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Making Tax Digital

Making Tax Digital (MTD) is a fundamental change to the administration of the UK tax system. It will affect how businesses and other organisations, agents and individuals maintain their accounting and tax records and how they transact and communicate with HMRC. MTD transformation projects are being run by HMRC, but should be seen as just one element of the digitalisation of business.

In this section

Practical guidance

MTD for income tax guidance

Making Tax Digital (MTD) for income tax will be mandated from April 2024. Much of the detail of the requirements is still unknown. ICAEW's Tax Faculty outlines how it is likely to work and the progress of the pilot.

Software for MTD

ICAEW shares the latest information about the Making Tax Digital (MTD) software that taxpayers and agents will need to keep digital records and to submit information to HMRC.

MTD and VAT

The first stage of HMRC's Making Tax Digital (MTD) programme focuses on VAT and imposes new requirements keeping on some VAT registered businesses and organisations from April 2019.

MTD for VAT penalties

The introduction of Making Tax Digital for VAT has prompted discussion about the risk of penalties where introducing new processes breach of the regulations.

MTD for agents

Making Tax Digital (MTD) will lead to very significant change for many ICAEW members in practice. MTD is a major HMRC driven change to the administration of the tax system but it should be seen in the context of the increasing digitalisation of business, including the business of providing accounting and tax services.

MTD for business overview

HMRC's vision to digitalise the UK tax system is well underway. The transformation started in April 2019 with Making Tax Digital (MTD) for VAT for businesses with taxable turnover above the VAT threshold.

Webinars and videos

MTD Phase 2 - Are you ready?

Everything you need to know to get ready for the MTD Phase 2 deadline, including what counts as a digital link.

MTD for Income Tax Self Assessment

HMRC is expecting to lay the Making Tax Digital for Income Tax Self Assessment Regulations before Parliament in February 2021. This will give effect to the April 2023 start date for MTD for ITSA, as well as confirming many of the requirements (some of the detail will be in tertiary legislation which will follow later).

MTD for Corporation Tax

On 12 November 2020, HMRC published the long-awaited consultation on Making Tax Digital for corporation tax (CT), confirming it's plans to extend MTD to companies. In this webinar ICAEW Tax Faculty explain HMRC's plans to roll out MTD for CT.

Making Tax Digital for Charities | 29 March 2019

The webinar covers the background to MTD, what the VAT filing requirements will be and what actions charities may have to take and what is meant by the ‘soft landing’ period. It will also include a demonstration of the Buzzacott bridging software showing how a digital submission can be made using the software.

Articles and features

Finance software for smaller charities – the case for investment

There has been significant interest in reviewing or replacing finance systems amongst charities recently. The introduction of HMRC’s ‘Making Tax Digital’ (MTD) has prompted many organisations to review their systems. It is also possible that many finance system reviews had been put on hold during lockdown. This article examines some of the key factors that any charity should consider when reviewing their finance system.

Bloomsbury Core Accounting and Tax Service

Eligible firms have free access to Bloomsbury Professional's comprehensive online library, comprising more than 60 titles from some of the country's leading tax and accounting subject matter experts. Find out who is eligible and how you can access the Core Accounting and Tax Service.

Guide to taxpayers’ rights and HMRC powers

Guide to the growing breadth of HMRC powers and the increasingly complex penalty regime for non-compliance.

Tax returns

A chapter on taxpayers' rights and HMRC powers in relation to tax returns.

Making tax digital tracker

The Tracker provides plain English guidance on the operation of MTD, with sections covering VAT, income tax, corporation tax and tax agents in relation to MTD. 

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Representations

ICAEW REP 95/21 Autumn Budget 2021 representations - Building a modern tax system

A response dated 5 October 2021 to a consultation published by HMT on 30 September 2021, including ICAEW’s Tax Faculty customary pre-Budget letter to the Financial Secretary to the Treasury. It calls for the acceleration of work to build a modern tax system, while urging a “manageable pace” of transition, it cautions against implementing tax changes without consultation, such as the new Health and Social Care Levy.

ICAEW REP 77/21: Basis Period Reform

Pushing through proposals to change basis periods ahead of the expansion of Making Tax Digital will cause as many problems as it solves and would be a backwards step for affected businesses, warns ICAEW in its response to HMRC's consultation on aligning basis periods with the tax year. ICAEW has urged the government not to implement to proposals.

ICAEW REP 66/21 Timely payment

In responding to HMRC's call for evidence on timely payment, ICAEW argues that earlier payment of income and corporation tax should not be considered until the economy has recovered and that earlier payment should not be based on in-year estimates without HMRC first demonstrating that they can be a reliable basis for earlier payment.

ICAEW REP 65/21: Tax Administration Framework Review

In responding to HMRC's consultation on the Tax Administration Framework Review ICAEW argues that the starting point of such tax reform should be significant simplification of the underlying tax rules and that HMRC needs to be given the resources and funding to give it the capacity to take on such a major piece of work.

Further support

Useful links

Some resources that we link to may pre-date the latest amendments to the relevant tax regulations. While these links contain useful information, please treat them with appropriate caution.

Case studies for Making Tax Digital

A series of short case studies from businesses in a range of industry sectors on how Making Tax Digital has worked for them.

Software suppliers supporting Making Tax Digital for VAT

List of companies who are supplying suitable software to support the MTD for VAT pilot. These suppliers have tested their products in HMRC's test environment and have already demonstrated a prototype of their software to HMRC.

VAT Notice 700/22: Making Tax Digital for VAT

Notice giving updated guidance on digital record keeping and return requirements of MTD for VAT. It explains the digital records that businesses must keep, ways to record transactions digitally in certain special circumstances, and what counts as ‘functional compatible software’.

Making Tax Digital: changing the scope and pace - technical note

Technical note giving a revised statement of impacts for the Making Tax Digital for Business programme to reflect the changed scale and scope of the mandatory elements announced in the government's Written Ministerial Statement of 13 July 2017.

Machine learning and its impact on accounting

A summary of a panel discussion on machine learning, artificial intelligence and its impact on accounting. The article looks at predictions for 2018 and the implications for making tax digital (MTD).

Finance Bill: Written statement - HCWS47

Statement made by Mel Stride, Financial Secretary to the Treasury, announcing policy changes to the timeframe and scope of Making Tax Digital rules.

Overview of Making Tax Digital

Policy paper explaining the foundations of MTD, the impact on individuals and businesses, links to consultations, the next steps for implementing MTD for business, and case studies.

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