Chartered Accountants Ireland and several members from a range of practice sizes met recently with HMRC as part of HMRC’s Making Tax Digital (“MTD”) small business review. In December when HMRC announced the most recent delay to MTD, the Government also announced an informal review into the needs of smaller businesses, and particularly those under the £30,000 income threshold.
That review is considering if/how MTD for income tax can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their income tax obligations. It will also inform the approach for any further roll out of MTD for ITSA after 6 April 2027 when businesses with turnover between £30,000 and £50,000 will be mandated to join. Once that review is complete, the Government will lay out the plans for any further mandation of MTD for income tax.
During the meeting we stressed that the MTD for income tax exemption threshold needs to be more realistic and should be set at the VAT registration threshold. We also expressed concern that agents will not be able to bulk sign up clients, that the trial will only be public from April 2025 which will not allow one full cycle to be completed before mandation from April 2026 for the turnover > £50,000 population, and that there is a need for free bridging software to be available. The income tax system is also in dire need of simplification.
On the issue of MTD, forum meetings are held every quarter and we will continue to represent your views at these. We will update you on developments in Chartered Accountants Tax News.
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