Lords criticise government’s basis period reform

The government has not made the case for basis period reform either as a simplification or as an essential prerequisite for introducing making tax digital for income tax says the House of Lords economic affairs Finance Bill subcommittee in its report on the draft Finance Bill (No 2) Bill 2021-22.

The subcommittee considers the consultation on basis period reform was flawed saying it was unclear why four years after the original consultation the new and different basis period reform proposals were published in haste.

However it welcomed the government’s recognition that more work needs to be done on the impact this reform will have on businesses that cannot align their accounting periods with the tax year. Further it recommended that for businesses which do not have a 31 March or 5 April year end making tax digital should be deferred until...