Why volunteer for HMRC’s MTD ITSA pilot?
By Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes)
27 March 2024
We look at the expansion to the Making Tax Digital for Income Tax Self Assessment (MTD ITSA) pilot to enable businesses to take part of the trial ahead of its mandation from April 2026.
In December 2022, it was announced that the mandation of MTD ITSA would be delayed by two years. This requirement will now only apply to self-employed taxpayers and landlords from April 2026 (who have income above £50,000) and April 2027 (who have income above £30,000). And there has been considerable speculation on whether HMRC and businesses will be ready for its rollout. Doubts have arisen off the back of the low level of uptake for HMRC’s existing pilot and the fact that it was only available to self-employed taxpayers and landlords who had an accounting year end date of 5 April.
We’ve been working closely with HMRC as a trusted stakeholder on MTD ITSA and we feel that it is important for HMRC to expand the range of self-employed taxpayers and landlords who can take part in the pilot. This is not just to help ensure that HMRC’s systems can be sufficiently tested, but also to instil confidence in businesses that there will not be any further delays to the MTD ITSA implementation. By widening the net, HMRC’s systems will be rigorously tested, plus it demonstrates that steps are being taken to avoid any further delays.
Expansion to HMRC testing from April 2024
HMRC has now confirmed that the MTD testing programme will expand from 22 April 2024, when the existing pilot will move to private beta. Essentially, this term means that a larger, but still restricted pool of self-employed taxpayers and landlords will be able to test HMRC’s systems. This is before public beta is introduced from April 2025, giving taxpayers and their agents a full year of testing their readiness for MTD ITSA ahead of its mandation in April 2026.
HMRC is hoping that around 1,000 taxpayers will sign-up for the private beta phase. By registering your clients for private beta, you can help prepare your practice for MTD ITSA and test the compatibility of your systems and those of your clients ahead of implementation. If every tax agent put a handful of clients in, this would give HMRC a broad spectrum of self-employed taxpayers and landlords, during a period of a more lenient penalty system being in place. The 2023 Autumn Statement announced how penalties will only arise on an annual basis.
Taking part in private beta will give you access to HMRC’s dedicated MTD ITSA support team. It’s an opportunity for those in the pilot to seek the support they need while ensuring their systems are compliant.
Who can take part in private beta
HMRC is still to publish full details, ahead of the launch on 22 April 2024. However, we understand that it will be open to self-employed taxpayers and landlords who have a year end of between 31 March and 5 April, providing that their software can support a year end other than 5 April.
We don’t expect taxpayers who must declare high income child benefit charge (HICBC), married couple’s allowance, pensions schemes or have overdue debt to HMRC to be able to take part in private beta. Read more about the changes to the HICBC rules here.
It will also be necessary for the taxpayer to have already registered for self-assessment and submitted tax returns with self-employment income and/or rental income. We understand that taxpayers without a National Insurance number will not be able to take part, however, they are exempt from the MTD ITSA mandation under the revised MTD ITSA regulations.
Getting set up for joining private beta from April 2024
First things first, agents need to make sure that they are registered for HMRC’s agent services account (ASA). You can find details of how to create an agent services account on GOV.UK. It will be necessary to complete a digital handshake so that the client can authorise an agent to act on their behalf in this way.
It is also important to check that the software provider will be taking part in private beta. Intuit QuickBooks and Sage were announced at the HMRC stakeholder conference as the first two software providers able to offer private beta testing to their customers. However, we expect other software providers will follow.
Find out more at our Practice Conference
We are delighted to confirm that Craig Ogilvie, HMRC’s MTD Director, and Sam Wood from HMRC’s MTD ITSA stakeholder team will be speakers at our Practice Conference on Wednesday 5 June in Edinburgh. This is a great opportunity for our members in practice to hear directly from HMRC and consider how MTD ITSA will affect their practice and clients. Spaces are limited, make sure you book your free place today.
Let us know your views
Please let us know how MTD ITSA will affect your practice and your clients. We want to hear your feedback, thoughts, observations and concerns so that we can represent your views in our discussions with HMRC.
We welcome your views more generally, which help inform our work on consultations or other tax-related matters. ICAS responds to many tax calls for evidence and consultations, as well as producing tax policy papers and reports. We also regularly attend meetings with HMRC at which service levels, delays and other issues are discussed, and we raise problems being encountered by members.
Please email tax@icas.com to share your insights and feedback.
