House of Lords inquiry recommends further delay to Making Tax Digital for income tax for certain taxpayers

The House of Lords has thanked Chartered Accountants Ireland for its evidence in respect of basis period reform as part of the Finance Bill-Sub-Committee’s inquiry on the draft Finance Bill 2021-22. The Sub-Committee has also now published its report ‘Basis Period Reform and Uncertain Tax Treatments’ which is the outcome of the inquiry.

The report highlights that:-

• the Committee views the consultation on basis period reform as flawed. This was also highlighted by Chartered Accountants Ireland in its response to the basis period reform consultation conducted in Summer 2021;
• the Committee welcomes the Government’s recognition that further work needs to be done on the impact this reform will have on businesses which cannot align their accounting periods with the tax year.
• the Committee recommends that, for those businesses which do not have a 31 March–5 April year end, Making Tax Digital should be deferred until at least 2025/26.

Chartered Accountants Ireland is due to discuss basis period reform, Making Tax Digital and tax complexity in a meeting with the Financial Secretary to the Treasury in the next few months and would welcome member feedback.

The Finance Bill Sub-Committee continues to examine the implementation of Off-Payroll Working legislation and how this is operating in practice. Last month the inquiry heard oral evidence from expert witnesses.