HMRC publishes consultation on MTD for Corporation Tax
A new consultation has been published by HM Revenue & Customs (HMRC) which explores how the core principles of Making Tax Digital (MTD) can be applied to Corporation Tax (CT).
Within the new consultation document, HMRC has made it clear that MTD for CT is a means of tackling the underpayment of tax, especially among SMEs, where HMRC believes these are significant issues with errors. The tax authority has indicated that as much as £2.1 billion of the tax gap relates to CT.
Along similar lines to the existing MTD for VAT system, the proposals put forward a process that would require companies to maintain their records digitally and the submission of quarterly updates and a year-end tax return using MTD compatible software.
These quarterly submissions will focus on accounting data, with the option of including indicative changes to tax treatment. However, the usual annual tax return will be retained to allow HMRC to take a final decision on tax treatment.
The change will also affect business groups who may be allowed to operate their digital record-keeping on a group basis to manage obligations under quarterly updates and year-end tax returns.
This change would affect the majority of businesses, apart from the very largest and most complex companies with annual profits above £20 million, who will be exempt from making quarterly submissions. HMRC has indicated that other compliance procedures should ensure they pay the correct amount of tax without this measure.
Under the current proposals, it will be necessary to link accounting data directly to the tax return submission for all businesses.
The consultation states: “The digital records kept within the entity’s software may also form the prime record for their accounts. To comply with the obligations of MTD, accounting and tax adjustments relating to the period will need to occur either in that software or alternatively in linked software.”
It also indicates that it expects far more to be done via MTD compatible software, rather than by currently accepted processes, such as iXBRL tagging.
If implemented the changes explored in the consultation document would have a significant effect on the tax compliance process for companies, which is why HMRC has confirmed that MTD for CT will not become mandatory before April 2026.
Instead, it plans to hold a voluntary pilot from April 2024 to test the effectiveness of the system, before rolling it out more widely.
Although the current consultation ends on 5 March 2021, the tax authority has promised a further simplified consultation document for smaller companies in the months to come.
- Make sure to include SEISS grants on your next tax returns
- Beware of the HMRC scammers, but ignoring calls can be costly
- Carry back scheme brings welcome relief for business
- New recommendations in sweeping CGT review
- Tax saving strategies for landlords
- Bank of England and CBI expect the biggest rise in economy for decades
- Financial Reporting: GRC, Governance Risk and Compliance Tools
- HMRC unveils penalty regime for VAT deferral scheme
- COVID forces businesses to change direction
- Workers can continue to claim home working tax allowance in the new tax year
- Reimbursed expenses – What you need to know
- HMRC to tackle SEISS abuse with new penalty regime
- New Debt Respite Scheme launched
- National Insurance relief launches for employers that hire veterans
- Parents missing out on tax-free childcare bonus of up to £500
- Applications for SME Brexit Support Fund underway
- Thousands of cases of COVID-related fraud and cyber-crime are being investigated
- Majority of SME owners have loaned personal money to their business during the pandemic
- Coronavirus insolvency measures extended until the end of June
- Inheritance tax reporting to be simplified
- HMRC contacts self-employed individuals who could be eligible for fourth SEISS grant
- Furlough scheme guidance updated
- New claims needed to continue receiving working from home tax relief
- The Best Cloud Accounting Software For Pubs
- Coronavirus Restart Grant
- Student loan thresholds to rise from 6 April 2021
- HMRC updates tax rules and calculations on ultra-low emission vehicles
- Almost two-fifths of small businesses are looking to trade overseas
- National Living Wage and National Minimum Wage rates to increase from 1 April
- Business rates review report delayed
- Vaccine rollout prompts SME optimism about prospects for 2021
- Budget 2021
- Self-Assessment late payment penalties relaxed but interest still accrues
- Business insurance rates are on the rise
- The advantages of electric vehicle salary sacrifice schemes
- Consultations on future of Companies House could see filing deadlines slashed
- Voluntary and compulsory strike-off processes paused in response to national lockdown
- Don’t forget to claim home working tax relief
- Large and medium-sized businesses need to be ready for IR35
- The VAT Reverse Charge for the Construction Industry Scheme – Are you ready?
- Basic rate taxpayers could face ‘high income’ child benefit charge
- The VAT Deferral New Payment Scheme
- COVID-19 Bounce Back Loan repayment period extended
- Calculating Coronavirus Job Retention Scheme claims for annually paid directors
- HM Revenue & Customs waives late filing penalties for Self-Assessment taxpayers who file by 28 February – but payment deadline remains
- Requests for exemption from publication of furlough claims must be submitted by Monday 25 January
- Only a few days are left to submit applications for the third SEISS grant
- What could Budget 2021 have in store?
- HM Revenue & Customs increases the threshold for Self-Assessment online payment plan service to £30,000
- Independent commission argues against annual wealth tax but advocates a one-off charge
- Could the Government be about to launch a new permanent state-backed small business loan scheme?
- HMRC issues new warning over lockdown fraudsters
- FSB proposes move to turn Covid emergency debt into shared ownership schemes
- VAT – Post-Brexit arrangements
- Insurance industry to pay out on COVID-19 business interruption claims
- Are you making full use of the Government’s COVID-19 financial support package?
- Government extends agricultural visa scheme to fill jobs left by EU workers
- Brexit: UK Trader Scheme to support movement of goods between Britain and Northern Ireland
- Coronavirus furlough and loan schemes further extended
- Brexit trade deal negotiations continue as businesses warned to prepare for a ‘no deal’ scenario
- VAT under the Northern Ireland Protocol
- Northern Ireland customs duty arrangements confirmed
- Government launches new export finance guarantee scheme
- How can your business prepare for customs and VAT after Brexit?
- UK launches points-based post-Brexit immigration system
- Business Secretary writes to professional services sector ahead of end of Brexit transition period
- HMRC updates Statutory Residence Test due to COVID-19
- Scammers are targeting Self-Assessment taxpayers, says HMRC
- Eat Out to Help Out compliance checks underway
- Businesses face legal action over unpaid business rates
- HMRC publishes consultation on MTD for Corporation Tax
- HM Revenue & Customs issues Capital Gains Tax reminder
- Virtual Christmas parties eligible for £150 annual function exemption
- Grandparents set to increase gifting following pandemic and families set to inherit more than expected
- Access to European Union VAT refund system to end on 31 March 2021, HMRC confirms
- Brexit: How to claim grant funding to help cover the costs of completing new customs declarations
- Companies House to scrap paper reminder letters
- Third round of Self-Employment Income Support Scheme (SEISS) opens on Monday with tighter eligibility criteria
- Important deadlines approach for the furlough scheme
- Spending Review highlights long-term economic impact of Coronavirus pandemic
- The New COVID-19 Tier System
- VAT after the Brexit transition
- IFS predicts tax rises of more than £40 billion a year by the middle of the decade
- More than 50,000 people claim working from home tax relief through HM Revenue & Customs online portal
- HMRC called on to simplify the administration of tax reliefs
- A quarter of businesses don’t think they will be ready for post-Brexit Britain
- HMRC warns taxpayers still aren’t ready for Making Tax Digita
- Homebuyers need to start purchases this month to take advantage of Stamp Duty savings
- Daily penalties waived for Self-Assessment late filing
- Furlough scheme update – Publication of claims and employees serving notice
- Extended Coronavirus Job Retention Scheme FAQ
- Government extends furlough scheme and provides a boost to SEISS
- Government extends further help to businesses and the self-employed during national lockdown
- National Lockdown – Extension to the Coronavirus Job Retention Scheme and Business Support Update
- Government extends further support to businesses affected by COVID-19
- HM Revenue & Customs publishes further details of the Job Support Scheme
- Annual Investment Allowance – Time is running out
- Accounting for mobile phone use
- Time to prepare (once again) for the VAT reverse charge
- Is the Government considering a National Living Wage freeze?