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On 23 September the Financial Secretary to the Treasury released a written statement to the House of Commons confirming that individuals would be mandated into MTD ITSA from 6 April 2024 (not April 2023 as previously proposed). All general partnerships have a further one-year deferral before they have to start MTD reporting, and complex partnerships and LLPs have no confirmed start date for MTD, as yet.

The Treasury statement also confirmed that the proposed change from the current year basis of assessment to the tax year basis, for reporting profits to HMRC, is to be kicked into the long grass for now. However, that has led to some confusion as how businesses with accounting periods that don’t align with the tax year will report under MTD ITSA.

The MTD ITSA regulations were rushed through Parliament with no scrutiny on 23 September, and they appear to contain some flawed logic.

This is what the regulations tell us:

• All sole-traders and individual landlords who are in business on 5 April 2023 will have to comply with the MTD regulations from 6 April 2024, if their turnover exceeds the MTD entry threshold. This digital start date applies, irrespective of the business accounting date.
• The entry and exit turnover threshold are both fixed at £10,000 per year, which includes all gross taxable income before any deductions, from both property and businesses.
• Quarterly updates will be required from all taxpayers within MTD ITSA for the same standard quarters to: 5 July, 5 October, 5 January and 5 April, with the reporting deadline exactly one month later.
• Businesses can elect to report quarterly updates to a calendar quarter: 30 June, 30 September, 31 December, and 31 March, but the reporting deadlines will remain the same as; 5 August, 5 November, 5 February and 5 May.
• The End of Period Statement (EOPS) will not necessarily be comprised of the sum totals from the quarterly updates, but instead will be a report of the annual accounts figures in a similar way to the self-assessment pages (SA103) and property pages (SA105) of the current self assessment tax return.
• The taxpayer will only be able to withdraw from the MTD ITSA regime if they have turnover of £10,000 or less for three successive tax years – the procedure for withdrawing in the first three years of the MTD regime is not clear.
• Trustees, executors, PRs of deceased estates, and non-resident companies will be exempt from reporting under MTD ITSA.

We will have more detail on how the EOPS reporting will work in a future newsletter, when we have received confirmation of our queries from HMRC.

Written by the Tax Advice Network

An individual who was not the subject of a child benefit claim in the UK won’t be issued with a UK national insurance number just before they reach 16. This will cause the individual all sorts of problems when they are an adult.

People without an NI number need to apply to the DWP to request the issue of an NI number before they can work, receive a company pension, or claim benefits. This application can now be done online, but only if the individual already has documents to prove their identity. The DWP has also resumed face to face interviews for NI applications.

Whether the NI number application is done online or in person it can still take 16 weeks for the DWP to issue an NI number. This delay will in turn delay the payment of any universal credit claimed, make it difficult to register for self-employment, or receive relief at source for pension contributions.

HMRC seem to believe the NI number issue is solved as it is advising taxpayers to revert to using the form CWF1 to register as self employed, which needs an NI number. During the pandemic HMRC suggested that form SA1 should be used instead, which would only register the person for self-assessment, not for self-employment. If our clients registered with HMRC using only form SA1, they now need to contact the National Insurance helpline to arrange for payment of class 2 NIC.

Written by the Tax Advice Network

Taxpayers who make a taxable gain on the disposal of a UK residential property have to report this gain and pay the CGT due within 30 days of the property deal completion date. These actions both have to be performed using the badly designed UK property reporting service.

This online property reporting service does not transfer data about the disposal or the tax paid into the SA tax return system, as we explained on 8 July 2021, so the reporting and payment functions have to be repeated at when submitting the SA tax return. This is an unnecessary duplication of tax compliance work, which also requires the taxpayer to separately authorise their tax agent to act for them on two different HMRC systems.

Where the taxpayer can not manage the digital process, perhaps because they don’t have the UK documents which will allow them to complete the online ID checks, a paper return of the property disposal can be submitted.

However, where a paper return has been filed the CGT can‘t be paid until HMRC issue a payment reference and a demand for the tax due. This can take from three to six months, as HMRC has a backlog of paper returns to process.

HMRC has now confirmed that taxpayers will have 30 days from the issue of a demand to pay, rather than 14 days to pay. A late payment penalty will not be issued if the tax is paid within 30 days of the manual demand charge. However, a late filing penalty may apply if the paper return was not submitted within 30 days of the completion date – this can be appealed.

Written by the Tax Advice Network

The portal to claim a refund of coronavirus statutory sick pay (CSSP) paid to employees opened on 26 May 2020, as we explained in our newsletter on 21 May 2020.

The refund scheme has only ever been open to employers with fewer than 250 employees, and who also set up their PAYE scheme before 28 February 2020. The refunds would only cover CSSP paid to employees who were absent because of coronavirus affecting themselves or a member of their household, leading to a requirement to self-isolate.

The refund claims could be back-dated to 13 March 2020, but in all cases a maximum of 14 days of SSP paid per employee could be reclaimed.

The government has just announced that refunds of CSSP will only be given for periods of absence from work up to and including 30 September 2021. This is also the day that the furlough scheme closes.

However, the new regulations that close the SSP refund scheme do allow employers to make claims and amend any claims up until 31 December 2021.

One aspect of the CSPP remains in place – that SSP should be paid from the first day of absence from work where the absence is for a coronavirus-related reasons.

Written by the Tax Advice Network