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CLA: Making tax returns online-only will punish rural businesses with poor broadband

Friday, November 4th 2016 by Phil Wilkinson-Jones

Rural business owners could be “unfairly punished” if they are given no choice but to submit tax information online, the CLA has claimed.

The organisation, which represents landowners, farmers and other rural businesses, is concerned about the government’s plan to digitise all tax-related accounting from 2018.

It is warning that a combination of poor broadband in rural areas and no plans by HMRC to undertake comprehensive user testing of the new system “could throw the rural economy into chaos”.

CLA president Ross Murray said: “It is vitally important to help everyone achieve tax compliance.

“We support new technology which aims to make life simpler for businesses but the government must look at the whole picture before making tax digital.

“Rollout of superfast rural broadband has been too slow and the government’s Universal Service Obligation (USO) of 10Mbps by 2020 is not guaranteed to be met.

“Current broadband technology in the UK means download speeds are faster than upload speeds, so the government must reassure businesses they will not be unfairly penalised as a result of poor connectivity when trying to complete and submit tax information online.”

The CLA said HMRC could face similar problems to those encountered by the Rural Payments Agency (RPA) when the Basic Payment System for farmers when online-only.

'A serious breakdown'

“It is crucial in view of previous government digital systems failures such as the RPA that HMRC should reflect on the lessons learned from that project to avoid a serious breakdown in the system which would cause yet more chaos for the rural economy,” said Mr Murray.

Responding to HMRC’s consultation on Making Tax Digital, the CLA has set out five key recommendations to support rural businesses.

They include rolling out the new system to the largest businesses first, delaying implementation by a year to test it over a full tax year cycle and reassuring rural businesses they will not be unfairly punished because of poor connectivity.

The CLA also wants the tax exemption threshold to be increased from £10,000 to match the VAT threshold of £83,000 and for the cost of buying bespoke software to deal with tax accounting allowable for tax relief.

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