Strong doubts have been raised over the current Making Tax Digital (MTD) timetable.

HMRC launched its flagship digitisation scheme in 2015-16, intending to move tax systems and records to a modern management platform by 2020.

The aim was to maximise tax revenue, make sustainable cost savings and improve customer service by modernising systems for VAT, income tax self-assessment and corporation tax.

HMRC also planned to require business taxpayers to keep and submit quarterly digital tax records.

The flagship tax digitisation project has, however, been beset by issues and delays. A recent National Audit Office (NAO) paper reported that the scheme is now expected to cost around five times its original budget.

Delays ‘undermining credibility’ of the programme

Gareth Davies, the head of the NAO, said: “The repeated delays and rephasing of Making Tax Digital have undermined the programme’s credibility and increased its costs.

“They put at risk the support of taxpayers and delivery partners, including those who are essential to the programme succeeding.

“It has made some recent progress on VAT but it has not yet tackled the most complex elements of the programme and significant delivery risks remain.”

HMRC confident on meeting new timelines

HMRC chief executive Jim Harra has admitted the Government underestimated the scale and complexity of the project.

Since December 2022, the tax authority said it has been undertaking a series of ‘co-creation’ events involving unnamed stakeholders “with the ambition of resolving the most pressing design issues within the coming months”.

They said they were confident about the prospect of delivering MTD for income tax self-assessment to its new timelines.

Those with incomes above £50,000 will join the programme in 2026 while those in the £30,000 to £50,000 bracket will join in 2027. The Treasury is currently reviewing whether MTD quarterly reporting is appropriate for people with income between £10,000 and £30,000.

However, representatives from the business, tax and accountancy world have expressed severe doubts to MPs about HMRC’s ability to get the project online at its current schedule.

Alison Kerrey, chair of the joint Chartered Institute of Taxation and the and the Association of Taxation Technicians Digitalisation and Agent Services Committee, said: “HMRC and the Government’s execution of this major change to the tax system feels like it is out of control, with spiralling costs, unrealistic timescales, and questionable benefits.”

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The current high interest environment can pose expensive challenges for businesses using traditional financing methods.

Bank loans still make sense for some companies; however, there are plenty of alternative finance options.

Being open to innovation and thinking creatively can help businesses access funding while minimising the impact of high interest rates in their financial endeavours.

With all types of funding, however, it is vital to have a strong business pitch to secure investment, as well as a sound understanding of any potential risks and pitfalls.

Peer-to-peer lending

P2P lending websites connect small businesses with smaller scale investors without going through a bank.

Borrowers can benefit from lower interest rates, increased lending opportunities and faster loan approval times when compared to traditional financial institutions.

Angel investors and venture capital

Angel investors provide initial seed money for startup businesses, usually in exchange for ownership equity in the company. It’s sometimes called ‘seed’ funding and you can generally expect to raise anything up to £1 million.

Venture capital firms invest in early-stage companies with high growth potential.

Small business grants

You may be eligible for a government small business grant to cover certain types of expenditure such as cost of premises, plant, machinery and IT equipment.

Crowdfunding

Crowdfunding has emerged as a popular way of accessing alternative funds, especially for startups, growing businesses and creative projects.

By leveraging online platforms, entrepreneurs can reach a broad audience of potential investors who are willing to contribute smaller amounts to support their ventures.

Strategic partnerships

Forming strategic partnerships with other businesses can unlock financing opportunities. These partnerships may involve joint ventures, co-branding initiatives or revenue sharing agreements that can help share the financial burden and leverage each other’s strengths.

Need support or advice with raising finance? We can help.

Earnings growth hit 7.3 per cent in the three months to May – the joint highest level on record.

According to the Office for National Statistics (ONS), public sector wages rose 5.8 per cent in the three months to May while earnings in the finance and business services sector leapt by 9 per cent.

In response, the Chancellor of the Exchequer and the Governor of the Bank of England have hinted at a need for wage restraint.

At the annual Mansion House dinner, Governor Andrew Bailey told City figures that current levels of price and wage increases were inconsistent with reducing inflation – now at 8.7 per cent.

‘More borrowing is inflationary’

Jeremy Hunt said the Government would do “what is necessary for as long as necessary” to tackle inflation persistence and bring it down to the two per cent target.

He said: “That means taking responsible decisions on public finances, including public sector pay, because more borrowing is itself inflationary.”

Despite the rise in headline wage growth, real pay when taking inflation into account was down 0.8 per cent, the ONS data showed.

‘Real value of weekly earning is still falling’

ONS director of economic statistics, Darren Morgan, said: “Pay excluding bonuses has again risen at record levels in cash terms.

“Due to high inflation, however, the real value of weekly earnings is still falling, although now at its slowest rate since the end of 2021.”

Workers have sought pay rises to keep up with the rising cost of living and some commentators claim the Government is scapegoating wage increases as the reason for sustained inflation.

It comes after a report in June by the International Monetary Fund (IMF) which said high corporate profits have been the biggest contributor to inflation in Europe since 2021.

Response from TUC

On Twitter, the Trades Unions Congress said: “Wages are not driving inflation. This government must stop blaming workers for its failures.

“Wages are falling by 1.7 per cent. Public sector pay has fallen even faster at 3.1 per cent.

“And the Bank of England’s own data shows that any pay gains are being driven by the very HIGHEST earners.”

The data also revealed that unemployment has risen over the past quarter, with the jobless rate in the UK increasing from 3.8 per cent to 4 per cent in the three months to May.

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A one-stop information portal has been set up to help directors make crucial business decisions.

The director information hub was launched by the Insolvency Service, providing advice and support regarding statutory obligations and potential financial pitfalls.

Who is it aimed at?

The hub hosts guidance and information on a range of business themes and is specifically designed for directors of micro, small and medium-size limited companies.

Directors of limited companies, unlike sole traders, must comply with certain statutory obligations. These can range from hairdressers and builders with their own companies to directors of mid-sized companies in the IT sector.

What does it offer?

Examples of the kind of advice available on the information hub include:

• Understanding company finances, director duties and obligations
• The benefits of a good accountant
• How to recognise early warning signs of financial distress
• How and when limited company debts can become personal debts
• How to avoid the risk of insolvency

Leanne Webb, project lead at the Insolvency Service, said: “Our research found that too many company directors struggled to locate the existing guidance that they needed, and that it was often complicated or overwhelming when they did.

“We hope this new one-stop shop provides the solution and helps directors take their companies in a positive direction.”

‘Need-to-know information in one place’

As well as direct research with company directors, the project also worked closely with teams in HMRC and Companies House, business finance specialists at Royal Bank of Scotland, and business groups, including The Directors Helpline and the Institute for Turnaround (IFT).

Milly Camley, CEO at the IFT, said: “Getting the right information and advice is crucial throughout the business cycle and most especially at points of stress.

“It’s great to see the need-to-know information – in plain language – in one place to enable directors to access what they need for business success.”

More information can be found at gov.uk.

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Drinkers face paying more for their glass of Chardonnay when a freeze on alcohol duty is lifted at the start of next month.

From August 1, every pint in every pub and restaurant will be subject to less tax, but at the same time the current hold on alcohol duty comes to an end.

Drink prices will go up with inflation and prices in supermarkets are likely to rise – especially for wine.

The new Alcohol Duty system will see drinks taxed based on their alcohol by volume (ABV). It replaces the current system, which consists of four separate taxes covering beer, cider, spirits and wine.

Small businesses that produce any alcoholic products with an ABV of less than 8.5 per cent will be eligible for reduced rates on qualifying products, if they produce less than 4,500 hectolitres per year.

Draught products in pubs cheaper than in supermarkets

Low strength drinks below 3.5 per cent ABV will be charged at a reduced rate of duty.

There will also be a reduced rate for draught products, which will reduce tax on qualifying beer and cider by 9.2 per cent, and by 23 per cent on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants.

It means the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets.

Jonathan Athow, Director General of Customer Strategy and Tax Design, HMRC, said: “After listening to feedback from industry, economists, public health groups and many business owners, the new Alcohol Duty system will be based on the founding principle of taxing alcoholic products by strength, ensuring consistency across the board for the first time.

“The new system will support the Government’s public health objectives and provide extra support to small producers, pubs and the hospitality sector.”

‘System will be simpler’

Exchequer Secretary to the Treasury, Gareth Davies said: “Because we left the EU, we can make sure our alcohol duty system works for us. From next month the whole system will be simpler – the duty will reflect the strength of the drink.

“We will also protect pubs and brewers with our Brexit Pubs Guarantee keeping Draught Duty down, and a new Small Producer Relief.”

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for 18 months from 1 August 2023 until 1 February 2025.