The UK Government is proposing to require most businesses and self-employed people to keep track of their tax affairs digitally, and update HMRC at least quarterly via a digital tax account.
Last year, my SNP colleague, Hannah Bardell MP, took part in a debate in Parliament on these proposals and joined with the Chartered Institute for Taxation, the Federation of Small Business and others in calling for the UK Government to consult on these proposals before any changes are made. I am pleased to note that we were successful in forcing the UK Government to conduct this consultation.
My SNP colleagues and I remain concerned about the impact of the proposals on small businesses in particular. Many aspects of these proposals represent unnecessary red tape, which will inflict additional costs on small business owners and I am concerned that it will act as a disincentive to entrepreneurs, and people considering becoming self-employed. I firmly believe that the UK Government should instead be concentrated on looking at ways to remove the burden of tax administration and bureaucracy from small businesses, and allowing them to focus on growing their companies and creating jobs.
It is vital that the UK Government reconsider whether mandatory use of digital reporting is a proportionate demand on business, or whether businesses should be allowed to voluntarily adopt digital reporting. I also share your view that there should be exemptions from quarterly reporting – particularly for those who are not incorporated or VAT-registered.
I recognise the disproportionate effect that these proposals will have on those working in the creative sector. In Scotland, the SNP Scottish Government is using its limited powers to support our thriving creative industries sector. For example, the Scottish Government is in the process of establishing the Creative Industries Advisory Group, which will advise Scottish Ministers on the support the sector needs to ensure it thrives in Scotland.
And in the aftermath of the UK’s decision to leave the EU, protecting Scotland’s membership of the Single Market is vital to Scotland’s culture and creative industries. The creative industries are worth almost £4 billion to the Scottish economy, with nearly 74,000 employed in the sector. We believe that access to the ideas, talent, experiences and creative exchanges that the freedom of movement aspect of the Single Market provides is especially important to the cultural sector.
Whilst my SNP colleagues and I are supportive of digital transformation, we believe this must be made in parallel with the simplification of tax policy. The UK Government’s lack of consideration for how this change will work in practice flies in the face of the commitments that they have made to small businesses and tax simplification, and we will continue to press for them to listen to our small businesses.