The government announced the review of making tax digital income tax self assessment (MTD ITSA) on 19 December 2022, alongside the deferral of its start date. HMRC expects to make recommendations to the Financial Secretary to the Treasury in June.
The review is informal and no consultation document has been published. HMRC has engaged with a wide range of taxpayers, agents and representative bodies. ICAEW’s Tax Faculty staff met with HMRC and hosted a separate roundtable with the MTD team and 11 ICAEW members in practice in April.
Following these meetings, ICAEW has written to HMRC to summarise the key points. These include:
- The review gives an opportunity for fresh thinking on MTD ITSA policy.
- This fresh thinking needs to be applied to all taxpayers, not just those with turnover below £30,000.
- The project should be refocused on what can realistically be delivered in 2026, and on digital record keeping and filing from software.
- The administrative burden associated with quarterly updates is disproportionate and needs a rethink.
- The requirements to maintain digital records and to submit details of income from self-employment and property directly from software could be decoupled from quarterly updates, with the current annual reporting cycle being maintained.
Anyone who would like to make representations directly to HMRC can do so by emailing firstname.lastname@example.org
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