The initiative is intended to create a ‘transparent and accessible tax system fit for the digital age’, and is due to be implemented between 2018 and 2020.
HMRC sought the opinions of businesses, the self-employed and landlords, who are amongst those likely to be the most affected.
The government published a raft of proposals, taking into account the views of consultation respondents. These include:
- providing free software to those businesses with the ‘most straightforward’ tax affairs
- allowing businesses to use spreadsheets for their record-keeping, which can be linked to the software in order to send updates to HMRC
- excluding charities from the requirement to keep digital records
- deferring MTD until 2020 for partnerships with turnover exceeding £10 million
- giving taxpayers at least 12 months to familiarise themselves with the changes before any late submission penalties are applied.
HMRC also stated that it will introduce changes gradually, and that any such changes will be thoroughly piloted with businesses before they are fully implemented.
The government hopes that pilot schemes will help to ensure that the MTD software is ‘user-friendly’, and will give businesses and individuals time to prepare and adapt.
Jim Harra, Director General of Customer Strategy and Tax Design, commented: ‘MTD will help businesses to get their tax right first time; it will help reduce the likelihood of errors, lower the chance of unwelcome compliance checks and give them greater certainty that they are getting things right.’
The government’s response to the consultation feedback can be viewed here.