Following extensive consultation, with more than 3,000 responses over the last eight months, HMRC has issued in-depth details on how digitising the tax system through its flagship Making Tax Digital project will help millions of businesses to get their tax bills right first time, without the need for an annual tax return.

Alongside draft legislation, HMRC has also published its responses to the six consultation documents issued in August 2016. After listening to the concerns of businesses and agents, HMRC can now confirm that under Making Tax Digital:

• businesses will now be able to continue to use spreadsheets to record receipts and expenditure, which they can then link to software to automatically generate and send their updates to HMRC – this was requested by a wide range of stakeholders, particularly small businesses and the Treasury Select Committee
• free software will be available to the majority of the smallest businesses
• businesses that cannot go digital will not be required to do so
• all self-employed businesses and landlords with a turnover under £10,000 a year will not have to keep their records digitally or make quarterly updates, but can do so if they wish
• the option to account for income and expenditure on a simple ‘cash in, cash out’ basis will be extended, helping an extra 2.5 million self-employed businesses and unincorporated landlords
• charities will not have to keep their records digitally or make quarterly updates
• customers will have at least 12 months to become familiar with the changes before any late submission penalties will be applied; following feedback from respondents, HMRC will also consult again in the spring on a new penalty model
• HMRC will pilot these digital systems with hundreds of thousands of businesses before rolling them out to ensure the software is user friendly, and to give businesses and landlords time to prepare and adapt

HMRC also confirmed that the government will need to consider further issues, such as the initial exemption threshold and deferring the changes for some small businesses alongside their cost, with final decisions to be made before legislation is introduced later this year.

During the consultation period, HMRC ran a series of public events across the country and online to hear views direct from businesses and agents. It also ran a short online survey for small businesses on some of the key questions from the consultations, which received over 1,200 responses.

Under HMRC’s plans to move recording and paying your tax online, most businesses, self-employed people and landlords will be able to keep track of their tax affairs digitally and update HMRC quarterly by 2020. This is part of the government’s commitment to make the annual tax return a thing of the past for millions of people and businesses.

With millions of businesses already banking, paying bills, shopping and interacting online, integrating tax with the day-to-day running of a business is a natural next step.

This will help businesses steer clear of errors – reducing the £8 billion a year cost to the public purse, get their tax bills right first time, and give them a clearer view of their tax position as they go through the year. Reducing the amount of avoidable errors will also reduce the cost, uncertainty and worry that businesses face when HMRC is forced to investigate them.

Director General, Customer Strategy & Tax Design, HMRC, Jim Harra said:

We know that the majority of businesses want to get their tax right first time, but the latest tax gap figures show that too many find this hard, with more than £8 billion a year lost in tax as a result of avoidable taxpayer error by small businesses.

Making Tax Digital will help businesses to get their tax right first time; it will help reduce the likelihood of errors, lower the chance of unwelcome compliance checks and give them greater certainty that they are getting things right.

There were more than 3,000 responses to the consultations and I’d like to thank everyone for their time and effort. We are pleased that there was a broad welcome for the principle of Making Tax Digital and HMRC developing a transparent and accessible tax system fit for the digital age. The appetite for digital services is growing and traditional paper-based processes make no sense in the 21st century where the vast majority use digital services.

HMRC will continue to work closely with stakeholders, including small businesses and agents, to ensure their views are reflected in the development of making tax digital.

Tata Steel UK Ltd (TSUK) paid the money to the Humber Nature Partnership, an organisation that delivers projects resulting in environmental, economic and community benefits. The payment follows a pollution incident on the Bottesford Beck.

On the 22 May 2015 after a call from the TSUK Environment Manager, Environment Agency officers found a heavy red coloured lubricating oil on Seraphim lagoon, the Bottesford Beck and in wetland channels of Ashby Ville Local Nature Reserve.

Following investigations it appears that the oil overflowed from an industrial bulk container as oil was being drained from a lubricating tank on the TSUK site.

Under the terms of this Enforcement Undertaking (EU), Tata Steel UK Ltd accepted an obligation to make a donation of £73,000 to the Humber Nature Partnership. Final plans for how the money will be used are still underway, but tree planting creation of wildlife ponds and ground works for an outdoor classroom that could be used by local schools are some schemes under consideration.

As part of the EU, Tata Steel UK Ltd has also agreed to take action to ensure that a similar incident does not recur and paid the costs of the Environment Agency.

Elizabeth Cooper, environment officer with the Environment Agency, said:

We work hard to protect people and the environment. In this case, we considered that the Enforcement Undertaking was an appropriate way to sanction the company while creating a benefit for the local environment.

Serious pollution can have devastating effects on rivers, fields and wildlife.

Along with prosecutions, the Environment Agency use enforcement notices, stop notices and civil sanctions to either improve performance or stop sites from operating. It is making better use of the wide range of measures that are available to bring sites back into compliance as quickly as possible.

The Environment Agency’s use of civil sanctions is in line with recent legislation extending their availability for more offences.

Civil sanctions such as these can be a proportionate and cost-effective way for businesses to make amends for less serious environmental offences.

The Enforcement Undertaking requires Tata Steel UK Ltd to:

• Make a donation of £73,000 to the Humber Nature Partnership

• Implement pollution prevention and restoration works

• Review refresher training for staff

• Site improvement works

• Pay Environment Agency costs

Failure to comply with an EU may result in the offender being prosecuted for the original offence. Details of Enforcement Undertakings accepted by the Environment Agency between can be found on GOV.UK

ENDS

Updated: Bass guidance updated