Making Tax Digital could put many small firms and sole traders at increased risk of cyber crime unless they get sufficient Government support, according to a leading accountancy body.
The warning comes from the Association of Taxation Technicians (ATT) as part of its response to the HMRC consultation Bringing tax into the digital age, ahead of the introduction of Making Tax Digital (MTD).
The ATT says that if digital record-keeping and quarterly profit reporting are made mandatory from April 2018, as HMRC proposes, there will be many businesses without any significant experience of keeping digital data secure who will be vulnerable to cyber crime as well as being hit with new costs.
The ATT is calling on the Government to take "primary responsibility" for assisting businesses to meet their new obligations under Making Tax Digital.
Yvette Nunn, co-chair of ATT's technical steering group, said: "There are real practical concerns about the security risks and the potential for businesses becoming victims of cyber crime. Our experience suggests that many businesses are not sufficiently cyber-savvy. They are unprepared for having to keep their data safe in a digital world.
"Forcing people down the digital route when they are unprepared for it could be putting them at the highest risk of being targeted by cyber crime and fraud. We believe that if HMRC is taking away the element of choice from a taxpayer over how they keep their business records and whether they engage digitally with HMRC, it needs to take the primary responsibility for educating taxpayers on cyber security."
In a latter to The Times on November 10, Jim Harra, HMRC's director general of customer strategy and tax design, said that HMRC is looking at the provision of additional assistance with transitional costs.
The Government, said Nunn, "must be prepared to invest whatever amount of financial support is required to ensure that taxpayers can reasonably meet those obligations. It is important to appreciate that very many taxpayers are fully meeting their tax obligations with the use of manual record keeping systems. For them, the compulsory change to digital record-keeping offers no advantage."
If the Government cannot provide sufficient support, added Nunn, then "it really does need to rethink the mandatory aspect of the MTD proposals".