ICAEW comments on draft secondary and tertiary legislation on MTD for income tax

ICAEW has commented, in representation 126/17, on The Income Tax (Digital Requirement) regulations, The Income Tax (Digital Requirements) notices and The Income and Corporation Taxes (Electronic Communications)(Amendment) Regulations published by HMRC on 13 September 2017.

The following key points were made along with more detailed comments:

ICAEW is supportive of HMRC’s digital transformation. For the tax system to be fit for the 21st century, a ‘digital first’ approach has to be the right way. ICAEW remains extremely concerned that quarterly digital reporting could be compulsory and has yet to be convinced that this will reduce the administrative burdens of business, particularly the smallest businesses. Businesses and individuals should be encouraged to adopt digital reporting as a benefit to their business and not as a forced change.

Jon Thompson, chief executive of HMRC, has said to the Public Accounts Committee that HMRC is to undertake a full review of its transformation plans, including moves to digitalise tax and its programme of office closures, to reassess how many of these proposals can be completed alongside Brexit.

The government has given an undertaking that MTD will not be extended beyond VAT until the system has been shown to be working well and not until 2020 at the earliest. It is not altogether clear what is meant by the system working well but ICAEW hopes that the spirit of this announcement will be adhered to.