HMRC has released four draft notices for consultation. These will form the tertiary legislation for Making Tax Digital for Income Tax (MTD ITSA). Although these notices list some of the more detailed requirements, businesses and their agents will be left with many unanswered "what if…?" questions.
The notices are made using powers conferred by regulations 3, 8, 12 and 16 of the Income Tax (Digital Requirements) Regulations 2021, SI 2021/1076. The notices cover:
- the use of functional compatible software;
- information required in quarterly updates;
- information required in end of period statements; and
- retail sales elections.
These notices are brief, merely specifying the data required. HMRC intends to publish guidance later this year, which will provide more information. Together, they should provide the detail included in the MTD VAT Notice, which contains a mixture of guidance and rules that have the force of law.
The retail sales notice, for example, does allow daily gross takings to be recorded rather than individual transactions (mirroring VAT).Three-line accounts-style reporting will be permitted for smaller businesses with an annual turnover below the VAT registration threshold. However, reporting of jointly-owned property income is still a major problem.
This consultation has a very short window of only four weeks, closing on 28 July 2022. Members will therefore need to send any comments to Caroline.Miskin@icaew.com before Friday 21 July 2022.
See MTD income tax self assessment for further details.
The July edition of MTDtalk has been cancelled due to insufficient new information from HMRC. MTDtalk will resume in September.
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.