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Earlier this week HMRC published, jointly with HM Treasury, a five to ten-year vision for tax administration. As part of this, a future roadmap for Making Tax Digital (“MTD”) was also set out which will begin with extending MTD for VAT to VAT-registered businesses with turnover below the £85,000 VAT threshold from April 2022. The full message from HMRC is set out below. The Institute will continue to engage with HMRC on MTD and related matters to represent the views of our members.“I am writing to let you know that today we have published, jointly with HM Treasury, a 5 to 10-year vision for tax administration. As part of this, we have set out a future roadmap for Making Tax Digital. There are links to the vision document Building a trusted, modern tax administration system and the Written Ministerial Statement for Legislation Day at the end of this message. I am very keen to work collaboratively and transparently with you in the period ahead to take forward today’s announcements. There are links to the vision document Building a trusted, modern tax administration system and the Written Ministerial Statement for Legislation Day at the end of this message. I am very keen to work collaboratively and transparently with you in the period ahead to take forward today’s announcements. The full message from HMRC I am proud of how HMRC has responded to the COVID-19 pandemic by delivering support in record time for individuals, businesses and the self-employed. I am also very grateful to the many organisations who have helped us with this work, and supported us so effectively during this period. The pandemic has exposed the challenges that an out-dated tax administration system presents. A tax administration system which is more resilient and adaptable will offer greater flexibility and scope to provide targeted support to people and businesses in the face of a future national crisis. This period has emphasised the value of having access to real-time data and a more up-to-date overview of taxpayers’ financial position. Real-time data would have provided government with a more accurate picture of the trading and profit levels of the self-employed enabling support to be better targeted.The vision document sets out the next steps we can take to address these issues. These include the next stages of implementation of Making Tax Digital. The roadmap provides certainty so that businesses and agents can plan ahead. It allows for lead-times and piloting, and does not require action in the near future. Making Tax Digital will be:extended to VAT-registered businesses with turnover below the £85,000 VAT threshold from April 2022 – 30% of these businesses have already joined voluntarily; andintroduced for Income Tax Self-Assessment for businesses and landlords with income over £10,000 from April 2023.In addition, we will consult in the Autumn on the detail of extending Making Tax Digital to incorporated businesses with Corporate Tax obligations. We will also look at the long delay before the self-employed need to register and submit trading data. With earlier registration and information, it would have been possible to support those who recently set up in business, without exposing the scheme to fraud or organised criminal attack. This will form part of broader work to update the tax administration legislative framework.Over the summer, we will hold further discussions with businesses and their representatives to develop and assure the estimated implementation and administrative costs of complying with Making Tax Digital. Our initial estimate is that the average additional cost of complying with Making Tax Digital is about £20 a year for each business, with a transitional cost to make the change-over of about £175. This includes efficiency gains in tax administration, but not the wider productivity benefits of going digital. This is an average within a broad range, as costs will differ significantly from business to business. Free, basic software products are available. We will firm up our estimates in the autumn following further input from stakeholders. In March the Government published an assessment of the rollout of Making Tax Digital for VAT. Since 2019 over 1.4 million businesses have started using the service, submitting over 6 million returns. Evidence to date indicates that the anticipated benefits are being realised, with further evaluation planned. We have listened to feedback and are confident that today’s announcement provides businesses, landlords and agents with the certainty they need and adequate time to make the necessary preparations. We will gradually expand the pilot service for Income Tax to allow more businesses and landlords to test that the service is working as intended.We will shortly initiate discussions with stakeholders about the vision and next steps. We are keen to hear views from everyone with an interest, and will ensure our stakeholder forums have the opportunity to debate and shape the way the vision is developed. We will also be in touch to discuss our plans for Making Tax Digital in further detail. In the meantime, please do get in touch with the MTD team directly if you have any questions.I look forward to working closely with you on next steps, and am very grateful for all the contributions so many organisations, businesses and agents have already made to support the modernisation of tax administration.”  

Read the latest on the Making Tax Digital for VAT in the latest update. 

HMRC is currently undertaking scheduled maintenance to the Making Tax Digital (“MTD”) service to enable the release of additional functionality. The MTD service is closed from 4.00pm Saturday 16 May until today 5.00pm Monday 18 May.  During this period, the following MTD for VAT services will be unavailable:  Submission of returns  Payment Services  Business Tax Account (BTA) view & change  During this period, the following MTD for Income Tax Self-Assessment services will be available, although there may be some intermittent downtime experienced from 14 May to 15 May between 19:45pm to 02:30am.  Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC regularly warn about the non-availability of specific services on the HMRC website. Check the relevant page for information on planned downtime.

HMRC will shortly be undertaking scheduled maintenance to the Making Tax Digital (“MTD”) service to enable the release of additional functionality. The MTD service will be closed from 4.00pm Saturday 16 May until 5.00pm Monday 18 May.   During this period, the following MTD for VAT services will be unavailable:   Submission of returns   Payment Services   Business Tax Account (BTA) view & change   During this period, the following MTD for Income Tax Self-Assessment services will be available, although there may be some intermittent downtime experienced from 14 May to 15 May between 19:45pm to 02:30am.   Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC regularly warn about the non-availability of specific services on the HMRC website. Check the relevant page for information on planned downtime.

Or is it? As the COVID-19 pandemic continues, today is the first day of the new tax year 2020-21. This heralds a number of significant changes which we remind you of below. It should be noted, however, that HMRC have decided to defer both the IR35 private sector off-payroll working rules and the end of the soft-landing period for MTD for VAT from April 2020 to April 2021. HMRC have also published updated guidance and help sheets in respect of the new tax year. The following other changes take effect as set out below:- From 1 April 2020, the rate of corporation tax will stay at 19 per cent and will not fall to 17 per cent; From 11 March 2020, the lifetime limit for entrepreneurs’ relief, which will now be known as business asset disposal relief, falls to £1 million with various anti-forestalling measures also applicable; the rate of the R&D expenditure credit increases to 13 per cent for expenditure on or after 1 April 2020; the structures and buildings allowances increases to 3 per cent from 2 per cent from 1 April for companies and 6 April for sole traders/partnerships; From 6 April 2020, the final period exemption for private lettings relief falls to nine months and lettings relief is also reformed; From 6 April 2020, corporate capital losses carried forward will only be able to offset up to 50 per cent of chargeable gains using carried-forward capital losses. Various other changes that are required to deliver or support this the National Minimum Wage and National Living Wage rates for all age bands and for apprentices have increased; rates and thresholds for employers 2020-21 has been published; From 6 April 2020, if you’re a UK resident and sell a residential property in the UK you’ll have 30 days to tell HMRC and pay any Capital Gains Tax owed; HMRC are stopping automatically sending paper Self-Assessment returns; From 1 April 2020, the digital services tax comes into operation; From 6 April 2020, corporate non-resident landlords are subject to UK corporation tax on profits from their UK property rental business instead of 20 per cent basic rate tax – see the guidance on this change; and From 6 April 2020, termination payments in excess of £30,000 will become liable to Class 1A NICs at 13.8 per cent and employers will have in-year reporting and payment responsibilities. The second reading of the latest Finance Bill is currently due to be considered by MPs on Wednesday 22 April 2020. Parts of the Bill will then be considered in Committee of the Whole House on Monday 27 and Tuesday 28 April 2020. The update from HMRC in respect of the off-payroll working rules reads as follows:- “The Government has announced it is delaying the reforms to the off-payroll working rules (IR35) from 6 April 2020 to 6 April 2021. This deferral has been announced in response to the ongoing spread of Covid-19, to help businesses and individuals deal with the economic impacts of the pandemic. This is a deferral of the introduction of the reforms, not a cancellation.   The Government remains committed to introducing this policy to ensure that people working like employees, but through their own limited company, pay broadly the same tax as individuals who are employed directly. The policy will be introduced on 6 April 2021, representing a 12-month delay. Due to this delay HM Revenue and Customs will be pausing the customer support and education programme that HMRC has been delivering to help customers get ready. HMRC will resume education and support activities at the appropriate time ahead of the reform in April 2021. This deferral means that the current off-payroll working rules in the public sector, introduced in 2017 will continue to operate as they do now. Public authorities will not need to implement the changes on status determination statements or implement status disagreement processes until April 2021. Customers can refer to existing guidance on the current rules for public authorities for more information: https://www.gov.uk/guidance/off-payroll-working-in-the-public-sector-reform-of-intermediaries-legislation. HMRC developed a wide range of guidance and support to help customers prepare for the changes, which are now delayed. These products will be updated shortly and remain available to access to help you prepare for the changes due in April 2021. This means that the different rules that exist for inside and outside the public sector will continue to apply until 6 April 2021. This announcement is a deferral of the introduction of the reforms, not a cancellation. The Government remains committed to introducing this policy to ensure that people working like employees, but through their own limited company, pay broadly the same tax as individuals who are employed directly. This means that the different rules that exist for inside and outside the public sector will continue to apply until 6 April 2021.”

HMRC's Talking Points webinars are designed to provide information, guidance and tips on tax issues. See the list of Talking Points webinars coming up. There are a limited number of spaces, so save your place now. VAT reverse charge on construction services: Choose a date and time Making Tax Digital – latest update: Choose a date and time If you have any questions, please send them to team.agentengagement@hmrc.gov.uk prior to the webinar, including the title of the webinar in the ‘Subject’ line of your email. HMRC will answer as many as possible on the day.

HMRC's Talking Points webinars are designed to provide information, guidance and tips on tax issues. See the list of Talking Points webinars coming up. There are a limited number of spaces, so save your place now.    If you have any questions about what the review means for your clients, please send them to team.agentengagement@hmrc.gov.uk prior to the webinar, including the title of the webinar in the ‘Subject’ line of your email. HMRC will answer as many as possible on the day.   Capital Allowances for the self-employed: Wednesday 4 March – midday to 1pm   Statutory Maternity and Paternity Pay: Thursday 12 March – midday to 1pm   Off-payroll working rules from April 2020: Choose a date and time   VAT reverse charge on construction services: Tuesday 24 March – midday to 12.45pm   Making Tax Digital – latest update: Choose a date and time   If you were unable to HMRC on some of the latest Talking Points webinars, this is your opportunity to catch up. Some recordings may only be available for a short period of time, so make sure you don’t miss out. Recordings currently available are as follows:-   Disposal of UK properties – important changes to reporting and paying Capital Gains Tax: Register and view   Off-payroll working rules from April 2020: Register and view   Trade Losses: Register and view   How to show self-employed business expenses on the tax return: Register and view    

HMRC's Talking Points webinars are designed to provide information, guidance and tips on tax issues. See the list of Talking Points webinars coming up. There are a limited number of spaces, so save your place now. If you have any questions about what the review means for your clients, please send them to team.agentengagement@hmrc.gov.uk prior to the webinar, including the title of the webinar in the ‘Subject’ line of your email. We will answer as many as we can on the day. Off-payroll working rules from April 2020:Choose a date and time VAT reverse charge on construction services: Choose a date and time Making Tax Digital – latest update: Choose a date and time Capital Allowances for the self-employed: Wednesday 4 March – midday to 1pm Statutory Maternity and Paternity Pay: Thursday 12 March  – midday to 1pm

Currently, the scope of Making Tax Digital (MTD) for VAT only covers submission of VAT returns. Other services are not currently included and these continue to be available in their previous form except for submissions of a Reverse Charge Sales List (RCSL). RCSL returns cannot be filed by businesses that have signed up to MTD for VAT. HMRC’s service availability page reads as follows in that respect: ‘Customers that have signed up to Making Tax Digital for VAT are not yet able to submit details of their Reverse-Charge Sales List returns using this service. We are working to provide the functionality to allow you to do this. In the meantime if you have joined Making Tax Digital and are required to continue making Reverse-Charge Sales List declarations, you should continue to keep the relevant records and information. No penalties will be charged as a result of any delay.’  

Updated MTD for income tax software and guidance on VAT groups feature this week. Check the status of overseas corporate lenders who are passport holders for double tax relief on UK loan interest Search the updated HMRC list of professional bodies approved for tax relief Business promotions (VAT Notice 700/7) has been updated The list of software that’s compatible with Making Tax Digital for income tax has been updated Updated guidance on VAT groups has been published See changes to the VAT MOSS rate for other countries HMRC has published an off-payroll working factsheet for contractors covering the reforms to the off-payroll working (IR35) rules from April 2020 Scotland is to go ahead with a Budget on 6 February 

Listed below are forthcoming online HMRC events.  HMRC ask that you register at least five minutes before a digital meeting is due to start.   Trade losses: Choose a date and time Basis periods: Choose a date and time Off-payrolling working rules from April 2020: Choose a date and time How to show self-employed business expenses on the tax return: Tuesday 14 January – 1pm to 2pm Income from property for individual landlords – part 1:Thursday 16 January – 11am to midday Capital allowances and vehicles: Choose a date and time Income from property for individual landlords – part 2: Thursday 23 January – 11am to midday If you have any questions for HMRC’s subject experts more than 24 hours prior to the meeting, please send them to team.agentengagement@hmrc.gsi.gov.uk, including the title of the meeting in the ‘Subject’ line of your email. Any questions that arise after this time should be submitted during the live meeting. These interactive meetings run on the ‘GoToWebinar’ platform. The organiser will run through how to ask questions on the day. Upcoming meetings are set out. If you were unable to join HMRC on some of the latest Talking Points webinars, this is your opportunity to catch up. Some recordings may only be available for a short period of time, so make sure you don’t miss out.  An overview of the Seed Enterprise Investment Scheme: Register and view Income from property for individual landlords – part 1: Register and view Income from property for individual landlords – part 2: Register and view Statutory sick pay – what needs to be considered when an employee is sick: Register and view How to show self-employed business expenses on your tax return: Register and view

HMRC are currently undertaking scheduled maintenance to the Making Tax Digital (“MTD”) for VAT service until 5pm today Monday 25th November. The scheduled closure, is to enable the release of some additional functionality, including: a repayment tracker for MTD taxpayers to be able to see the status of their repayment; supporting taxpayers to change their business telephone number and web address through our change of circumstances service; allowing taxpayers who have left the service to be able to sign up again; and allowing businesses and agents to view and print copies of their returns through the Business Tax Account Until 5pm today, taxpayers and their agents will be unable to:  access their Business Tax Account for VAT; update change of circumstances; access Agent Services; sign up to the MTD service. Please note that the ability to submit through software will still be available. Details of the service maintenance is available on the VAT service availability pages.

Read the latest on Making Tax Digital and the trust registration service in last month’s update.

Do you use HMRC online services? Don’t be caught out by the planned downtime to some services. HMRC are warning about the non-availability of specific services on the HMRC website, a range of services are impacted. Check the relevant page for information on planned downtime. Due to scheduled maintenance you will be unable to set up, view, cancel or amend Direct Debits using HMRC’S Making Tax Digital onine service from 6am to 7am on Tuesday 19 November 2019.

Listed below are forthcoming online HMRC events.  HMRC ask that you register at least five minutes before a digital meeting is due to start.  If you have any questions for HMRC’s subject experts more than 24 hours prior to the meeting, please send them to team.agentengagement@hmrc.gsi.gov.uk, including the title of the meeting in the ‘Subject’ line of your email. Any questions that arise after this time should be submitted during the live meeting. These interactive meetings run on the ‘GoToWebinar’ platform. The organiser will run through how to ask questions on the day. Upcoming meetings are set out. Making Tax Digital – your Agent Services Account: Choose a date and time Off-payrolling working rules from A‌pr‌il 2‌02‌0: Choose a date and time Expenses and benefits – social functions and parties: Tuesday 3 December – 3pm to 4pm Expenses and benefits for employers – phones, internet and homeworking: Thursday 5 December – 2pm to 3pm Expenses and benefits for employers – phones, internet and homeworking: Thursday 5 December – 2pm to 3pm How to show self-employed business expenses on the tax return: Tuesday 10 December – 1pm to 2pm Income from Property for Individual Landlords – Part 1: Wednesday 11 December 11am – midday  

Listed below are forthcoming online HMRC events.  HMRC ask that you register at least five minutes before a digital meeting is due to start.  If you have any questions for HMRC’s subject experts more than 24 hours prior to the meeting, please send them to team.agentengagement@hmrc.gsi.gov.uk, including the title of the meeting in the ‘Subject’ line of your email. Any questions that arise after this time should be submitted during the live meeting. These interactive meetings run on the ‘GoToWebinar’ platform. The organiser will run through how to ask questions on the day. Upcoming meetings are set out. Getting ready for Brexit: Choose a date and time Making Tax Digital – your Agent Services Account: Choose a date and time Off-payrolling working rules from A‌pr‌il 2‌02‌0: Choose a date and time National Minimum Wage – How to carry out checks to ensure compliance with minimum wage legislation: Wednesday 6 November – 11am to midday Transitional Simplified Procedures: Choose a date and time Making Tax Digital – latest update: Choose a date and time Missed recent Talking Points events of interest? this is your opportunity to catch up. Some may only be available for a short period of time, so make sure you don’t miss out. Statutory Sick Pay – Register and view VAT Flat Rate Scheme: Register and view Income from Property for Individual Landlords – Part 1: Register and view Income from Property for Individual Landlords – Part 2: Register and view

In an unexpected move, last week HMRC announced that it is opening up a new process which, on application and acceptance by HMRC, will allow some businesses longer to meet the digital links requirement under Making Tax Digital for VAT, once the one year soft landing period from the original mandation date for MTD ends (either from 1 April 2020 or 1 October 2020). HMRC have also updated the relevant VAT notice. “For periods starting on or after 1 April 2019, most VAT-registered businesses with turnover above the threshold have been required to keep their records digitally and send their VAT returns to HMRC direct from the underlying data in those digital records.  In recognition of the fact that some businesses would need more time to digitise the links between their internal systems to fully meet the requirements of Making Tax Digital (MTD), we allowed a 1 year ‘soft-landing’ period from their original mandation date for these digital links to be in place.   Today we opened the process for customers to apply for additional time, if needed, to put digital links in place in order to comply with the requirements of MTD. This additional time will be provided for businesses with complex or legacy IT systems, who are unable to comply with MTD digital links requirements by the end of the initial soft-landing period. Businesses need to ensure that by the end of their soft-landing period their systems are digitally linked where any data is transferred or exchanged. Through our engagement with stakeholders we are aware that some businesses, with complex or legacy IT systems, may require a longer period to put digital links in place across their MTD software to meet their legal MTD for VAT requirements. Therefore, we have opened a process for customers to apply for additional time. The criteria for making an application and how to apply are set out in the VAT Notice 700/22, section 4.2.1.3 - www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat.  Applications must be received by HMRC by the end of a business’ soft-landing period.” END OF HMRC COMMUNICATION

HMRC has advised that scheduled maintenance is taking place to the Making Tax Digital (“MTD”) VAT service from Saturday 21 September at 16:00 until Monday 23 September at 16:00, during which time the MTD service for VAT will be closed. During this period, taxpayers and their agents will be unable to: Sign up for Making Tax Digital for VAT, Create an Agent services account (although all other Agent services will be available), Submit VAT returns, View previous submissions and payment details, Set up new or cancel and amend existing direct debits, Review and update any business details, Access the Business Tax Account to view or change details.   Further details can be found on the VAT and ITSA service availability pages:   VAT - https://www.gov.uk/government/publications/making-tax-digital-for-vat-service-availability-and-issues/making-tax-digital-for-vat-service-availability-and-issues ITSA - https://www.gov.uk/government/publications/use-software-to-send-income-tax-updates-service-availability-and-issues/use-software-to-send-income-tax-updates-service-availability-and-issues

HMRC recently sent the below update on Making Tax Digital (“MTD”) which sets out its approach to enforcing compliance in the first year of MTD. Update from HMRC “The government has confirmed a light touch approach to penalties in the first year of implementation of MTD VAT. Where businesses are doing their best to comply, no filing or record keeping penalties will be issued.  The department’s main priority is to support taxpayers to transition to MTD smoothly, so it will not penalise businesses, instead we will send them a letter encouraging them to join without further delay [where businesses failed to sign up in time for their first MTD filing deadline].  We are trialling two different approaches based on compliance and behavioral insight. For each approach, there are two versions of the letter – one includes a disclaimer for businesses where the information we hold suggests their taxable turnover may be below the VAT registration threshold.    Following feedback on the letter issued to monthly filers, we have amended the letter to make the disclaimer more prominent – it is now at the outset.  Sanctions will remain possible in cases of deliberate non-compliance, and in order to safeguard VAT revenue.”  

HMRC have asked us to share their latest update on Making Tax Digital. Click ‘Read More’ to see this. The latest Making Tax Digital Agent Update has also been published. “On 7 August we reached a significant milestone in the rollout of MTD, with the first quarterly filing deadline for VAT.  This therefore seems like a good moment to update you on how the new service is progressing and to thank you for the important role you have played in getting us to this point. We have been encouraged by the numbers who have signed up and submitted their VAT returns through MTD. There are now nearly one million businesses in the service who have made over 900,000 VAT submissions. As at 7 August 370,000 (76%) VAT registered businesses above the threshold in stagger 1 had signed up.  This is in line with our expectations, particularly given the public commitment we made up front to taking a light touch approach to digital record keeping and filing penalties during the first year. Our focus during this period has been to support businesses moving to MTD to get it right, not to unnecessarily penalise businesses who are doing their best to make the transition. We are now writing to the businesses who did not sign up to encourage them to join as soon as possible and expect numbers to increase significantly in the coming weeks as a result. We took this approach with monthly filers, whose first return through MTD was due by 7 June. 89% (40,000) of that group have now joined the service.  We are also continuing to see non-mandated customers joining on a voluntary basis and sign ups from businesses in stagger 2 (179,000) and stagger 3 (124,000) are accelerating in advance of their first submission deadlines on 7 September and 7 October respectively. In the period leading up to the stagger 1 filing deadline on 7 August the service performed well, handling high volumes of traffic.  Over 60,000 submissions were filed per day at peak times and 19 businesses even filed their returns in the minute before midnight. Businesses and agents also rose to the challenge. We understand that in getting to a position where they felt comfortable submitting their first returns under MTD many have invested significant time and effort to research and prepare. We would like to thank all of those who worked so hard to make this a smooth transition for the majority of businesses. Those who have now switched to digital record keeping and signed up and submitted their first return have taken the biggest step in the MTD for VAT journey. Once businesses are set up and get used to a new way of doing things, they’ll be better placed to take full advantage of the benefits that the move to digital brings. We know that being able to get support through the VAT helpline is very important for customers. That’s why we deployed additional staff to the helpline in late July in anticipation of a peak in demand in advance of the 7 August deadline, helping deliver an average wait during that week of five minutes. The helpline achieved an average wait time of less than five minutes for the whole month of June and for most of July, with the exception of two weeks in July (commencing 1 and 29 July in the build up to peak weeks) when average wait times rose to around seven minutes before returning to normal levels. Whilst we are pleased with the progress we have made it is important to acknowledge that a small proportion of customers experienced issues when trying to meet their obligations and I am sorry for the frustration and worry this may have caused.  We will continue to improve the service so that in future every customer is able to experience the smooth process that was enjoyed by the majority. Over the coming return deadlines we will continue to monitor progress in the roll out of the VAT service and take stock of the lessons learned when considering the future direction of MTD.” END OF HMRC UPDATE