Jane Ellison said the government is 'committed' to digital tax system - Photo credit: PA

Jane Ellison, the financial secretary to the Treasury, has said that the government remains committed to digital tax reforms, despite cutting the plans from the Finance (No2) Bill.

The chancellor Philip Hammond yesterday gave notice to parliament that he was planning to cut out around half of the bill’s 135 clauses and 29 schedules, in a bid to speed its progress through both houses before parliament dissolves on 3 May.

This includes the Making Tax Digital reforms that would have required businesses to keep digital tax records and file quarterly updates to HMRC.

They have come under fire from MPs and peers who say it has not properly considered the financial and administrative burden it would place on businesses.

Related content

Chancellor to jettison Making Tax Digital plans from Finance Bill
HMRC urged to undertake comprehensive pilot of Making Tax Digital as costs remain unclear
Earning public trust in an age of cyber threats

Speaking in the House of Commons debate on the Finance Bill yesterday (25 April), Ellison said that the government recognised the need to debate the Making Tax Digital reforms at greater length than was allowed during the truncated hearing, which saw three stages being completed in under five hours.

“The government remain committed to the digital future of the tax system, a principle widely accepted on both sides of the house,” she said. “We recognise the need for the house to consider such measures properly [and] that is why we have decided to pursue those measures in a Finance Bill in the next parliament, in the light of the pressures on time that currently apply.”

The move was welcomed by opposition MPs, with Peter Dowd, Labour MP for Bootle, saying that it will come as a “great relief to many small businesses given the onerous requirements for quarterly reporting”.

He added: “No one is against a move to a digital tax system, but we do not agree with the rush to implement it.”

Meanwhile, George Kerevan, Scottish National Party MP for East Lothian, said that the decision to remove the clauses “could be no more fitting tribute” to the work of Andrew Tyrie, chairman of the Treasury Committee, in scrutinising the plans. The Conservative MP yesterday announced that he would not stand for re-election in the general election in June.