The Institute of Chartered Accountants in England and Wales (ICAEW) has written to HMRC with new views on the introduction of Making Tax Digital for Income Tax Self Assessment (MTD ITSA), including the conclusion that quarterly reporting is a disproportionate administrative burden. It echoes the concerns of other leading tax bodies and calls for a re-think.
As part of the ICAEW;s ongoing engagement with HMRC on reviewing how MTD ITSA should be designed for the self-employed and smaller businesses, it has summarised its key concerns and suggestions.
While the discussions have been informal and, in part, the result of the Announced delay to the introduction of the policy, its suggestions include:
- The informal review gives an opportunity for fresh thinking on MTD ITSA policy.
- This fresh thinking needs to be applied to all taxpayers, not just those with turnover below £30,000.
- The project should be refocused on what can realistically be delivered in 2026 and on Digital record-keeping and filing from software.
- The administrative burden associated with quarterly updates is disproportionate and needs a rethink.
- The requirements to maintain digital records and to submit details of income from self-employment and property directly from software could be decoupled from quarterly updates, with the current annual reporting cycle being maintained.
The review is informal and no consultation document has been published. HMRC expects to make recommendations to the Financial Secretary to the Treasury in June.
Both the Chartered Institute of Taxation (CIOT) and its sister body the Association of Taxation Technicians (ATT) have noted the MTD SA creates burdens on taxpayers, having to submit at least one set of quarterly reports and End of Period Statement (EOPS) followed by a Final Declaration.
Useful guides on this topic
Making Tax Digital: Survival guide (for the self-employed & landlords)
The way that some self-employed taxpayers report their business profits to HMRC is set to change under the Making Tax Digital (MTD) for business regime, when it begins to apply to Income Tax reporting.
Making Tax Digital for Income Tax: Data required by HMRC
Making Tax Digital for Income Tax: the schedule and likely categories of information.
Confirmed: Making Tax Digital for ITSA postponed
The Financial Secretary to the Treasury, Fiona Atkins has issued a ministerial statement confirming the postponement of