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Detail of outcome
The vast majority of respondents to this consultation supported the objective of simplifying the tax system. Some were concerned about the timing of the reform in this consultation and whether businesses have the capacity to adjust to multiple changes at once.
The government has chosen to proceed with two of the measures proposed in the consultation. The measures being taken forward are increasing the entry threshold for the cash basis to £150,000 and simplifying the rules on capital and revenue expenditure within the cash basis to make it easier for businesses to work out whether expenditure is deductible.
In response to stakeholder comments, further consideration is being given to reforming basis period rules and measures to simplify period end reporting requirements.
HMRC has published draft legislation together with a tax information and impact note.
At Budget 2015, the Government set out the vision for a transformed tax system and in December 2015 launched the Making Tax Digital Roadmap, outlining more detail about what the transformed tax system will look like by 2020.
Because of the scales of these changes there is a lot we need to ask people about. We have published 6 consultation documents, each focusing on specific customer groups or elements of the Making Tax Digital reforms.
Focus of this consultation
This consultation seeks views on:
- changing how the self-employed map accounting periods onto the tax year (basis period reform)
- extending cash basis accounting to larger businesses
- reducing business reporting requirements
- reducing the need to distinguish between capital and revenue for businesses using cash basis accounting