Kworia News
Articles for United Kingdom
This hub covers e-invoicing and digital reporting requirements in the United Kingdom, including HMRC's Making Tax Digital programme, the phased obligations for VAT-registered businesses, and the evolving framework for corporate tax digitalisation. Readers will find mandate timelines, technical standards, software recognition criteria, and practical steps for achieving and maintaining compliance across UK tax obligations.
HMRC's VAT Notice 723A allows non-UK businesses to reclaim UK VAT on supplies received from January 1, 2021 onwards. The scheme requires reciprocity and uses a defined claim period (July 1 to June 30) with claims covering three to twelve months. Import VAT and VAT group claims have specific eligibility rules.
HMRC proposes a new criminal offense for reckless false statements on direct tax filings to align enforcement with indirect tax rules. The offense targets behavior that knowingly files potentially incorrect information without proper checks, with penalties including unlimited fines and up to two years imprisonment.
HMRC has documented exemption pathways for those unable to comply with Making Tax Digital for Income Tax (MTD IT), mandatory from April 6, 2026. The framework includes temporary and permanent exemptions with specific application timelines and appeal processes for tax advisors and affected self-employed individuals and landlords.
428,000 UK taxpayers failed to submit their required quarterly updates by the August 7, 2026 MTD for Income Tax deadline, indicating a substantial compliance gap. This near-parity with successful submissions suggests behavioral issues rather than system failures, posing immediate enforcement challenges for HMRC.
436,000 sole traders and landlords have submitted their first MTD for Income Tax quarterly updates, but HMRC will auto-enroll remaining eligible individuals starting September 2026.
HMRC's Making Tax Digital (MTD) for Income Tax Self Assessment becomes mandatory on August 7, 2026, requiring quarterly submissions from sole traders and landlords with gross income over £50,000. Over 580,000 eligible individuals remain unregistered. The penalty system includes a soft landing for 2026/27, with income thresholds lowering to £30,000 in April 2027 and £20,000 in April 2028.
Over 580,000 UK sole traders remain unregistered for Making Tax Digital for Self Assessment, while unverified survey data claims nearly half are considering quitting self-employment due to MTD's administrative burdens. The policy's impact on self-employment participation requires further investigation.
