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MTD ITSA – a complex and challenging program
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HMRC confident in April 2026 MTD ITSA target

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In a recent webinar with Intuit QuickBooks, HMRCs Jonathan Athow explained why the tax authority is confident it will hit the April 2026 MTD ITSA deadline, in spite of the complexity of the challenges they face. 

26th Feb 2024
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HMRC director general of customer strategy and tax design, Jonathan Athow was recently a guest on an Intuit Quickbooks x HMRC Fireside chat webinar, where he was quizzed on Making Tax Digital for income tax self assessment (MTD ITSA) by Michael Kennedy Intuit’s chief corporate affairs officer. 

In the webinar, Athow was clear that they were firmly fixed on hitting the April 2026 delivery date for the first mandation of MTD ITSA for those with turnover above £50,000.

Fixing the foundations of the tax system

Athow said that the HMRC 10-year plan which we’re now four years into, has been focused on fixing the foundations. This has involved a combination of legislation updates and as well as technical infrastructure improvements to the customer account.

There have been changes to fix out-of-date laws and make them fit for a modern digital tax system as well as incremental improvements and progress such as child benefit now being digitally administered online and the popular HMRC mobile app that allows taxpayers access to a wide range of their personal tax information as the direction that HMRC is taking. 

Athow described MTD ITSA deadline as a complex and challenging project, but he said that since the announcement of the delay to 2026, the tax department has re-assessed its delivery plans and looked at how to simplify and streamline processes. However, he insisted HMRC is focused and confident about delivery for 2026.

HMRC principles of good tax administration

Athow outlined the broad principles HMRC has put in place to enable them to meet their main role – to cost-effectively collect the right amount of tax – no more and no less than it should. 

These included:

  • Move to ‘nearly’ real-time data - the quicker they can get information the more accurate it’s likely to be
  • Move to more timely payments - the longer the time between liability and payment the more chance there is of debt and that liability not being paid

As well as a focus on Making Tax Digital, HMRC is improving their digital offering for taxpayers through the single customer account. There have been a series of incremental improvements that aim to bring HMRC systems together so they are more integrated and efficient and can talk to each other. This has led to improvements in their digital service and helps HMRC reduce its costs at a time when their budgets are being squeezed.

Delays have led to a change in approach

The December 2022 delay announcement and change in scope has allowed HMRC to re-look at what they can deliver and how best to do so. But Athow claimed the biggest change was the approach HMRC was taking on board feedback from agents, taxpayers and the software industry to see where how to streamline or improve the way MTD ITSA will work.

Athow said he hoped that people had seen an improvement in the way HMRC is being more open about how policies and processes are developed. This approach has already led to the changes and simplifications to quarterly updates, removing some of the end-of-year processes. 

Athow claimed that HMRC is listening and taking on board feedback and whilst some of the elements of MTD are now fixed and won’t be re-opened, there will be further updates such as the alignment of VAT and MTD ITSA reporting dates and more to come where specific issues are highlighted. 

Athow said that HMRC understands that they need the support of tech vendors, agents and taxpayers to adapt processes to make MTD work.

Reducing errors and building confidence

Recent National Audit Office statistics suggested that MTD for VAT had led to around £190 million increase in the VAT collected in the first full year of implementation. Kennedy asked Athow what benefits MTD ITSA would bring to taxpayers. 

Athow said that HMRC sees a lot of errors from individuals and small businesses in Self Assessment tax returns. They believe a lot of these are down to poor record-keeping which makes complying with your tax obligations harder. The move to digital records makes it easier not to lose receipts and keep on top of your liabilities, making compliance easier.

As well as improved compliance, Athow said their research into MTD for VAT showed that just over half of those surveyed felt more confident dealing with their tax affairs and more on top of how their business is performing.

MTD ITSA needs a multiple-agent solution

Athow accepted that one important bit of technology that needed improvement before MTD ITSA could be successfully delivered was Agent access to client information and in particular allowing multiple agents, for example, a bookkeeper and an accountant, to both be able to access and support clients filing quarterly updates and finalising returns.

HMRC is building a tool and it’s part of their plans for it to be in place before 2026. They are working through key questions around multiple access, including access and authority to different elements of taxpayer records. They want to improve multiple agent access across all HMRC services, which Athow said was another complex challenge.

Third-party data and pre-population

On the topic of third-party data and pre-population of data on self assessment returns, this is already being used to bring in employment income to Self Assessment. HMRC would like to see how much else could be usefully brought in. 

Athow said that HMRC wants to take advantage of third-party feeds, data from online platforms that give information on people’s income, such as ride-sharing platforms and online auctions to make sure people are paying the right tax.

Athow said this was not always about pre-population, and could be just for prompts and nudges, they need to make sure they match individuals properly and it the data is accurate, to avoid mistakes and legal risks of bringing in the wrong data.

Examples that were given were using it to double-check data, eg if taxpayer is saying no overseas income but HMRC has third-party data suggesting otherwise they could ask for confirmation. Could use some data from banks and building societies where they are confident they can match to taxpayers.

HMRC wants to ensure that they don’t undermine the principle that the responsibility for correctly declaring all relevant details on self assessment remains with the taxpayer.

A chance to get your questions answered

Why not grab the opportunity to grill HMRC on the future of MTD in person at the Festival of Bookkeeping & Accounting at the NEC, Birmingham? There will be representatives from the tax authority in attendance on both the 13 and 14 March and Craig Ogilvie, director of MTD, has been confirmed as a speaker. There are still FREE tickets available here – don’t miss out!

Replies (35)

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Should Be Working ... not playing with the car
By should_be_working
26th Feb 2024 09:40

In other news, HMRC confident in the aerodynamic qualities of pigs.

Thanks (19)
Ivor Windybottom
By Ivor Windybottom
26th Feb 2024 09:45

Finally an acknowledgement that this is all about speeding up tax payments.

Surely that goal can be achieved more easily by using PY figures for POAs or adopting the Corporation Tax (self assessed) quarterly payments without filing any further Returns.

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Replying to Ivor Windybottom:
By ireallyshouldknowthisbut
26th Feb 2024 10:42

Just pay interest on it like CT and many would pay monthly in advance.

Many of my clients pay CT a year or more in advance. Virtually none pay SA.

Given the way our government account for tax receipts on a naive cash basis as opposed to accruals, this would be seen as extra "income" in their red book ROI comps.

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Replying to Ivor Windybottom:
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By FactChecker
26th Feb 2024 13:19

I nearly gave up reading at para 2 when I encountered the reference to "the popular HMRC mobile app that allows taxpayers access to a wide range of their personal tax information".
I've no idea what dictionary they're using in HMRC nowadays, but that's a really interesting (almost 'creative') use of the word 'popular' ... based on what metrics?

But for such a believer in newspeak to let slip that 1 of the 2 'core principles' driving determination to implement MTD ITSA (even when it's doomed to failure) is encapsulated in 5 words:
"Move to more timely payments"

The mind boggles - or at least should, given the number of times that this (as an accusation) has been laid at HMRC's door - only to be robustly and officially denied by those at the top.
It's like those cartoons where the protagonist exclaims "Whoops, did I just say that out loud?"

Thanks (4)
Replying to FactChecker:
Jake Smith, AccountingWEB
By Jake Smith
27th Feb 2024 15:43

Hi Factchecker, It genuinely appears to be popular, looking on the Apple app store you'll see 143,000 reviews and a rating of 4.8 out of 5 stars. I have to say that having tried the app I do find it useful and prefer it to using the website.

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By johnjenkins
26th Feb 2024 09:46

This from an organisation that can't answer the phone, can't answer post. can't sort out CIS refunds properly, can't sort out employment status, can't sort out RTI (wrong code numbers all the time). I could go on so suffice to say a load of claptrap from an organisation that is not fit for purpose.
Jake there is no confidence in HMRC, whatever digital stuff is at their disposal.

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By Mr J Andrews
26th Feb 2024 10:04

Good news perhaps for accounting package software firms ? Only another two years for the only benefactors to cash in. With HMRC's track record, Athow's confidence in this comfort woffle leaves one hell of a lot to be desired.
Of course , another so called Fireside chat between another senior HMRC official and a non-tech vendor asking different tabled questions might produce facts.

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Replying to Mr J Andrews:
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By Rob Swan
26th Feb 2024 15:30

Software firms with any sense will leave well alone, on the basis it won't actually happen. Unfortunately -for them - that's too risky a strategy and very bad PR, so they'll eventually have to write off the million's they'll have spent trying to comply with HMRC 'interface' spec's. Maybe that's the 'Plan' - tech. job creation? If you think tax can be tricky, just try Gov't software spec's..... Technical Woffleese on steriods.

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By ireallyshouldknowthisbut
26th Feb 2024 10:48

We do seem to be still singing from the widely debunked theory of "lost receipts" which shows how little HMRC understand about the impact of not including all your expenses on your tax bill.....hint its in their favour.

I find it amusing they are trumpeting the prepopulation of employment data. Only a very low percentage is there until the last dregs returns are done in Dec/Jan and even then its no more than 60 or 70%. How about sort that out so its there when the employer files the march payoll? Cant be that hard to do.

That would be a highly useful step.

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By [email protected]
26th Feb 2024 11:04

"Computerise, and speed up the mess":

Real time information: data retrieval is very hit and miss for PAYE data and sometimes retrieves pension data as employment.

And that data is filed digitally online...

Foreign income notice: we had one of those, client totally confused until she realised the French bank current account paid interest, all €7 of it, half of which was her husband's, and he lives in France. Major international tax fraud thwarted.

As for confidence in data from those switching, looking at some of the efforts they are confident because they can't understand what they have done but it must be so because 'the computer does it'; yeah right.

Whatever they are smoking can they pass it around?

Thanks (1)
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By fmuk
26th Feb 2024 11:19

Why doesn’t HMRC concentrate on the Agent's service account? Why do Agents have half of their services on one Gateway and VAT on another, and we can’t do basic amendments to clients’ data on either? Or can we get in touch with HMRC over the phone, I've put the phone down after 45 minutes 5 times last week alone.

Athow said that ‘HMRC sees a lot of errors from individuals and small businesses in Self-Assessment tax returns. They believe a lot of these are down to poor record-keeping which makes complying with your tax obligations harder. The move to digital records makes it easier not to lose receipts and keep on top of your liabilities, making compliance easier.’

We entirely agree the errors are from individuals submitting their returns, not from agents submitting client's returns (because we first analyze the client’s errors and make the appropriate amendments before submission).

With quarterly reporting agents won’t be first analyzing the records, they will come directly from the client's raw digital bookkeeping, which we have all found to be even more prone to errors than manual records due to a lack of understanding of how they work.

Not our problem though, as ‘HMRC wants to ensure that they don’t undermine the principle that the responsibility for correctly declaring all relevant details on self-assessment remains with the taxpayer.’

We recently took on a new client who had submitted his returns via FreeAgent for 2 years. After inspection, it became clear that he had underpaid tax and N/I of almost thirty thousand pounds over the 2 years. This is the worst we’ve ever seen, but certainly not the first.

Athow and HMRC are deluded if they think MTD for ITSA will improve the tax system in any way whatsoever or increase the tax take. Good luck, you’ve been warned.

Thanks (9)
Replying to fmuk:
Jake Smith, AccountingWEB
By Jake Smith
26th Feb 2024 12:51

One of the comments that Jonathan Athow made was the need, and desire to improve the way their systems work together, from the single customer account, to allowing agents to access this information. Hopefully these will be addressed. There have been some improvements made and the app is actually very good - speaking as a taxpayer. Now if only my agent could access the information easily too!

Thanks (0)
Replying to Jake Smith:
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By johnjenkins
26th Feb 2024 13:19

Jake, many years ago HMRC came up with something called "Agent Strategy" whereby agents were allowed to see and alter clients information. Many of us thought "wow" this is great. Now look what we've got, a complete mess and MTD will not cure it.

Thanks (3)
Morph
By kevinringer
26th Feb 2024 12:42

"HMRC confident in April 2026 MTD ITSA target"

HMRC said something similar about the 2018 target, and all the others they've had since then. HMRC were also confident they would have 400,000 volunteers sign up for the pilot that they ran from 2017, when in fact they ended up with single figures. HMRC have learned nothing, other than spending £1.3 billion on this vanity project has left them with £zero to address the unacceptable service levels and IT problems they currently have.

Thanks (6)
By SteveHa
26th Feb 2024 13:02

Last time I bought a lottery ticket I was confident that, this time, I would win the jackpot.

That didn't happen, either.

Thanks (5)
Replying to SteveHa:
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By NotAnAccountant2
28th Feb 2024 11:01

SteveHa wrote:

Last time I bought a lottery ticket I was confident that, this time, I would win the jackpot.

That didn't happen, either.

The 1980 Turing award lecture. (This is like the Nobel prize of computing)

It's well worth reading this (and other lectures) I don't think it requires any significant computer knowledge to understand.

"The Emperor's Old Clothes"

"Besides, failures are much more fun to hear about afterwards; they are not so funny at the time."

failure to take account of customer feedback:
"Earlier attention paid to quite minor request of our customers might have paid as great dividens of goodwill as the success of our most ambitious plans"

On PL/I
At first I hoped that such a technically unsound project would collapse but I soon realized it was doomed to success. Almost anything in software can be implemented, sold, and even used given enough determination. There is nothing a mere scientist can say that will stand against the flood of a hundred million dollars. But there is one quality that cannot be purchased in this way — and that is reliability. The price of reliability is the pursuit of the utmost simplicity. It is a price which the very rich find most hard to pay.

The last line:
"The tailor is canonized as the patron saint of all consultants, because in spite of the enormous fees that he extracted, he was never able to convince his clients of his dawning realization that their clothes have no Emperor"

===
I think that On PL/I quote is very important. 20-30 years time we might well be looking at compensation for another huge tranche of horizon type mismanagement survivors!

Thanks (1)
By SteveHa
26th Feb 2024 13:03

Quote:
There have been a series of incremental improvements that aim to bring HMRC systems together so they are more integrated and efficient and can talk to each other. This has led to improvements in their digital service and helps HMRC reduce its costs at a time when their budgets are being squeezed.

Ermm, what?????

Thanks (2)
Replying to SteveHa:
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By FactChecker
26th Feb 2024 13:26

C'mon, be fair. If you ignore the first 3 words (that must have been inserted by accident), it's just a litany of the hopes and prayers that they write on bits of paper and throw down the wishing-well on a regular basis.
They don't actually *believe* any of it, do they? What, they do? Aaaargh

Thanks (4)
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By Open all hours
26th Feb 2024 13:26

Four years into a 10 year plan. They’ve been peddling this nonsense since 2015.
Have they even the first idea?

Thanks (1)
Replying to Open all hours:
boxfile
By spilly
26th Feb 2024 13:35

Lots of ‘ideas’, just no clue as to how to implement any of them in the real world.

Thanks (1)
Replying to Open all hours:
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By johnjenkins
26th Feb 2024 14:48

Ah, the first year was the year they decided to have a 10 year plan so that it gave them time to make up things and excuses as to why the 10 year plan isn't working.
I mean, come on, how long did it take them to admit "oooo this is a bit trickier than we first thought".

Thanks (3)
Profile
By indomitable
26th Feb 2024 13:42

Oh yeh right!!

A guy from Quickbooks (who will make money from MTD ITSA) and one from HMRC (who can't even get the current basics of their online offering to work properly)

Hardly an objective opinion!!

There needs to be a 'drain the swamp' attitude in this country otherwise we will be continuing to fork out our hard earned taxes on 'vanity projects' that have no chance of success, just a black hole for our taxes that are just used to justify salaries in the public sector.

Thanks (3)
Replying to indomitable:
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By Open all hours
26th Feb 2024 13:52

Quickbooks. The software which suggested to me that an unidentified cheque would be ‘bank charges’. Just about the only thing it was never ever going to be. Unbelievable Jeff.

Thanks (2)
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By Open all hours
26th Feb 2024 14:00

We met HMRC in Coventry a couple of years ago. They lied to us then so why would we waste time listening to more of the same at the NEC?
Absolutely zero credibility. Shame on everyone who ever spoke in favour of MTD.

Thanks (2)
Replying to Open all hours:
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By johnjenkins
26th Feb 2024 14:53

Er was there anyone who spoke in favour of HMRC? OK, Andy pandy, then there was Bill and Ben, not forgetting "little weeeeed". We mustn't forget Hardy Harra the laughing hyena.

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By Paul Crowley
26th Feb 2024 14:10

So it is now official. HMRC hopes that labour win.

Thanks (4)
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By MartinLevin
26th Feb 2024 16:04

"deliver, deliver, deliver" - enough of this cliché, please. The thesaurus offers: provide, achieve, present, or a host of others. Only babies and parcels are DELIVERED.
says The GoodEnglish Professor

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By MartinLevin
26th Feb 2024 16:04

"deliver, deliver, deliver" - enough of this cliché, please.
The thesaurus offers: provide, achieve, present, or a host of others. Only babies and parcels are DELIVERED.
says The GoodEnglish Professor

Thanks (1)
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By MartinLevin
26th Feb 2024 16:04

"deliver, deliver, deliver" - enough of this cliché, please.
The thesaurus offers: provide, achieve, present, or a host of others. Only babies and parcels are DELIVERED.
says The GoodEnglish Professor

Thanks (1)
Replying to MartinLevin:
By SteveHa
26th Feb 2024 16:10

MartinLevin wrote:

says The GoodEnglish Professor

Three times, apparently. Are you keeping up with HMRC "deliver"s?

Thanks (2)
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By MartinLevin
26th Feb 2024 16:08

Why does His Majesty's Revenue & Customs [HMRC] always resort to the fact that taxpayers [they are not "customers", as they have no "choice"] harangue our clients over record-keeping errors? They are TRADERS, not BOOK-KEEPERS, and therefore, are human.

Thanks (3)
Replying to MartinLevin:
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By johnjenkins
26th Feb 2024 16:32

Because in HMRC's eyes in order to be a one man band business you have to have a trade, be a bookkeeper, be an Accountant, arrange your affairs in order to pay the most tax etc. etc. Not to mention Accountants who have to be part of the money laundering police.

Thanks (3)
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By adam.arca
26th Feb 2024 18:19

I seriously doubt any practising accountant can’t drive HGVs through that shambles of a justification. The problem of course is that it isn’t aimed at us and is just PR fluff to make HMRC look touchy feely and responsive.

Anyway, my three takehomes are:

A cosy fireside chat with an IT guy. Seriously? That would explain all the searching questions, then.

“Move to ‘nearly’ real-time data - the quicker they can get the information the more accurate it’s likely to be.” Really? Absolutely no evidence there of consulting with accountants: there’s a reason why accounts are (typically) prepared months after the year end and that reason will still exist even if MTD ever sees the light of day. And why can’t HMRC absorb the reality that, for every trader whose records improve due to QU (probably because they’re currently non existent), there will be another trader who makes a complete hash of them and ends up trashing his previously competent manual records?

We’re told that HMRC have used the MTD delay to suddenly become the Listening Revenue. Pardon me whilst I absorb the enormity of that whopper. We’re also told that they’ve developed this, that and the other (none of which I was previously aware of). Do I believe them? No, not really. Even if that is the case, its benefit to the Revenue as a brownie point is moot because we weren’t (and never have been) provided with a detailed road map of this journey and we have all, I would imagine, reduced our trust in Revenue announcements to junk bond status. Essentially, what the Revenue are trying to sell us is valueless because it’s all post hoc fallacy: we’ve done this, so we were always going to do this, so it must be good stuff. Yeah, right.

Thanks (4)
Replying to adam.arca:
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By Rob Swan
27th Feb 2024 09:39

Good points adam.arca.
'Nearly' real time data is NOT real time. Any competent IT person knows the difference - it's balck and white, no room for any grey. Your point is bang on - real time rubbish (data) is, well.... still rubbish. HMRC don't seem capable of understanding this.
As for HMRC's 'Listening'.... My guess is the MTDITSA delay resulted in the 'better' people on the project leaving , resulting in a knowledge/skills drain. Those less capable types left to pick up the pieces have no choice but to scour the industry for 'knowledge', hence 'Listening' = HELP!!!. Intuit loving all the attention and sucking up to HMRC. My guess is they will come to regret it.

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By Silver Birch Accts
27th Feb 2024 17:52

I think Jonathan is dreaming, he does seem to be wearing his jimjams.

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