Making Tax Digital
‘Making Tax Digital’ is a planned reform of the administration of tax that will replace the annual tax return system with online quarterly reporting. According to present Government plans, it will apply to income tax from 6 April 2018, affecting nearly all individual landlords and self-employed people, as well as many others. This will have a huge impact on taxpayers and on HMRC, and many are concerned that it is being introduced too quickly. The Government ran consultations on the proposals earlier this year, and will publish the responses in January 2017.
As announced in March, the Government will introduce a new penalty for ‘enabling’ tax avoidance schemes that are later held to be ineffective. This is aimed at promoters of such schemes. It is likely to apply from Royal Assent to the Finance Bill 2017.
There will also be a new penalty for a person who ‘knew or ought to have known’ that their transactions were connected with fraud. This is aimed at the so- called ‘carousel’ fraud that has exploited the VAT system over the last two decades, but it may be applied more widely.