making tax digital
The Chartered Institute of Taxation (CIOT) has criticised HMRC’s new Making Tax Digital system after a report from National Audit Office (NAO) has stated that MTD project is now expected to be over budget. The NAO report estimates that the final expected costs for the new system is going to 5 times that original cost estimated by HMRC.
COIT has criticised not only the cost of the project but the unrealistic timetable and if they’re benefits to the new system. It added that with the move to MTD for VAT the system has led to VAT liabilities being overstated by £5 billion. The NAO is now calling for a new business case from HMRC in relation to MTD for Income Tax Self-Assessment (MTD ITSA) before the system is rolled out.
However, with no announcement from HMRC it is unclear whether the report will have any effect on MTD ITSA roll out. It would be prudent to continue under the assumption that MTD ITSA will roll out on the current timetable, i.e. by April 2026 for self-employed and landlords with turnover over £50,000 joining the scheme and anyone with a turnover between £30,000 and £50,000 by April 2027. No announcements have been made for any small business’s below £30,000 turnover and the position is still unclear, HMRC are awaiting the review of the MTD ITSA once the first roll out has been made before making any decisions.
We will keep you updated.
