Brexit causes HMRC to delay Making Tax Digital for individuals

Brexit causes HMRC to delay Making Tax Digital for individuals

HMRC have delayed the full roll-out of Making Tax Digital (MTD) while the UK prepares to leave the EU in 2019.

MTD for individuals was scheduled to take effect from 2020, however the government have revealed that the plans have been put on hold to allow HMRC to focus on the UK’s Brexit preparations.

In a letter to tax professionals, HMRC stated: ‘We have made the decision to delay plans to release project capability to EU exit work. This means halting progress on Simple Assessment and real-time tax code changes.’

HMRC proceeded to say that the foundations for MTD for individuals have been laid, which will enable the government to return to the initiative ‘in the future’.

Responding to the news, Yvette Nunn, Co-Chair of the Technical Steering Group at the Association of Taxation Technicians (ATT), stated: ‘Given the unprecedented changes which will result from Brexit, it is only sensible that HMRC seek to prioritise their work.

‘There have been reports of inaccuracies in the information which HMRC have used in Simple Assessments to calculate tax bills. As a result, taxpayers are required to check these carefully once received, especially as they only have 60 days to correct any errors.

‘While we welcome the pause . . . we strongly urge HMRC to use the extra time given to iron out the known problems with Simple Assessment and dynamic coding before they hit play on them again.’

Meanwhile, HMRC confirmed that MTD for VAT is set to take effect from April 2019 as previously planned. From this time, businesses with a turnover above the VAT registration threshold (currently £85,000) will be required to keep digital records for VAT purposes and submit VAT returns using MTD functional compatible software.

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Cost of Brexit ‘divorce bill’ still unclear, says NAO

Cost of Brexit ‘divorce bill’ still unclear, says NAO

The National Audit Office (NAO) has stated that the final cost of the UK’s Brexit ‘divorce bill’ remains ‘uncertain’.

There are many factors that need to be considered when analysing the cost of leaving the EU, the NAO stated, and the estimate of between £35 billion and £39 billion put forward by Prime Minister Theresa May in December 2017 could rise.

The NAO said that an increase in inflation, alterations to the exchange rate or changes to the UK’s economic performance could cause the final figure to rise.

Commenting on the matter, Amyas Morse, Head of the NAO, said: ‘We have reviewed the Treasury’s estimate of how much the UK will pay the EU under the draft withdrawal agreement. The estimate reflects a number of moving parts, so the range of costs in it could have been wider than £35 billion to £39 billion.’

The UK is set to leave the EU on 29 March 2019, and a transitional period is expected to last until 31 December 2020. The UK has agreed to continue to fulfil its current financial commitments following Brexit, while benefitting from most of the current trade arrangements.

Confidence in UK economy has ‘returned to positive figures’, IoD finds

Confidence in UK economy has ‘returned to positive figures’, IoD finds

Business leaders’ confidence in the UK economy has ‘returned to positive figures’, and has risen to its highest level since Article 50 was triggered, a survey carried out by the Institute of Directors (IoD) has found.

The IoD’s poll of 700 company directors revealed that the balance of business leaders who stated that they are optimistic in regard to the UK economy has risen to 1%.

Directors’ confidence in their own businesses also rose, increasing to 47%, said the IoD.

However, the Institute warned that positivity is being ‘held back by labour shortages’, alongside the ‘burden of complying with government regulations’.

Commenting on the survey’s findings, Tej Parikh, Senior Economist at the IoD, said: ‘After nearly a year of economic pessimism winning out among business leaders, the scales have tipped gently into the positive.

‘It seems likely that meaningful progress in Brexit negotiations since December has brought some much-needed reassurance.

‘We urge the government to provide further detail on its proposals for the UK’s future trading and regulatory relationship with the EU, and to iron out its initiatives to narrow the skills gap and enhance business productivity through the Industrial Strategy.’

CBI warns of cost rises if UK strays from EU regulations

CBI warns of cost rises if UK strays from EU regulations

In a new report, the Confederation of British Industry (CBI) has warned the government that costs could rise for businesses if the UK were to diverge from EU regulations.

The report states that Brexit ‘presents opportunities for rule changes’ in specific sectors, which could ultimately benefit the UK economy.

However, the CBI also warned that the government should only diverge from EU rules if it can be proven that the benefits of doing so will outweigh the costs.

It said that, for certain industries, existing EU rules are ‘fundamental’ to the trade and transport of goods, and as such, remaining aligned with the EU would be ‘essential’.

Commenting on the issue, Carolyn Fairbairn, Director General of the CBI, said: ‘It’s vitally important that negotiators understand the complexity of rules and the effects that even the smallest of changes can have.

‘Deviation from rules in one sector will have a knock-on effect on businesses in others, and divergence from rules in one part of a production process will have consequences for market access throughout entire supply chains.’

Brexit vote ‘has cost UK households £600 per year’, data suggests

Brexit vote ‘has cost UK households £600 per year’, data suggests

A study carried out by think tank the National Institute of Economic and Social Research (NIESR) has suggested that the Brexit referendum has ‘cost UK households over £600 per year’.

The NIESR stated that the Brexit vote caused sterling to depreciate, resulting in sluggish economic growth. The vote also contributed to a fall in living standards.

The think tank has now downgraded its growth predictions for the UK economy for this year and for 2018: the NIESR anticipates the economy to grow by 1.5% both this year and next year. These predictions are based on the prospect of the UK experiencing a ‘soft Brexit’, and do not take into account the effects of a ‘hard Brexit’.

The NIESR’s new predictions come in the wake of a ‘strengthening and broadening’ global economic recovery.

Garry Young, Director of Macroeconomic Modelling and Forecasting at the NIESR, commented: ‘It is almost certain that the relative deterioration in the UK economy and the accompanying fall in living standards over the past year are a consequence of the vote by the British people to leave the EU.

‘Had sterling not depreciated and the economy continued to grow at its previous rate, as would have been likely with an improving global backdrop, real household disposable income per head might have been more than 2% higher than now, worth over £600 per annum to the average household.’

Mr Young also called for Chancellor Philip Hammond to ‘make full use of the fiscal space available within the existing rules to accommodate any continued weakness in productivity’ in the upcoming Autumn Budget. He added that the government has ‘scope to relax fiscal austerity, whilst maintaining a long-term fiscal discipline’.

Businesses urge government to make ‘urgent progress’ during upcoming Brexit talks

More than 100 UK businesses have signed a letter to the Brexit Secretary, David Davis, urging him to ensure that ‘urgent progress’ is made in the next round of Brexit talks.

The letter calls for Mr Davis to make sure that transitional arrangements are secured.

Signatories of the letter represent ‘businesses of all sizes, sectors and regions of the UK’, and have responsibility for over 500,000 jobs in the UK and 600,000 jobs in the EU.

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In the letter, the businesses state that they need to make investment and employment decisions now that will have consequences for economic growth and jobs in the future.

The businesses affirm that, until transitional arrangements can be agreed upon, the risk of the government failing to secure a Brexit deal ‘remains real’. The firms therefore want ‘substantive progress’ to be made in the upcoming negotiations.

Commenting on the issue, Carolyn Fairbairn, Director General of the Confederation of British Industry (CBI), said: ‘Businesses are deeply concerned about Brexit and getting more so by the day. Not about the fact that Britain’s exit from the EU is happening – they’re fully committed to making it work. The concern is how we do it.

‘The top priority is to open talks on a ‘status quo’ transition for business, lasting two to three years. That will clear a path to discussing the main prize: trade between the UK and the rest of the EU.’

The letter can be read in full here.

BRC urges government to secure advantageous Brexit customs deal

The British Retail Consortium (BRC) has urged the government to secure an advantageous customs deal with the EU ahead of Brexit in 2019.

The BRC warned that agreements must be put into place in order to avoid goods being held up at borders. It suggested that delays or disruption could lead to rising prices, reduced availability on shelves and an increase in waste.

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Investment in ports, roads and transport infrastructure should be prioritised to ‘get systems ready’ for the day when the UK leaves the EU in 2019, the BRC stated.

Helen Dickinson, Chief Executive of the BRC, commented: ‘A strong deal on customs is absolutely essential to deliver a fair Brexit for consumers.

‘Whilst the government has acknowledged the need to avoid a cliff edge after Brexit day, a customs union in itself won’t solve the problem of delays at ports.

‘So to ensure supply chains are not disrupted and goods continue to reach the shelves, agreements on security, transit, haulage, drivers, VAT and other checks will be required to get systems ready for March 2019.’

The government recently published a Brexit customs position paper, which set out two approaches: a ‘highly streamlined’ customs arrangement between the UK and the EU, and a new customs partnership with the EU.

A second paper outlined proposals to ensure that existing trade in goods and services can continue after the UK leaves the bloc.