Government plans to force small firms to submit quarterly digital tax returns will be more burdensome than current arrangements and will increase record keeping and compliance costs, an independent watchdog has said.
The Administrative Burdens Advisory Board, which has oversight over HMRC, said it has "significant concerns" over the plans, adding "compulsory digital record keeping and quarterly online updates is not an approach we can endorse".
It expressed "reservations around the current capability of software being able to deliver HMRC's vision" as well as the appetite among small firms to use what is currently an untested digital tax returns platform.
The ABAB also said it was "surprised and disappointed" that the Government decided to announce the policy without consultation as part of the Autumn Statement - "particularly that given our close engagement and relationship with HMRC we were not informed of the intentions earlier".
Mike Cherry, national chairman of the Federation of Small Businesses, said: "The writing is on the wall as more and more small businesses are making clear their concerns about this poorly thought out plan.
"Forcing small firms to pay for expensive digital accounting software so they must submit extra tax returns is not going to help anyone. It will simply add to the cost of doing business in the UK. These proposals will also substantially increase administrative burdens - particularly for the smallest businesses.
"When every independent body and expert is lining up to tell you to stop, slowdown and think again, it might be time to take a breather and listen to their concerns."