HMRC's independent oversight body has slammed government plans to force small businesses to submit quarterly digital tax returns, explaining it "is not an approach we can endorse".
The Administrative Burdens Advisory Board (ABAB) has used its annual report to underline "significant concerns" shared by the Federation of Small Businesses (FSB) that "the proposals for quarterly updates will be more budernsome than they currently are with increased record keeping and compliance costs".
The stark criticism from the ABAB adds to growing concerns about HMRC's plans to mandate small businesses to move to the untested digital tax returns platform. The ABAB report highlights "reservations around the current capability of software being able to deliver HMRC's vision and the appetite amongst small businesses to utilise them".
The ABAB also criticised the decision to announce the policy without consultation or warning in last year's Autumn Statement. The report says: "We were surprised and disappointed when this was announced at the Autumn Statement, particularly that given our close engagement and relationship with HMRC we were not informed of the intentions earlier".
Mike Cherry, national chair of the FSB, said: "The writing is on the wall as more and more small businesses are making clear their concerns about this poorly thought out plan. Forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone. It will simply add to the cost of doing business in the UK. These proposals will also substantially increase administrative burdens - particularly for the smallest businesses.
"When every independent body and expert is lining up to tell you to stop, slowdown and think again, it might be time to take a breather and listen to their concerns."
The FSB is asking its members to outline the real impact these proposals will have on their businesses to illustrate to Ministers the problems this will cause. The FSB is urging the government to ensure any move towards quarterly tax reporting is strictly on a voluntary basis.