MTD for ITSA will require people with annual business, property, or combined business and property income, above £10,000 to use accounting software to keep their records and file their returns, as well as report their income and expenses to HMRC once a quarter. HMRC claim that MTD for ITSA will mean that many of the existing paper-based or manual processes are eliminated, more accurate tax records are submitted, and time spent by many taxpayers on administration is reduced.

However, HMRC’s research reports that ‘awareness of MTD in general, and MTD for ITSA specifically, was low…’.  In addition, enthusiasm for MTD amongst taxpayers appears to be fairly muted, for example:

• Only 38% agreed that using MTD-compatible software would be easy.
• 43% agreed that submitting quarterly returns would be easy, but 39% said it would be difficult.
• 42% disagreed with the statement that quarterly summaries would ease the end of year reporting burden.

It appears many taxpayers are also likely to be unready for the change to digital record keeping, with 45% saying they currently keep records on paper and only 17% using software.

This research report has led the ATT to call on HMRC to increase their publicity around MTD for ITSA, and publish more detailed guidance about the MTD process.