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.
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 is being introduced tax by tax, not by business size or type, although introduction of MTD for income tax for individuals is being staged by reference to level of income. 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.
New penalty regimes for late filing of MTD reports, and for late payment of tax under MTD, took effect from January 2023. Daily penalties may be charged where business records are not kept in a digital medium.
