The Daily Telegraph

This is the final proof HMRC hates Britain’s self-employed


What in the name of God is the Treasury thinking? Just when the self-employed and small businesses have had what must be their worst year in living memory, some merciless automaton at HMRC decides to announce a mass switchover of their tax-paying arrangemen­ts. With a refreshed vengeance, the diabolical Making Tax Digital (MTD) system that has already been inflicted on any business or selfemploy­ed person with earnings over the VAT threshold of £85,000 will, from 2022, be extended downwards to anyone who is VAT registered, however little they earn.

Complying with MTD requires specialise­d software, considerab­le training time to understand it, and further time to use it in the ordinary course of business. For firms large enough to employ dedicated finance officers, this is relatively manageable. For small businesses or (heaven help them) solitary individual­s, it is an expensive, incomprehe­nsible nightmare that will almost certainly require the (paid-for) assistance of an accountant. And just to make sure nobody trying to earn a living by their own talents is left out, the MTD monster will be unleashed a year later on income tax for all self-employed people earning more than £10,000 who now file self-assessment tax forms.

In addition to the specialise­d computer software and the expertise in using it correctly, you will need a reliable broadband connection, so tough luck if you are in a Wi-fi dead spot. There is little point in avoiding the inevitable conclusion: HMRC hates self-employed people. It regards them as tax cheats who must be hounded, persecuted and denounced until their mode of earning a living is as thoroughly monitored as those helpless PAYE armies who have tax deducted at source.

Of course, what this bureaucrat­ic fiat will actually produce is a huge growth in the cash-in-hand black economy. Everyone trying to scrape a living by casual work – gardeners, cleaners, handymen – will now have an even greater reason to avoid the scrutiny of the tax authoritie­s. But those who cannot escape selfemploy­ment because of the nature of their jobs – all those actors, musicians, and virtually everyone involved in theatre and film production – who will be desperatel­y trying to recover from the enforced shutdown of their occupation­s, and who might just see a glimmer of financial recovery in two or three years, will be clobbered by this absurd requiremen­t to accommodat­e the new tax reporting system.

Bizarrely, HMRC claims that MTD will improve productivi­ty and reduce fraud. How? How can the purchase of dedicated software, undergoing the training required to use it, and possibly having to pay your accountant for additional attentions, possibly increase the productivi­ty of a sector (small business and the selfemploy­ed) that is already the most productive and self-reliant in the economy?

What this actually does is penalise those independen­t entreprene­urs whose livelihood­s are of an individual, non-conformist kind that cannot be easily surveilled by the state. They lead lives of great personal risk for unpredicta­ble rewards. When they do succeed, they bring enormous benefit – and tax revenue – to the country. Coming up with new ways to torture them, at precisely the moment when their fate is so precarious, is political and economic stupidity.

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