This week (21 July 2020), the Government published a five to ten-year vision for tax administration. Within the announcement, the Government has said they plan to:
- Make Making Tax Digital (MTD) for Income Tax mandatory from 6th April 2023 for businesses and landlords with turnover in excess of £10,000. At present, businesses above the VAT threshold of £85,000 are covered by the system, which requires them to keep digital records and provide VAT returns through the software. Since it was introduced in 2019, more than 1.4 million businesses have joined the programme, submitting over 6 million returns.
- Ensure all businesses registered for VAT (including those below the VAT threshold) submit their VAT returns via MTD from April 2022. From April 2022, the programme will be extended to all VAT registered businesses with a turnover below the VAT threshold (£85,000), and from April 2023, it will apply to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually.
- Consult this Autumn on how MTD can be extended to include Corporation Tax. To ensure that the Making Tax Digital approach also evolves for those businesses that have incorporated to become companies, the government will be consulting later this year on the design of what the system should look like for Corporation Tax.
Finally, there is an increasing number of third parties playing a critical role in tax administration. These too can have a significant impact on the tax system, and they can be a very important source of feedback and information. Some of them have been involved for many years, such as employers and paid agents; some have been involved more recently, such as software developers. But all can play a critical role in securing successful outcomes.
HM Revenue and Customs will also plan a consultation programme for its 5-10 year vision to deliver its goals for the tax administration framework.