Making Tax Digital for Corporation Tax
Executive summary
- AAT believes all entities within the charge of Corporation Tax should fall within the scope of Making Tax Digital (MTD). This includes charities, community amateur sports clubs and other not for profit organisations.
- HMRC should digitise all forms and processes around Corporation Tax incentives, allowances and reliefs. AAT believes that rather than singling out particular areas of interaction with HMRC that would benefit from digitisation, a better starting point would be to recognise that all areas of interaction with HMRC would benefit from digitisation.
- There are likely to be practical benefits to MTD for Corporation Tax, but these should not be overstated. A reduction in errors and thus a potential reduction in the tax gap is possible in the medium to long term, but errors may actually increase in the short term. Productivity gains have been reported for some businesses participating in MTD for VAT, but these are not uniform.
- AAT members strongly support proposals to align the filing dates for tax and company law purposes. More than two thirds (69%) did so, with just 7% opposing the idea.
- AAT would only support HMRC plans to withdraw the free filing product, known as Company Accounts and Tax Online (CATO), "over time" if users are given sufficient notice of such a decision, meaning three to five years.
- The costs of transition must not be underestimated, as was the case with MTD for VAT. For those not currently involved in MTD, meaning those under the VAT threshold, an additional cost of approximately £300–£500 per annum is likely for software subscriptions. Additional one-off costs in the form of accountancy fees may be possible but given MTD for Corporation Tax could theoretically make entities agents' work more straightforward (in the medium to long term), there are unlikely to be any additional accountancy fees on an ongoing basis.
Related consultation responses
Spring Budget 2024 representation
This representation ahead of the March 2024 Spring Budget sets out AAT’s policy position on tax, professional standards, support for SMEs and late payments.
Progress with Making Tax Digital
We believe HMRC must stick to a timeframe for the roll-out, simplify as well as digitise complex processes, and build greater awareness among small businesses.
Autumn Budget and spending review 2021
Our response includes comments on tax after Covid, the national living wage, personal tax, pensions and savings, Corporation Tax, and business rates.
March 2020 Budget
AAT's response to the Spring Budget 2020 includes comments on personal tax, Corporation Tax, Indirect Tax, and tax avoidance, evasion, and non-compliance.
