ICAEW has responded to a consultation on the draft tertiary legislation for Making Tax Digital for income tax self assessment (MTD ITSA). The draft MTD ITSA notices are very limited in scope and do not differ significantly from the drafts published in 2017.
The notices supplement the MTD ITSA secondary legislation (regulations) published in September 2021. They need to be supplemented by guidance.
ICAEW’s Tax Faculty understands that guidance will not be available for some time. Without this additional guidance, all the notices offer is some clarity over the transaction categories that must be used for MTD ITSA and the continuation of the ‘three-line accounts’ relaxation.
Some of the more fundamental issues with MTD ITSA that need to be resolved include:
- the need for multiple agent functionality;
- the design for businesses that have accounting dates that do not fall between 31 March and 5 April;
- the design for income from jointly owned property;
- the design for making adjustments and corrections, and exactly how the quarterly updates, annual adjustments, end of period statement and final declaration fit together in practice; and
- whether HMRC, software developers, taxpayers and agents have the capacity to deliver MTD ITSA to the current timeline, given the limited nature of the pilot, lack of awareness and resistance to the additional cost involved.
ICAEW’s Tax Faculty continues to have intensive engagement with HMRC’s MTD team concerning these issues.
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.
More support on tax
ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.Sign up for TAXwireJoin the Tax Faculty
The future of tax after COVID
As digital technologies transform society, the UK government is grappling with balancing the books while ensuring its tax system is fit for purpose. Join us as we take a look at the issues and challenges facing the tax system.Read more
More from the Tax Faculty
Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter
Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.
Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.