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  • Mr Paul Clifton

MTD ITSA pilot opened up to more business



HMRC has previously limited the new MTD Self Assessment income tax pilot testing system, for the self-employed, to taxpayers with simple tax affairs, and we actually mean very simple! In fact, HMRC have come under intense criticism after only nine participants were in the pilot scheme, many having dropped out. We wonder why?


Accountants are now being asked by HMRC to sign up more of their clients to the new scheme to enable further testing. One local accountant has prepared a draft letter that goes along the following lines:


Dear client


Would you like to join the new Income Tax Self Assessment MTD pilot scheme? It will cost you more in accountancy fees and more detailed work.


You will also have to pay for new software, which mostly is still in development and being tested. You will act as a Guinea Pig.


You will then have to make up to six electronic submission each year, with four every quarter, and two final year-end submissions, rather than the single Tax Return you do now.


HMRC are already taking months to respond to letters and you’ll be lucky if you can get to speak to them on the telephone. The benefits to you are an incorrect estimated tax bill 4 times a year, though you still only pay your tax once or twice a year.


If you are interested in the pilot then please do contact us.


MTD ITSA is still due to go live on 6 April 2024 for all self-employed (non-limited company) individuals. This, of course, is after a number of false starts and the deadline being pushed back several times. It applies to a business with annual turnover (not profits) from self-employment or property income above £10,000.


From July 2022, the rules for joining the new Making Tax Digital for Income Tax Self Assessment (MTD ITSA) scheme will be expanded. This should allow more self-employed individuals and landlords to join in.


From July 2022, individuals with the following, more complicated, types of income will be able to join the MTD ITSA pilot scheme:

  • Self-employment

  • UK property

  • PAYE income, including employment income and occupational pensions

  • UK interest

  • UK dividends


I am sure that the above list will account for 99% of my firm’s clients, who are currently excluded from joining the pilot, due to ‘complex’ tax affairs.


Self-employed individuals and landlords will need to have an accounting year that ends on 5 April to join the 2022–23 pilot. That will exclude more businesses with a 31 March year end.


There still appears to be only 3 software providers on the HMRC approved list, with a further 18 listed as ‘in development’. Anyone want to join the club? Where is the Office of Tax Simplification when you need them?


The MTD train is still puffing its way down the tracks. I know you cannot hear it being announced by the station master of HMRC; but do make sure you are at the station on 6 April 2024. Knowing the train service as we do, I’m sure the train will be delayed!


And please, please, please, don’t believe those stupid TV adverts where they tell you that you can purchase their software, photograph a few receipts at petrol station on your mobile phone and everything will be okay. If you follow and believe the adverts then please expect higher accountancy charges.


For our fuller blog article on MTD ITSA, and exactly how it will affect you, please click here.

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