The Treasury Select Committee has requested an independent review into the estimated costs of mandatory quarterly tax reporting for small firms.
The government’s Making Tax Digital (MTD) plans include requirements for small businesses to submit quarterly tax updates to HM Revenue & Customs (HMRC). However, many believe that the costs of the proposals to firms have been underestimated. Now the committee of MPs has called for an independent review by the Administrative Burdens Advisory Board (ABAB) to properly assess the impact.
The Federation of Small Businesses (FSB) has welcomed the independent review. It recently commissioned an external economics consultancy to provide an estimate of the costs of MTD to small firms. The consultancy found that the average annual cost would be £2,770 per business.
Mike Cherry, National Chairman of the FSB, said: ‘We are delighted to see the Treasury Committee embrace our recommendation for a full pilot of mandatory quarterly tax reporting before MTD is launched.
‘Research commissioned by FSB indicates that HMRC has significantly underestimated the true cost to small businesses of quarterly tax reporting. We therefore fully support the ABAB review and look forward to working with the body to further scrutinise HMRC’s implementation of MTD.’
Last year the ABAB stated that it held ‘significant concerns’ about mandatory quarterly tax reporting, and said that the proposals would be ‘more burdensome than they currently are with increased record keeping and compliance costs’.