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Published on 19 January 2024

HMRC consultation on proposed amendments to Making Tax Digital Regulations

HMRC published draft amended Regulations relating to Making Tax Digital for Income Tax legislation for consultation last month. The draft amendments were to mainly take account of the outcome of HMRC’s Small Business Review that it had undertaken in 2023. LITRG recently responded to the consultation.

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The draft amendments confirmed the mandation dates of 6 April 2026 and 6 April 2027 for compliance with MTD for businesses with annual turnover of £50,000 or more and £30,000 or more respectively. They also covered the following:

  • quarterly updates for a tax year to be prepared on a cumulative basis
  • abolition of the requirement to complete an End of Period Statement (EOPS) for each income source in MTD in a tax year
  • exempting foster carers from MTD altogether where qualifying care income is their only source of income

However in LITRG’s submission we highlighted areas where the proposed amendments still left questions around how the system will operate, for example around digital links within functional compatible software, what exactly needs to be provided in a quarterly update, how the adjustments that were to be dealt with via EOPS will now be done and the interaction between the digital start date and the income exemption.

We stressed the importance of good accessible guidance and direct taxpayer support to help those who come within MTD meet their obligations, especially those who are unrepresented.

We also suggested an amendment should be made to include a requirement for HMRC to notify a taxpayer that they must comply with MTD with effect from a particular date, due to the potential complexity around establishing a taxpayer’s digital start date. This would give a taxpayer certainty over when they need to begin to comply with MTD and provide protection against penalties which might accrue without their knowledge should they inadvertently miss their mandation date.

You can read LITRG’s full submission using the link provided. A link is also given to the original consultation on GOV.UK. 

Sharron West

Technical officer

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