Making Tax Digital faces fresh criticism from House of Lords

The Government’s hotly-contested Making Tax Digital (MTD) project is now facing fresh criticism over its proposed £10,000 a year exemption threshold, above which businesses and self-employed individuals will need to report to HM Revenue & Customs (HMRC) on a quarterly basis.

This time, the comments come from the House of Lords economic affairs committee, which has labelled the threshold “ridiculous,” according to reports.

Lord Bilimoria, founder and chairman of Cobra Beer, said that he supported calls from tax and business bodies for the Government to raise the exemption threshold to match the current VAT threshold of £83,000.

Speaking to the committee, he said: “I put my cards on the table, I’m not a fan [of Making Tax Digital].

“Nobody in a smaller business can imagine how this can be user-friendly. This will increase the error rate. People who have to create accounts in a short space of time make a lot more errors than those who don’t,” he added.

Lord Billimoria said that HMRC’s proposals represented a “complete lack of commercial reality” and that its proposed MTD exemption threshold was “ridiculous”.

He also criticised the Government’s plans to begin phasing in MTD for landlords and sole traders first, followed by larger businesses shortly afterwards.

He said: “I would suggest we start with companies and end up with the smallest businesses, rather than the other way [around].

“We’ve got the wrong direction of travel on implementation”.