HMRC have published draft secondary and tertiary legislation and guidance in respect of Making Tax Digital for business, for Income Tax and VAT, together with draft guidance on MTD for VAT. Comments are invited by 10 Nov 2017.

Primary legislation on Making Tax Digital (MTD) was published on 8 September 2017, this includes provision for HMRC to make up the rules as they go along by the use of secondary legislation.

The intention is finalise the new regulations by April 2018 in order that businesses will be prepared for Making Tax Digital for VAT in 2019, and Income Tax in 2020.

The draft Income Tax (Digital Requirement) Regulations will apply to Income Tax. 

The draft 'Income and Corporation Taxes (Electronic Communications) (Amendment) Regulations' cover electronic delivery of returns.

VAT draft guidance

HMRC have published draft guidance for VAT, VAT legislation overview, see Making Tax Digital for VAT.

Small business reporting under MTD

Small trading businesses will be pleased to see that HMRC have allowed a reduced reporting requirement for Income Tax payers. Trades and professions, once within MTD and with turnover below the current VAT registration threshold, may choose to provide a reduced number of categories as part of their quarterly update as follows:


  • Turnover; takings, fees, sales or money earned.
  • Other business income expenses.
  • Total allowable expenses.

These businesses will still be required to provide full details of their income and expenses when they file their end-of-period statement. It is not proposed that the reduced reporting requirement will apply to landlords, partnerships or businesses trading above the VAT threshold.


Bearing in mind the outcry by many MPs that the use of secondary legislation in respect of the EU Withdrawal Bill represents a 'power grab' by the government, it appears that the same 'Henry the Eighth' powers are being used in Making Tax Digital. The danger of secondary legislation is that it is not subject to the same parliamentary scrutiny as the primary legislation. The additional problem of secondary legislation is that it is very hard to track and this is a problem all too frequently encountered by the tax tribunals. 

External links

HMRC: Making Tax Digital Reforms for business