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  • Writer's pictureClive Cass

HMRC’s latest MRD Guidance

HMRC have gifted practitioners with an end of summer treat in the way of further guidance on MTD for ITSA.

Four documents have been published in an attempt to answer some of the pressing questions being poised to them over recent months.

Four documents have been published in an attempt to answer some of the pressing questions being poised to them over recent months.

Although the new guidance doesn’t change the underpinning facts of what we already know, we have summarised the four documents and included links to them on HMRC’s website.

Eligibility for MTD

The new guidance sets out rules of those with non-domicile status who don’t need to register for MTD for their foreign income. Only their UK self-employment income would contribute to their qualifying income if exceeding £10,000.

More ambiguity has been created around the information needed on a personal account as the new guidance states that businesses ‘’may need to send HMRC information on personal income sources’’ which is likely to include other areas of income such as dividends.

When to sign up for MTD

The rules surrounding the date to meet the requirements (from 6th April 2024) have not changed, but HMRC has announced the conditions that must be met prior to signing up.

The individuals 2022/2023 tax return must have been submitted by the usual deadline of 31st January 2023.

This will be reviewed by HMRC to check if qualifying income is above £10,000. If it is, they will write to the individual to confirm they must meet the MTD for ITSA requirements by 6th April 2024.

MTD software must then be adopted by the individual, practitioners can obviously help with this, and they must sign up for MTD for ITSA.

Signing up for MTD

This part of the guidance helpfully explains what information is needed prior to registration.

We have listed these below:

  • – Business name

  • – Business start date

  • – Email address

  • – National Insurance number

  • – Accounting Period

  • – Accounting type (e.g., cash or standard)

It goes without saying that the individual must be registered to file self-assessment tax returns and have a Government Gateway ID and password.

There is also the option to voluntarily sign up now, however the conditions that need to be met are strict so it is unlikely that many of your clients would be able to at this point.

Using MTD for ITSA

HMRC have confirmed, as with VAT, software must be reauthorised every 18 months.

An end of period statement is due for each business that qualifies, and after submission, an updated estimate of the tax bill will be shown.

If the software does not support additional information required for the final declaration, it will be possible to use HMRC’s online services account to submit the data instead.

Unanswered questions

Despite the latest guidance, there still seems to be some missing information which is required by practitioners before they feel confident communicating HMRC’s message to their clients.

We will, as always, endeavor to keep you up to date with more details once they’re announced.

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