The Governments Making Tax Digital (MTD) for corporation tax may fail to meet its policy objectives and could be costly for businesses, the Chartered Institute of Taxation (CIOT) has warned.
MTD for corporation tax will require firms to keep digital records and provide regular electronic updates to HMRC directly to prove that records are being kept digitally.
Although HMRC is expecting MTD to reduce the number of errors, the CIOT has raised concerns over the potential costs and burdens on businesses, resulting in calls from the trade organisation for the Government to waive the quarterly reporting requirement for corporation tax where the firm is already reporting VAT in line with MTD.
The CIOT is also calling on the Government to make more businesses exempt from MTD for corporation tax and to simplify the corporation tax system before MTD for corporation tax is introduced.
Tina Riches, CIOT spokesperson, said:
“It does not make sense to impose a ‘one size fits all’ solution on all businesses liable to pay corporation tax. We strongly suggest that more businesses are exempted either from MTD for corporation tax altogether, deferred until a later date as happened with VAT, or exempted at least from the obligation to submit quarterly reports to HMRC.”
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