MTD for Income Tax: Solving the capacity puzzle before it breaks your firm.

Making Tax Digital (MTD) for Income Tax is not just another compliance change, it's a fundamental operational shift for accountancy firms. Once in force, every sole trader and landlord within scope will be required to submit quarterly updates to HMRC, all to the same deadline: 5 August, 5 November, 5 February, and 5 May. 

If you have 300 clients within MTD’s remit, you’re suddenly dealing with at least 1,200 additional tax submissions a year – plus year-end finalisations – and that’s excluding any individuals that may have to report separately for both their trade and property income. But the real pressure comes not just from volume, it’s the clustering of that work around those fixed deadlines and the inevitable deluge of client queries that will come with onboarding, training and keeping everyone compliant. 

MTD: first live submission completed via TaxCalc as customer hails ease of use.

TaxCalc has achieved another MTD milestone, as our first live quarterly submission of an update period successfully reached HMRC.

And the verdict is in: “In true TaxCalc style it was intuitive - needing no help or guidance to use.”

Those were the words of Robyn Milstead, Director of Tax at LKA Chartered Accountants, who was among our Beta testers. Robyn, a TaxCalc customer, made the submission using TaxCalc’s new MTD Quarterly Filer product.

MTD for ITSA Notices: HMRC’s Atomic Kitten

HMRC recently released the much-anticipated MTD for ITSA Notices, a document that TaxCalc has long been campaigning for and were promised early sight of six months ago – a promise that never quite came to fruition.

When first published back in July 2018, the clarity provided by the equivalent MTD for VAT Notice 700/22 was a welcome breath of fresh air, clarifying many outstanding points in relation to functional compatible software, digital links and the use of spreadsheets. It contained examples, diagrams and clear explanations of what was legislative, and hence came with the force of law, and what was HMRC guidance or recommendation. 

New penalty regime: points mean prizes (for HMRC)

HM Revenue & Customs (HMRC) has confirmed that their new points-based penalty regime will come into effect from 1 January 2023 and will apply to both Making Tax Digital (MTD) for VAT as well as MTD for Income Tax Self Assessment (ITSA). Their stated aim is to make penalties simple, fair and effective but, as the arguably illustrious ageing rocker, Meat Loaf, might say, “Two Out of Three Ain’t Bad”.

Have your say on basis period reform

HMRC has opened a consultation on basis period reform which asks for views on how best to implement a proposal to simplify the rules under which profits of an unincorporated trading business are allocated to tax years using basis periods.

Mandatory digital links for MTD for VAT. What to do now.

Since the introduction of MTD for VAT a ‘soft landing period’ has been in place, allowing businesses time to get their systems digitally-linked to comply with the full MTD for VAT requirements. This period enabled businesses to use ‘cut/copy and paste’ methods to move data from one system to another before filing to HMRC. From 1 April 2021, this will no longer be permitted. However, there is no need to panic. It is likely you already have everything you need to continue being compliant, or some simple adjustments could be all that’s required. 

Do I need to complete an EC Sales List after Brexit

For the export of goods or the supply of services made to EU businesses on or after 1 January 2021, you will not need to submit an EC Sales List (ESL). You will have until 21 January 2021 to submit ESLs for sales made before 1 January 2021.

HMRC to Remove VAT100 XML Filing Service

Recently, HM Revenue and Customs shared news of changes to its IT infrastructure, involving the migration of VAT Customer Accounts to a new system. Following this migration, HMRC will decommission the current XML submission service from 8 April 2021.