The Low Incomes Tax Reform Group (LITRG) has urged HMRC to thoroughly test Making Tax Digital for Income Tax (MTD for Income Tax) before rolling it out to taxpayers and landlords.
HMRC recently announced that, from April 2022, Making Tax Digital for VAT (MTD for VAT) will be extended to all VAT-registered businesses with turnover below the VAT threshold of £85,000.
Additionally, from April 2023, the self-employed and landlords with turnover above £10,000 per year will be required to keep digital records and submit income tax updates every three months. The updates will replace the filing of the annual self-assessment tax return.
The LITRG is urging HMRC to 'make effective use of the next three years' and run full pilots in order to help support taxpayers with the transition to the new digital system.
HMRC is currently running a small MTD for Income Tax pilot with self-employed individuals and landlords. It is seeking to scale up the pilot from April 2021.
Commenting on the matter, Victoria Todd, Head of the LITRG, said: 'We recognise the many benefits that a primarily digital system will bring for individuals and business as well as for HMRC.
'However, it is important that those who require assistance to transact digitally and individuals who are digitally excluded continue to have their needs met.'