Making Tax Digital for Corporation Tax (MTD for CT)

HMRC launched the MTD for CT consultation document on 12 November with the window for responses open until 5 March 2021. There are a number of fundamental changes being sought by HMRC so it is vital that corporates engage in the consultation either directly or through interested parties such as FTI Consulting.

Please see the link to the latest consultation document here:
https://www.gov.uk/government/consultations/making-tax-digital-for-corporation-tax

Key points from the guidance

• End to end digital record-keeping and digital links will become mandatory for all companies, including non-resident companies.
• Quarterly filing of summary tax-categorised information for all CT taxpayers, though some potential exemptions for quarterly instalment payers.
• Aligning CT deadlines to Companies House filings shortens CT filing period to 9 months or 6 months;
• XBRL tagging will be integral to MTD and manual tagging will therefore no longer be supported.
• HMRC expects some of its £2.1bn CT tax gap to be reduced by these measures.

Key consequences for your businesses

Your in-house tax compliance processes will have to change:

• Earlier deadlines and with no lead-time over statutory accounts deadline.
• Typing, re-keying and manual edits will no longer be allowed.
• New ways of working in spreadsheets, tax products, and financial systems will have to be adopted.

Software will have to be updated, upgraded or replaced

• Standard tax software such as corporate tax compliance systems should be updated automatically in due course.
• Non-standard solutions, out of support products, and old versions will need to be replaced.
• Industry specific solutions and tax-specific solutions will need to be investigated.

All tax data will need to be integrated and automated

• ERP data into tax compliance tools will have to be integrated without copy/paste between spreadsheets.
• Tax-packs, whether in-house or vendor supplied, will need to be integrated.
• All data that goes into the tax calculation and return must be digitally linked.

Tax sensitization/categorisation will need to occur earlier in the process (and calendar)

• Initially summary level information will have to be categorised for the quarterly filings, up to 21 months sooner.
• HMRC are also keen to extend this to every transaction and are specifically seeking consultation feedback.
• This only applies to income and expenditure, but could optionally include allowances, reliefs and incentives.

This MTD for CT site will act as a key resource where we will aggregate the resources that you need, including up-to date commentary and analysis from our experts.