In response to the consultation on the draft updated MTD for Income Tax legislation, the Institute took the opportunity to highlight its ongoing concerns in relation to this project, including the need to uplift the exemption limit. In addition, the lack of available software and small numbers currently participating in the trial are worrying.
The Institute’s Northern Ireland Tax Committee was responding to the consultation opened last month into the draft legislation which has been updated to reflect the changes announced in December 2022 and as part of the Small Business Review in November 2023.
Key recommendations also featured in the Institute’s response include the following:-
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HMRC should seek to develop the detailed guidance on MTD for Income Tax after a period of consultation with stakeholders - this should contain practical worked examples/case studies of different scenarios and should carefully distinguish between the digital recording keeping requirements and functional compatible software requirements;
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This guidance should be published in a timely manner in advance of the commencement date;
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HMRC should work at pace and aim to publish the final MTD for Income Tax legislation, associated notices, and more detailed guidance as a matter of urgency;
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The tax year from which new sources of trading or property income falling within MTD for Income Tax should be reported should be amended to the next tax year after acquiring that new source of income;
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The quarterly filing deadline should be set as the seventh day of the next month to align with the VAT return filing deadline;
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Unincorporated businesses should be able to move out of MTD for Income Tax in the next tax year where, turnover has fallen below the exemption limit and by a significant percentage; and
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HMRC should undertake a detailed matching exercise to remove any anomalies so that quarterly update information matches that reported on the relevant self-assessment returns for trading and property income.
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