Tax and compliance changes coming in 2023, 2024 and beyond

It continues to be a busy period when it comes to understanding compliance requirements. Changes in everything from MTD to VAT have been a feature of accounting life over the past few years, and things aren't going to change as we head into 2023.

Here's some things to know as 2022 comes to an end and we begin planning for the future.

1 November 2022

Closure of VAT portal (monthly and quarterly filers)

HMRC will close its online VAT portal to quarterly and monthly filers. Businesses will no longer be able to file VAT Returns through their HMRC online VAT account, as they did prior to MTD for VAT’s introduction.?

This only affects businesses that aren’t yet complying with MTD for VAT. In theory, there should not be many of these. The reality is that many businesses are going to be taken by surprise with this closure.

1 January 2023

Introduction of DAC7

The 7th amendment to the EU's Directive on Administrative Cooperation, or DAC7, requires digital platforms to provide information to tax authorities about sellers and certain goods and services. This info is then shared across the EU.?

It applies to both EU and non-EU platforms that facilitate sales to EU sellers, so will include some UK businesses, too. Note that the reporting deadline isn’t until a year later—31 January 2024.?

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1 January 2023

Late filing and payment changes from HMRC

A new points-based system applies to late tax submissions, while penalties are calculated differently for late payments. Initially this applies only to MTD for VAT, but then will apply to MTD for ITSA upon its introduction in April 2024, and then all Self Assessment taxpayers as of April 2025.?

1 April 2023

Corporation tax rise

In case you missed it, the corporation tax rise is back on following its temporary cancellation as part of the mini-budget.

Corporation tax will rise to 25% based on an upper profits threshold of ￡250,000.?

Smaller businesses with profits under ￡50,000—around 70% of total businesses, according to the government—are set to stay at the 19% main rate. A tapered rate is applied to businesses with taxable profits between ￡50,000 and ￡250,000.

6 April 2023

Basis period reform: start of transitional year

All unincorporated businesses not using the tax year as their basis period will have to move to a fiscal year basis at some point from 6 April 2023 onwards. This will generate transitional taxable profits after their accounting period ends, creating for a one-off 12+ month basis period.

15 May 2023

Closure of VAT portal (annual filers)

HMRC will extend the closure of its online VAT portal to yearly filers.?

See the first entry in this list above for more about this issue.?

January 2024

DA7 reporting deadline

As mentioned earlier, this is the DAC7 reporting deadline, covering the previous year.

Introduction of UK digital reporting platform rules

Digital platforms in the UK will need to provide information to HMRC about sellers and sales of certain goods and services. The deadline for the first reporting is a year later, in January 2025.

April 2024

MTD ITSA begins

For unincorporated businesses and landlord income bringing in over ￡10,000 per annum, the rules for MTD ITSA will apply: digital record keeping (and digital linking), quarterly reporting, end of period statements for each trade and landlord income, and then a final declaration on 31 January. MTD ITSA-ready software must be used.?

Start of Corporation Tax pilot?

Perhaps surprisingly, businesses might be able to sign-up for MTD for Corporation Tax as early as April 2024. As with MTD for Income Tax Self Assessment (MTD ITSA) and then MTD for VAT, HMRC wants to test MTD for CT through a pilot programme—and in its consultation documents mentions this could start as soon as 2024's tax year.

Basis period reform start date

All non-incorporated businesses will have to use the tax year as their basis period as of April 2024. They can continue to use whatever accounting period they wish, though.?

January 2025

UK Digital Platform reporting deadline

This is the deadline for the first report to HMRC from UK digital platforms about seller income and sales of certain goods and services, covering the previous year.

April 2025

MTD for Income Tax for general partnerships

General partnerships with only individuals as partners will need to start following MTD ITSA's rules, as discussed earlier. Other types of partnership, including Limited Liability Partnerships (LLPs) that are not general partnerships with only individuals as partners, do not need to join MTD ITSA as of this date.

April 2026 (at the earliest)

MTD for Corporation Tax

Making Tax Digital will come to corporation tax, with a likely requirement to keep digital records, provide quarterly reporting of income and expenses through software, followed by an end of year submission via software to replace the existing CT600.?

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Other things to watch for

Some noteworthy changes have been mooted but no date provided, including:

• Further EU VAT reforms?("Vat in the Digital age"): The EU has prepared a report looking into 3 separate but interrelated areas of VAT policy, including digital reporting requirements (or ‘DRRs’), the VAT treatment of the platform economy, and the single VAT registration and the import One Stop Shop. Details of reforms may be published soon.
• Companies House reforms:?In February 2022, the government released a policy paper setting out its position on reforming Companies House, notably featuring corporate transparency and register reforms.?This policy paper laid out 58 reforms and paved the way for legislation to follow.?