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HMRC goes live with MTD Income Tax private beta testing

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Voluntary testing for Making Tax Digital Income Tax has gone live, allowing agents to sign up clients ahead of the planned 2026 mandation. But as with previous testing regimes, the tight entry criteria and a lack of available software may limit participant numbers.

22nd Apr 2024
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HMRC has kicked off the latest round of testing for its Making Tax Digital for Income Tax (MTD IT) programme. Designed to stress-test the robustness of HMRC’s systems before the new rules are mandated in April 2026, the ‘private beta’ is available to taxpayers who meet set criteria laid down by the tax department.

Rather than liaising with software vendors to be added to the testing programme, as was the case under previous MTD testing regimes, interested agents can sign up clients for the testing via HMRC’s Sign up your client for Making Tax Digital for Income Tax page.

Sole traders or landlords can register via the Sign up voluntarily for Making Tax Digital for Income Tax page.

Who can sign up for MTD IT testing?

Agents can sign up clients (or sole traders or landlords can register directly) if all of the following conditions are met: 

  • their personal details are up to date with HMRC 
  • they’re a UK resident 
  • they have a National Insurance number
  • they have submitted at least one self assessment tax return, or an agent has done this on their behalf 
  • they’re up to date with their tax records
  • their accounting period aligns to the tax year — it must run from 6 April to 5 April.

Potential participants can also use an accounting period that runs from 1 April to 31 March, if the software supports this. To do so, the agent or client must:

  • select calendar quarters in the software before the first update is made
  • make an adjustment at the end of the first tax year — so that their income and expenses from 1 April to 5 April are included in their tax return.

MTD IT restrictions

Participants in the MTD IT testing programme will not be able to claim carryback of losses, change their accounting period, or change their accounting method. 

This, combined with the need for a 5 April year-end (or 31 March if the software supports it), may limit the numbers who can take part – although not to the same degree pilot numbers were restricted in January 2022, when they fell to just nine.

Once the participant is registered, HMRC will write to them to confirm when they’ve become liable for the new penalty regime, guidance for which has been recently issued. 

Who cannot sign up for the MTD IT testing?

Agents cannot sign up clients or sole traders/landlords cannot register voluntarily if they:  

  • have a High Income Child Benefit Charge
  • have a payment plan with HMRC 
  • are a partner in a partnership 
  • claim Married Couple’s Allowance 
  • claim Blind Person’s Allowance 
  • are currently, or are going to be, bankrupt or insolvent 
  • are an MP, minister of religion or Lloyds underwriter 
  • have income from being a foster carer or being in a shared lives scheme 
  • have income from a trust 
  • have income from a jointly owned property  
  • have income from a furnished holiday let
  • are subject to a compliance enquiry  
  • use ‘averaging’ or other arrangements because their profits vary between years — for example because they’re a farmer, writer or artist 

There is an eligibility checker built into the sign-up service, but this doesn’t appear to check the year-end point.

What do agents need to sign up clients?

Agents wanting to sign up clients for the testing will need an agent services account, and the client’s full name, date of birth and National Insurance number. Using the Government Gateway user ID and password, agents can click here and follow the steps.

For each of your client’s income sources, they will need:

  • their business start date or the date they started receiving property income 
  • the accounting method such as cash basis accounting or traditional accounting 
  • the tax year your client would like to start using Making Tax Digital for Income Tax 

After getting the client’s permission, agents will need to sign in to their agent services account and either follow the steps to obtain client authorisation or copy the client’s existing authorisation for self assessment from your HMRC online services for agents account, to your agent services account.

For advice on the system, taxpayers or agents can contact MTD's Customer Support Team on: [email protected] 

Software absentees

An insider familiar with the sign-up process also told AccountingWEB that agents need to speak to their software provider before signing up to make sure they can support them – even if the provider is on the software available now list.

A recent update to the Making Tax Digital for Income Tax software page revealed that five products will be available on the go-live day, with several larger players among the notable absentees. 

While major names such as QuickBooks Online and Sage are involved, the likes of Xero and FreeAgent, and compliance suites such as Bright Tax, Capium, IRIS, TaxCalc and Wolters Kluwer CCH, have all chosen to join at a later stage.

Next steps

HMRC has not explicitly publicised a specific timeline for the next step of the MTD IT journey. However, AccountingWEB understands the “public beta” testing phase, where in theory the majority of taxpayers will be able to freely join the programme, is likely to be launched in February 2025. 

In 2026/27, self-employed individuals and landlords with income of more than £50,000 will be mandated to MTD IT, while in 2027/28 those with an income of more than £30,000 will be brought into the programme.

Replies (8)

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By ireallyshouldknowthisbut
23rd Apr 2024 09:25

From a professional point of view, I cant see how any accountant could ask a client to sign up for this.

Any one of the exclusions may arise even for a client for whom it does not now.

Moreover the raised penalties and huge amount of extra work makes this a complete nonsense.

And that is for accountant who believe this project will actually work this time (as opposed to all the other times when it was stalled or radically changed)

If you think its a dead project, then zero incentive to join.

Thanks (9)
Replying to ireallyshouldknowthisbut:
Tornado
By Tornado
23rd Apr 2024 12:18

I agree (except for believing this project will actually work this time)

The list of people not eligible to sign up is far longer than the people who can.

What sort of idiot thinks that this test is going to enable a fully tested fool proof system to be ready for any and every situation by April 2026.

It is seriously unbelievable and in my view is the last nail in the coffin of this very much dead project.

Thanks (6)
Replying to Tornado:
By ireallyshouldknowthisbut
23rd Apr 2024 13:56

Ah poor wording, I was putting my self in the shoes of an accountant who thinks it might work, and considering if it was possible to join the pilot and remain credible.

Personally I dont think it matters how many times they announce the same policy the same result will occur each time as the project is effectively underliverable on a fundamental level. No amount of turd_away_polish is going to help.

Thanks (4)
Replying to ireallyshouldknowthisbut:
Tornado
By Tornado
23rd Apr 2024 15:22

It seems to me that no one seriously believes that this project is ever going to work, but whilst there is a seemingly bottomless pit of money available to keep it going, then there is a big incentive for thousands of people to keep the dream alive and apparently well.

Who cares if you are working on a pointless project when you still get paid very, very well, whatever happens.

Perhaps a new Government will have the guts to say 'No More Money for MTD'.

Thanks (2)
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By Refs1
23rd Apr 2024 22:34

No thanks - if they cannot be bothered to answer the phone, I cannot be bothered joining as a “volunteer”, any accountant who does, is somewhat letting the profession down IMO

Thanks (4)
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By FactChecker
23rd Apr 2024 22:50

How can anyone (let alone HMRC who've never managed it before) "stress-test" a system in any meaningful way if:
* all the 'awkward' types of clients aren't allowed to do any testing?
* all those clients who do any testing aren't allowed to do things in their business which would make good economic sense for them but aren't supported by the pilot?
* all the software that is 'approved' to use is incomplete (if only because they don't yet have a full specification to guide their development)?
* there's no evidence (certainly in the public domain) that HMRC either know what they want to do with any data received or have back-office systems/processes to cope with errors or corrections?

The only 'safe' way to join the pilot (cash basis maintained in a spreadsheet with filing via one of the 'bridging' options) is safe precisely because it WON'T stress-test anything (or meet the supposed original objectives let alone deliver any of the claimed benefits)!

Thanks (4)
Replying to FactChecker:
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By FactChecker
23rd Apr 2024 22:57

Oh and who is going to compensate (properly - not just a derisory 'goodwill' amount) any client who struggles through all the above for a year ... only to find that the year-end process (whatever it finally transmutes into) is impossible for them?

Maybe the software provider has given up/pulled the plug, or maybe HMRC decide that the first lot of filings they receive aren't what they actually need, or maybe the client did something relatively innocuous during the year (like triggering HICBC) without realising that this invalidated their place in the pilot - and there are other possibilities.

That's a LOT of extra work (especially if they changed their accounting year just for the purposes of the pilot), so who's going to re-do it all? Who's going to pay for that? And who will compensate client for the likely knock-on impact on their business?

A lawyers' paradise (but VERY unhappy accounting clients)!

Thanks (3)
Morph
By kevinringer
03rd May 2024 15:39

It must be my age, but didn't the MTD pilot start in 2017 https://www.accountingweb.co.uk/tech/practice-software/mtd-pilot-offers-...? It's taken 7 years and HMRC has got nowhere, other than wasting £1.3 billion which could have been put to better use fixing existing HMRC software errors and providing acceptable service levels.

Just what has HMRC gained over the 7 years since the pilot started?

The original pilot was to run for 12 months and have 400,000 volunteers. It actually limped on for 6 years before it had dwindled to less than 10 participants and died completely. The purpose of a pilot is to test. This test failed, spectacularly. HMRC should have acted on these results and realised that if the pilot with willing volunteers with simple tax affairs has to be re-started after a 7-year slog, there's no way it's going to work with unwilling taxpayers with normal and complex tax affairs. But no, this is a demonstration of HMRC arrogance and their complete disconnect from the real world. That's why HMRC will make MTD happen no matter how costly, how impractical, how much HMRC will have to dumb-down tax and reduce the tax take. Over the last 7 years HMRC has grudgingly had to admit it was wrong and that instead of saving costs for business, MTD will cost businesses. HMRC has also now admitted MTD is complex. Given the dumbing down of tax, that means the original rationale for MTD (the closing of the mythical tax gap) has also gone. HMRC seems to thing its whole purpose is to introduce MTD, despite the vanity project having lost any vestiges of creditbility it might have had. HMRC needs to get back to the day job of collecting tax.

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