To the surprise of no one, HMRC have once again announced a delay to MTD for Income Tax until 2024 at the earlier.
What is Making Tax Digital for Income Tax? (MTD ITSA)
HMRC’s newest big policy is their plan to partially do away with the annual tax return and replace it with a requirement that taxpayers complete an income statement four times per year. First announced by George Osborne in 2015, the policy has been delayed endlessly.
The long term goal of the policy is to force all taxpayers to keep their business records using specialist accounting software like Sage, Quickbooks or Xero so that HMRC can build a link directly from the software to the government’s own systems. HMRC believe this will bypass the difficulties they currently have in requesting access to taxpayer records and hope that a well built software system which ties to their servers will give them ready access to the otherwise hidden and private calculations and transactions which make up the figures in VAT and Income Tax Returns HMRC receive.
In public, HMRC are claiming that this decision was made to help struggling businesses. In reality, anyone in the tax or accountancy industry will be treating this claim with a great deal of skepticism. HMRC’s internal struggles, borderline collapse and total failure to cope with the demands on Covid-19 have been readily available for all to see. In this context it seems more like that this decision has been made because HMRC are totally incapable of introducing an new, complex systems any time in the near future.
You can find my previous article on this matter elsewhere on our website.