Making Tax Digital
Digitising tax compliance
HMRC is formulating a ten-year plan to modernise the whole of the UK’s tax administration system by 2030 which will facilitate more digital reporting in ‘real time’, i.e. closer to the time of transactions. This project includes the restructure of HMRC’s own internal systems.
There will also be a new structure for the penalties which are imposed for late filing of reports to HMRC and for late payment of tax. HMRC is considering how the timing of tax payments made by small companies and the self-employed can be brought closer to the time profits are made, but nothing has been decided on that yet.
Making Tax Digital (MTD) is part of this long-term modernisation project. The ultimate goal is for all regular transmissions of data between taxpayers and HMRC to be performed digitally, and where possible automatically.
MTD for business is being introduced tax by tax, not by business size or type. Separate MTD reports will have to be submitted for each tax, but it may be possible for the MTD software to combine reports due around the same time into one submission process.