The aim of the Government’s Making Tax Digital (MTD) programme is to create a tax system ‘fit for the challenges and opportunities of the 21st century’.

The scheme is at the heart of HMRC’s plans to make it easier for people and businesses to get their tax right and stay on top of their affairs.

It involves replacing manual processes with digital ones, and the initiative is gradually being rolled out across various tax areas.
The MTD for VAT service has already been introduced, while MTD for Income Tax has been piloted since April 2017.

And now it’s the turn of corporation tax to get a digital makeover.

Making Tax Digital for Corporation Tax: have your say

Earlier this month, the Government published a consultation document on the future design of Making Tax Digital for Corporation Tax.

If your business or organisation is subject to corporation tax, you have until 5 March 2021 to submit your views on the scheme. Agents, software developers and professional bodies are also being invited to have their say on the early-stage design of MTD for CT.

Following the consultation, there will be an opportunity for businesses to take part in a pilot from April 2024, and MTD for CT won’t become mandatory before April 2026.

How could Making Tax Digital for Corporation Tax affect you?

Although the scheme is currently at the consultation stage, now is a good time for you to prepare for the changes.

If the principles and design proposed in the document go ahead, you’ll need to:

  • Maintain digital records (e.g. records of income and spending)
  • Use MTD-compatible software to provide regular (quarterly) summary updates of your income and spending to HMRC (although not everyone will need to do this)
  • Provide an annual corporation tax return using MTD-compatible software

What are the benefits of MTD for CT?

The use of record-keeping tools and linked IT systems will help your business to simplify its accounting processes and make them more efficient.

Digital systems will help ensure your organisation pays the right amount of tax, avoids mistakes and is more productive.

Our thoughts

The scheme is ever evolving, but it’s a good idea for you to start to digitalise your affairs, unless you’ve already done so.

If you run a small company, your main interface could be a smartphone app, which you could use to record purchases, raise invoices and receive payments ‘on the go’.

But an in-house software system or an off-the-shelf third-party package might be more suitable if you run a larger organisation.

At Churchill Taxation, our team of tax advisers are experienced at using digital processes for different types of tax payments, including corporation tax. And we can help you with everything from tax planning to tax return preparation.

To find out more about our services, call us on 07813 434195 or send an email to stephanie.churchill@churchilltaxation.co.uk

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation