Grunberg has said that HMRC’s decision to scrap plans for Making Tax Digital (MTD) for Corporation Tax reflects the practical challenges of introducing a universal reporting system for such a diverse business population.
The firm, which advises businesses across London and the South East, noted that the move had been anticipated by many in the profession, given the long silence on the proposal.
Nimesh Patel, Tax Partner at Grunberg, said: “MTD for Corporation Tax has been under discussion for years, and the fact that no concrete rollout date was ever set made it clear there were obstacles. This outcome was always likely.”
He added that for many companies, the decision would come as a welcome development.
“With administrative demands on companies continuing to grow, many will be relieved that this decision avoids adding yet another layer of compliance.”
Nimesh also highlighted the technical risks that could have emerged from trying to apply the same framework across such a wide range of corporate structures.
“Corporation Tax affects everything from micro-entities to multinational groups. Forcing a uniform process could have resulted in unintended pressure points for businesses that don’t fit the mould.
“Our understanding is that the Government is still looking at alternative and more effective ways to improve and modernise tax reporting rather than abandoning it altogether.”
While the firm agrees that digital record-keeping is becoming the norm, it said businesses were already moving in this direction organically.
“Most companies have already transitioned to having digital records especially over the last decade. MTD for VAT has been mandatory since April 2019, so many companies have been keeping digital records to comply with these regulations.
“A lot of businesses also see the operational benefits of this, not just the compliance side, which is why uptake has been strong without additional mandates.”
Nimesh also dismissed the suggestion that the decision might stall automation or deepen digital inequality.
“Automation is progressing regardless of HMRC’s position on MTD for Corporation Tax. Smaller companies have more accessible options and are using software where they see clear value. The market is far more flexible than it was even five years ago.”
The firm believes HMRC should focus on improving its core services to support Corporation Tax compliance.
“HMRC’s service levels remain a concern. Faster processing, clearer status updates and better functionality in HMRC’s online platforms would make a tangible difference to both businesses and advisers.”
Grunberg continues to support companies through changing tax and compliance requirements, helping them adapt with confidence.
To speak to a partner at Grunberg, visit www.grunberg.co.uk or call 020 8458 0083.
