Making Tax Digital

Making Tax Digital is a key part of the government’s plans to increase the use of digital communication in Government.

HMRC is committed to bringing in a digital tax system where the default is online interaction. This will bring significant change for HMRC, taxpayers and their advisers.

The ICAS view - the long-term vision of Making Tax Digital

The long-term vision of Making Tax Digital (MTD) is attractive. It potentially empowers taxpayers, reduces data handling costs and provides a new range of services for both taxpayers and their agents. However, this could be undermined by poor and rushed implementation.

Digital should not be mandatory for everyone. Alternative, non-digital channels should be available and adequate resourcing is needed for HMRC to deliver the best service.

The aim should be to create a system that taxpayers want to use. Agent Services must be made available at the same time or ahead of services for individuals and businesses so that agents can properly support their clients.

Key ICAS policy positions are:

• Digital facilities should be accessible to all on the terms that they want.
• Digital services should be so good that everyone wants to use them.
• ICAS members are well placed to encourage and support digital use where appropriate.

Next steps in MTD

MTD for VAT became mandatory for businesses with a taxable turnover above the VAT registration threshold from April 2019, with some larger or more complex business joining in October 2019. 30-day online reporting for UK residential property gains came in from April 2020.

MTD for VAT is extended to all VAT registered businesses from April 2022. MTD for Income Tax for trading and property income, covering unincorporated businesses with a turnover over £10,000 per year, is scheduled for April 2023. MTD for Corporation Tax is not envisaged before April 2026.