The Administrative Burdens Advisory Board (ABAB) has expressed concerns over the implementation of digital record keeping and quarterly reporting for small businesses. In its latest report, the independent board, whose stated aim is to make “a noticeable difference for small business by supporting HM Revenue and Customs to help make tax easier, quicker and simpler,” said that it was broadly in support of moves to take tax reporting digital.

It expressed concern, however, that the Government’s Making Tax Digital initiative would not suit all businesses and should not be compulsory. Planned moves to require quarterly rather than annual reporting could also prove problematic.

The report said: “We are very supportive of the move to digital but have reservations as to whether this will meet the needs for all small businesses, together with the level of support that will be available and the pace of change. Therefore compulsory digital record keeping and quarterly online updates is not an approach we can endorse. We are concerned that the proposals for quarterly updates will be more burdensome than they currently are with increased record keeping and compliance costs. This will have a big impact on the smallest of businesses. The requirement that as part of the reforms all businesses will have to keep records digitally is a significant concern, given the timescales to educate businesses and provide the necessary tools for them.”

ABAB is an advisory board only and has no power to force changes on HMRC or the government. If the proposed changes go ahead, small businesses might well find it useful to embrace cloud accountancy and other accounting tools in order to get to grips with the process.

The report also criticised HMRC’s levels of service, which it said, “continued to be poor.” It said that a large proportion of the feedback received via the Tell ABAB online facility for small businesses was concerned with HMRC’s channels of communication, particularly with its telephone service. The report hypothesised that improved systems and better access to HMRC records might result in fewer telephone inquiries, but for now, more efficient telephone service is needed.