The recent HMRC Consultation into Making Tax Digital for Corporation Tax (MTD CT) has now closed to responses. The Consultation focused on HMRC desire to implement the making tax digital rules in place for VAT to corporation tax and considers the potential design of those rules.
While the consultation introduces some key concepts to the MTD CT design process including maintenance of digital links, quarterly and annual reporting using MTD compatible software and potential large company exemptions, it is not at this stage detailed in all respects on the specific mechanics of how these will work in practice or the policy objectives behind them. We understand the consultation process is likely to continue over the next few years before the first trial runs in 2024.
Broadly we are supportive of the moves towards the digitisation of HMRC processes and services however there are a number of practical points we have set out in our response which will hopefully be helpful to HMRC in developing the policies.
MTD CT is a very complex and ambitious project as respects the timing and processes outlined in the consultation. We consequently wanted to highlight the key areas where HMRC could focus consultative efforts going forward in regards to considering further implementation for complex businesses, the value of quarterly reporting and building flexibility into MTD CT.
Ultimately what is clear from discussions with many of our clients, is that any large scale changes to corporation tax administration, such as MTD CT, will require clear guidance and a significant time window to implement.