DMS Posts

MTD development on a go-slow

HMRC’s CEO has announced that the MTD process for individuals is slowing down to free up resources for work on Brexit. How might this affect you?

No change, almost. According to HMRC’s CEO, the go-slow “means halting progress on simple assessment and real time tax code changes” . He added that this doesn’t mean no changes at all. Anything that frees resources for other work, namely Brexit, will go ahead, but no details of what this might involve were given.

New. Simple assessments were supposed to play a big part in Making Tax Digital (MTD), and HMRC’s initial claim was that it would be a “New way of collecting tax that will make life easier for millions of customers” within self-assessment. However, so far HMRC has only used them sparingly and so you’re unlikely to notice any change because of the go-slow. In practice, this probably means that if you’re currently within self-assessment you’ll remain in it for a while longer.

Tax codes. The slowdown may have a more noticeable effect on HMRC’s dynamic coding. This was supposed to collect underpayments of tax which built up because of incorrect tax codes, by making in-year adjustments, but the system has struggled to cope. While HMRC hasn’t given any clues about exactly what will happen now, our guess is that there will be fewer dynamic coding changes. So if you want to avoid or reduce under or over-paying tax through PAYE, the onus will be on you to tell HMRC as soon as possible about changes which might affect your code number, e.g. starting to receive benefits in kind.

Tax credits and child benefit. Since no new tax credits claims can be made after January 2019, HMRC doesn’t intend to proceed with an online service for such claims. Instead it will focus on the beleaguered Tax-Free Childcare. There will be no significant changes to the existing child benefit system.

What about businesses? MTD for VAT is still on course for April 2019. And while HMRC admits that the introduction of a single online account for businesses will be delayed, there’s no suggestion that the April 2020 date for MTD for business will be put back… watch this space!

The go-slow will probably mean that if you’re in self-assessment you’ll remain so rather than receiving simplified assessments instead. Improvements to the tax coding system are also on hold.