helping HMRC achieve the best possible outcome.