12th July 2022
Earlier this month, HMRC published draft notices on Making Tax Digital for Income Tax Self Assessment (MTD ITSA). After numerous delays to MTD ITSA, the publication of these draft notices is a very strong indication that MTD ITSA will come into effect from April 2024 as planned.
Whilst the information within the notices is limited, it did provide some clarity on what will be required for MTD ITSA:
- It was confirmed that when individuals/businesses are reporting the quarterly figures, these will need to be itemised into HMRC ‘categories of transactions’, meaning the submissions will include the total of each relevant expenses ie professional fees, repairs, insurance etc.
However, where an individual or business’ annual turnover/income is below the VAT threshold, currently £85,000, a simpler two-figure return could be submitted quarterly (ie reporting the total income and expenditure during the quarter rather than a breakdown of each ‘category of transaction’).
- The notices confirmed that along with the four quarterly submissions, all applicable individuals and businesses would be required to submit an End of Period Statement (EOPS) for each source of income within MTD ITSA. The EOPS would include any tax adjustments (ie capital allowances and losses as well as finalising/updating any provisional figures reported within the quarterly submissions).
- The draft notices provided confirmation that all applicable individuals and businesses within MTD ITSA must maintain their records digitally in a ‘functional compatible software’.
Now that HMRC have released the details of these draft notices, meaning that software developers have further insight as to what will be required, we expect more software providers to bring their provisional product to the market. haysmacintyre will continue to keep an eye on the products available and when ready will be in contact with you, where applicable, with our suggestion on the best solution for you.
As HMRC continue to release further information on MTD ITSA, we will continue to update you on this. Should you have any immediate concerns about MTD or any of the above, please speak to your usual haysmacintyre contact or Alfie O’Dell.