Amendments to the regulations and notices for making tax digital income tax self assessment (MTD ITSA) need to be set in the context of wider concerns about the programme.

ICAEW’s Tax Faculty has responded to HMRC’s consultation on draft regulations for MTD ITSA and associated notices in ICAEW REP 08/24. 

As the current MTD ITSA regulations provide for a start date of 6 April 2024, it is essential that new regulations are laid before that date. As well as changing the start date, the amendments will incorporate changes announced in December 2022 and at Autumn Statement 2023 following the small business review. The associated notices have not previously been published. 

ICAEW’s response makes several important technical points on the regulations including: 

  • the lack of clarity on requirements for maintaining digital records, including the level of detail required;
  • what the requirement for digital links within functional compatible software will mean in practice;
  • changing the submission deadline for MTD ITSA quarterly updates from the fifth of the month to the seventh of the month to align with the VAT deadline. ICAEW understands that such a change is being considered, but it is not reflected in the draft amendments; and 
  • the need for a quick and easy way to bring taxpayers’ affairs up to date when they have fallen behind.  

It is important not to lose sight of the wider concerns about the programme which include: 

  • the administration burden and complexity that arises from the quarterly updates requirement;
  • unresolved design and implementation issues and whether a meaningful pilot will be possible in 2025/26 in advance of the April 2026 start date; 
  • HMRC’s capacity to provide the customer support that will be needed;
  • whether a sufficient range of suitable software products (including some that meet the government’s commitment to free products) will be available; and 
  • how the late submission penalty regime will apply in practice. 

ICAEW’s Tax Faculty is 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.

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