A call has been made to increase the level of income that exempts one-person businesses from reporting to the taxman quarterly by eight-fold.
The call was made by the Chartered Institute of Taxation (CIOT) after a poll of its members revealed that 87 per cent would like the £83,000 VAT registration threshold to replace the £10,000 exemption that is being proposed for the digital reporting plan.
However, even if the threshold was increased, PSCs would still not be able to get the exemption as HMRC has said that any threshold would only apply to an individual’s income via their own incorporated business.
This means that PSCs who are viewed as clients in the CIOT poll will still be required from April 2018 to report digitally at least quarterly – that is unless the Government decides to heed the CIOT’s call.
The CIOT has also asked the Government to put back the start date of the plan, entitled Making Tax Digital, to give HMRC, taxpayers and their advisers more time to prepare. This call has also been echoed by Treasury Select Committee Chair Andrew Tyrie MP.
The CIOT said: “The government appears to be forcing the pace in the belief that requiring even very small businesses to ‘go digital’ in a tight timescale will transform their record keeping and reduce the tax gap.
“Our survey results heighten our fears that this current aggressive approach by HMRC may have the opposite effect, with more haste meaning not just less speed, but maybe even see compliance levels go in the wrong direction.”