HMRC has ‘enormous amount of work’ to deliver MTD on time

In evidence submitted to the Public Accounts Committee’s ‘Progress with Making Tax Digital’ inquiry, contributors from across the accounting profession voiced damning opinions around HMRC’s perceived ability to deliver within its own new timeline.

The written submissions mainly covered three areas:

1. HMRC’s failure to consult with and listen to taxpayers, agents, professional bodies and software vendors.
2. The Revenue’s ‘limited understanding’ of how businesses operate.
3. Expressed frustration at a continuing lack of clarity over how MTD would work in practice.

HMRC’s current project timetable will deliver Making Tax Digital for Income Tax self assessment (MTD ITSA) eight years behind schedule, while the National Audit Office has reported the scheme’s implementation budget will have been exceeded by more than £1bn.

HMRC however, told MPs they were confident they will deliver MTD within the new timelines, as follows:

• Taxpayers with incomes above £50,000 will join the programme in 2026, 
• Taxpayers with income between £30,000 to £50,000 will join in 2027, 
• Quarterly reporting for those with incomes between £10,000 and £30,000 is under review.

The Association of Tax Technicians (ATT) remains unconvinced, and said there is still ‘an enormous amount of work to do to deliver MTD in a workable and valuable form by 2026’.

The project was always likely to be challenging, given its complexity and scope. There are though, some significant questions that remain unanswered: 

• How will jointly owned properties be treated?
• How will taxpayers with multiple agents be affected?
• What is HMRC’s definition of a ‘digital record’?
• How often will updates be required, and can these be made cumulative?
• The interaction of the MTD reporting periods with the basis period reform process.

HMRC officials also told MPs that since December 2022 it has been undertaking a series of ‘co-creation’ events involving unnamed stakeholders ‘with the ambition of resolving the most pressing design issues within the coming months’. Let’s hope these events are successful and the results are communicated very soon, to remove the unknowns and provide some surety.

If you’re unsure of the impact MTD will have on your reporting responsibilities, please get in touch. If we have the answers yet, we’ll very happily explain them to you, otherwise, we will at least be able to explain why you may not have been able to find the explanations you’re looking for!