Hi

If HMRC was a business, it’s Chairman, CEO and board of directors would all have been sacked for incompetence long ago.

In a ministerial statement yesterday, the financial secretary to the Treasury, Victoria Atkins, set out the following adjustments to the scope and timing of MTD ITSA:

• A two-year delay until April 2026 for mandatory MTD ITSA filing.
• Minimum income reporting level increased to £50,000, with those earning more than £30,000 mandated to join the scheme in 2027.
• The situation for landlords and sole traders earning less than £30,000 will be reviewed to see if MTD ITSA can be shaped to meet the needs of smaller businesses;
• Partnerships will not be brought into MTD for ITSA as previously planned in 2025.

While Atkins said the government remains committed to introducing MTD for ITSA to partnerships at a later date, the decision on when they might join the scheme will be taken at a later date, as for those on less than £30,000.

The minister wrote: “The government understands businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition to MTD for ITSA represents a significant change for taxpayers, their agents, and for HMRC.” 

To maximise the benefits of MTD for small business, the government opted to allow more time to prepare, “so that all businesses, self-employed individuals, and landlords within scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.”

Don’t be taken in by the rhetoric. The MTD initiative has been nothing less than a fiasco since it was first announced way back in 2015. Despite bringing in experienced tech managers to steer the project in the right direction, HMRC is nowhere near ready to launch in 2024, a date which has already been pushed back twice before.

In the words of one software developer: “We’re having the same conversations now we that had 2-3 years ago. I can’t think of a single important question that has been answered in the last two years. New APIs continue to be released, but none of the core issues have been addressed.”

Writing in The Times last Wednesday, Sage CEO Steve Hare, commenting on the widespread MTD delay rumours said: “We are now hearing that Making Tax Digital could once again be pushed back further. However, I am of the view that further delay would be a serious mistake. In addition to the vast productive benefits for small businesses, the opportunities for the government are clear, too: more accurate live data on what is going on in the real economy as well as being better able to track the small minority who make inaccurate declarations and ultimately close their tax gap.”

How much longer must the public be expected to put up with incompetence on this scale from the government and HMRC?

Noel Guilford