The CIOT has raised a number of points in response to HMRC’s consultation on the draft Income Tax (Digital Requirements)(Amendment) Regulations 2024 which will introduce many of the changes to Making Tax Digital announced at Autumn Statement 2023. Key observations include:
incorporating the main principles from HMRC’s 2023 Making Tax Digital Small Business Review into the MTD regulations is a positive move, says the CIOT – particularly in terms of administrative easements such as cumulative quarterly returns and removing End of Period Statements (EOPS);
positive improvements notwithstanding, several concerns appear not to have been addressed, including: how tax and accounting adjustments should be made in the absence of EOPS, what a ‘digital record’ actually is, the lack of detail regarding digital links, how owners of furnished holiday lets should record their income, and complexity around exemption where income fluctuates above and below the mandation thresholds; and
the £30,000 threshold ‘should not be lowered until it is clear that MTD ITSA is meeting its objectives and that it is clear that it will not be disproportionately complex or burdensome to taxpayers and their agents’, says the CIOT. This brings into focus the potential unintended consequence of a system whose thresholds are based on turnover rather than profit. Should the threshold be reduced or removed in the future, smaller traders could find themselves within the scope of MTD even though their income tax liability is zero.
The CIOT has raised a number of points in response to HMRC’s consultation on the draft Income Tax (Digital Requirements)(Amendment) Regulations 2024 which will introduce many of the changes to Making Tax Digital announced at Autumn Statement 2023. Key observations include:
incorporating the main principles from HMRC’s 2023 Making Tax Digital Small Business Review into the MTD regulations is a positive move, says the CIOT – particularly in terms of administrative easements such as cumulative quarterly returns and removing End of Period Statements (EOPS);
positive improvements notwithstanding, several concerns appear not to have been addressed, including: how tax and accounting adjustments should be made in the absence of EOPS, what a ‘digital record’ actually is, the lack of detail regarding digital links, how owners of furnished holiday lets should record their income, and complexity around exemption where income fluctuates above and below the mandation thresholds; and
the £30,000 threshold ‘should not be lowered until it is clear that MTD ITSA is meeting its objectives and that it is clear that it will not be disproportionately complex or burdensome to taxpayers and their agents’, says the CIOT. This brings into focus the potential unintended consequence of a system whose thresholds are based on turnover rather than profit. Should the threshold be reduced or removed in the future, smaller traders could find themselves within the scope of MTD even though their income tax liability is zero.
