The government has been told it should should think again about its plans to make it compulsory for landlords and self-employed businesses to keep digital records and report their income quarterly from April 2024.
The results of a recent Chartered Institute of Taxation / Association of Taxation Technicians survey of tax professionals about Making Tax Digital for Income Tax Self-Assessment – shortened by some to MTD for ITSA – highlight widespread concerns around the proposed launch of the new requirement in 16 months’ time, and recommend pausing the roll-out to allow time for further consultation.
The survey of tax professionals found that:
– 97 per cent of respondents do not think that MTD for ITSA, in its current form, can be successfully introduced from April 2024;
– 94 per cent are uncomfortable with the level of taxpayer awareness and a similar proportion are uncomfortable about taxpayers’ ability to comply;
– some 65 per cent are uncomfortable about the availability of suitable software and a mere three per cent are comfortable about HMRC’s capacity and resources to support taxpayers and agents.
On next steps for MTD for ITSA, the survey found that:
– 47 per cent of respondents think that MTD for ITSA should be paused, and consultation undertaken on its future;
– 31 per cent think that MTD for ITSA should continue, but on a voluntary basis; while
– 30 per cent suggest that MTD for ITSA should continue, but with a significant increase to the £10k minimum income threshold.
Alison Hobbs, chair of the digitalisation joint board of the Chartered Institute of Taxation and Association of Taxation Technicians, says: “These results confirm what we, and others, have felt for some time. The incredibly limited testing, combined with there being some key problems still to be resolved, means that HMRC must announce that the April 2024 start date is to be pushed back.
“While we remain supportive of digital tools which improve compliance and customer experience, the limited piloting of MTD for ITSA has yet to demonstrate that it will do either of these things. It is vital that these new processes are fully tested, and deliver the intended benefits, before they become mandatory.”
She continues: “While we support the objectives of MTD, we regret that the consultation around how to achieve them started too late in the process, after critical decisions had already been taken. As our survey demonstrates, it’s time to take a fresh look at how these objectives might be achieved.
“There are clearly elements of MTD for ITSA where HMRC and stakeholders are largely in agreement as to their benefits, and these might represent parts of the project which can be implemented first. For instance, most respondents see the benefits of keeping records digitally. Indeed, many of the difficulties we are seeing arise around the changes to reporting processes, and these are perhaps aspects which might reasonably be deferred until key issues such as the use of multiple agents can be resolved.”
