Scrapping Making Tax Digital for Corporation Tax is the right call, says ATT
Today’s announcement that Making Tax Digital for Corporation Tax will not be introduced is welcome, but there is no ‘one size fits all’ solution, says the Association of Taxation Technicians (ATT).
HMRC’s Transformation Roadmap1 confirms that HMRC do not intend to introduce Making Tax Digital for Corporation Tax (MTD for CT). Instead, they will look to develop an approach to the future administration of corporation tax to suit the varying needs of the diverse corporate population.
If introduced, MTD for CT would have required companies to use software to keep digital records and file quarterly updates of their income and expenses with HMRC.
Jon Stride, Chair of the ATT’s Technical Steering Group, said:
“We welcome the announcement that plans to introduce MTD for CT will no longer be going ahead. The complexity of corporation tax would make bringing it into MTD difficult, and the benefits were unlikely to be as extensive as anticipated.2
“HMRC’s consultation published in November 20203 indicated that at that time 4 in 10 small businesses already kept digital records, and presumably this figure was even higher for medium and large companies. That number is likely to have increased further in the last five years as more businesses adopt digital tools.
“It is not clear how imposing extra reporting requirements on entities that were already keeping digital records would have increased their productivity, or reduced errors.”
Jon Stride added:
“The corporation tax population is incredibly diverse, ranging from very small owner managed businesses to large multinational enterprises. Any changes made to the CT system need to take account of this diversity – there is no ‘one size fits all’ solution.
“We are therefore pleased to see HMRC’s commitment to engaging with stakeholders to identify potential changes, and to consulting and providing early clarity and assurance on the design and timing of any changes.”
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