As the dust settles on what turned out to be a rather bizarre election campaign and an unexpected outcome, it’s time to ask what impact this might have on HMRC’s Making Tax Digital project.
Instead of a “strong and stable” government, the general election on 8 June ended Theresa May’s slim overall majority and left her relying on a “confidence and supply” arrangement with Northern Ireland’s Democratic Unionist Party. Although the Queen’s Speech has been delayed by a couple of days, the Government believes it will have enough support in the House of Commons to vote through its legislative programme. But will this now include MTD?
Before the election, many of the cross-party discussions had been around the ambitious timescales and potential costs to businesses of MTD; the issue was sufficiently contentious for it to be dropped from the pre-election finance bill. The Labour Party’s manifesto commitment to “Scrap quarterly reporting for businesses with a turnover of under £85,000” highlighted their concerns about the impact on small businesses.
Perhaps even more significantly, given their new position of influence, in the last parliament the DUP expressed concerns over the impact of MTD on rural communities badly served by broadband. We don’t yet know to what extent these concerns will be taken into account in any new finance bill, but it remains a possibility.
But it’s not simply a matter of counting Ayes and Noes in the new parliament; some of the key figures in the MTD project have now changed as a result of the election.
Jane Ellison, Financial Secretary to the Treasury, failed to keep her Battersea seat while David Gauke, who had been at the Treasury since the coalition government came to power in 2010, has been promoted to Secretary of State for Work and Pensions. Both had been heavily involved in MTD and their replacements, Mel Stride and Liz Truss respectively, will take a little time to get completely up to speed on their new responsibilities, possibly resulting in delays. (Liz Truss does at least have some credentials for her new job, being a qualified management accountant and CIMA member). It’s possible that they will both bring new ideas and fresh thinking to MTD.
Ultimately, of course, MTD is an HMRC project, projected to save money and improve efficiency, so it seems unlikely that it will be dropped entirely from the legislative programme. At Wolters Kluwer, our technology vision remains clear: for us, Making Tax Digital is simply a step towards the goal of full digitalisation of tax and accounting, so we will continue to push forward with our plans ahead of the currently scheduled implementation date in April 2018.
UPDATE: This article was written and first published before the Queen's Speech (delivered on 21 June). The speech included the following under "Other measures": The programme will also include three Finance Bills to implement budget decisions. Summer Finance Bill 2017 will include a range of tax measures including those to tackle avoidance.
We don't at the moment have any further information on the content of these Bills, whether Making Tax Digital will be included, or any dates associated with this. We'll provide further updates as this becomes clear.