Tax advisers have said that the 'aggressive' plans outlined by the Government as regards rolling out a digital tax system could lead to small business owners across the country being hit with huge bills.

Proposals to insist that businesses keep detailed digital records and submit them to the taxation body using smartphones or computers is putting the 'spirit of voluntary compliance' that currently exists in the tax system at risk, it has been argued.

In response to the Government's request for responses regarding making tax digital, many concerns were received about the increased burden of compliance on businesses across the country.

The Government is hoping to lower its tax losses that result from errors by £600 million on an annual basis by forcing businesses to make tax digital. However, many feel that no business case that truly justifies the suggested changes has been put forward by the Government and say that the plans could even result in reducing tax compliance.

According to The Institute of Chartered Accountants in England and Wales, the cost of making tax digital for businesses would be at least £3 billion and could rise to £7 billion.

John Cullinane, tax policy director of the Chartered Institute of Taxation, told the Financial Times: "There is a significant risk that small businesses will fall into non-compliance, whether deliberately or inadvertently, unless HMRC reconsiders the timetable for mandating MTD.

"What is at stake is the spirit of voluntary compliance within our tax system that sees over 90 per cent of all that is due collected without significant intervention from the authorities.”

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