Select committee: Finance Bill Sub-Committee
Conclusion 14
2nd Report - Basis Period Reform and Uncertain Tax Treatments
Published 15 Dec 2021
Paragraph 66
Finance Bill Sub-Committee Draft Finance Bill 2021-22 All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
We therefore recommend 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 . This is also the earliest date at which partnerships—which are disproportionately represented in this group of businesses—are due to be brought into MTD. For the largest partnerships which are particularly adversely affected by basis period reform, no date for the implementation of MTD has yet been set.
From: Finance Bill Sub-Committee, 2nd Report - Basis Period Reform and Uncertain Tax Treatments, paragraph 66, 15 December 2021
Government response
The government responded to the whole report on 2 February 2022 (deadline 15 February 2022).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Government accepts two of the Sub-Committee's recommendations and partially accepts six, with the cover letter stating it "welcomes" the view that basis period reform should continue.
- On overlap relief and guidance, the Government "cannot commit" to the 5 April 2022 deadlines, but commits to publishing basis period reform guidance "as soon as possible after Royal Assent".
- It does not accept deferring Making Tax Digital for businesses without a 31 March-5 April year end, saying it "cannot justify differential treatment purely based on the date accounts are drawn up to".
- On provisional figures, the Government is "planning to explore" the issue with stakeholders from late February 2022, with a decision on whether and how to introduce an easement "by autumn 2022".
- On uncertain tax treatment, it commits to monitoring the regime and will explore a third trigger through informal engagement, with any decision "subject to full parliamentary scrutiny and debate".