UK Confirms MTD‑ITSA Mandation Dates Will Not Slip Again
January 5, 2026
Introduction
After years of deferrals, HMRC has confirmed over the weekend that Making Tax Digital for Income Tax Self Assessment (MTD‑ITSA) mandation dates will not be delayed further. From April 2026, qualifying taxpayers will be required to comply, marking the first genuinely irreversible phase of the reform.
Background and context
MTD‑ITSA has been repeatedly postponed due to software readiness, agent capacity, and political sensitivity. However, HMRC’s latest update – reported across professional tax press and echoed by senior HMRC officials on LinkedIn – signals that operational tolerance has ended.
The UK government now views MTD as compliance infrastructure, not an optional digital upgrade.
Technical analysis
MTD‑ITSA applies to individuals with:
- Trading income, and/or
- UK property income
exceeding the £10,000 gross threshold.
Requirements include:
- Quarterly digital updates
- End of Period Statements (EOPS)
- Final Declarations
Crucially, quarterly updates are informational, not tax‑calculating. However, errors now surface within‑year, fundamentally changing enquiry dynamics.
Practical and commercial implications
Accountants face workflow compression, while unrepresented taxpayers face steep learning curves. Businesses relying on spreadsheets without bridging solutions are now exposed.
Risks and common mistakes
- Assuming MTD replaces Self Assessment entirely
- Believing quarterly updates determine tax due
- Leaving software onboarding too late
Conclusion
MTD‑ITSA is no longer theoretical. It is imminent, mandatory, and operationally unforgiving.
Final thoughts
This is not a tax change, but it will change tax behaviour.
Call to action
If you have trading or property income, confirm your MTD status now and migrate systems before April 2026.
If you have any queries over MTD, or any UK or UAE tax matters, then please get in touch.
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Introduction For many UAE businesses, excess VAT has historically been treated as a benign accounting line and something that sits on the balance sheet until it is convenient to claim. The introduction of a five-year statutory deadline for VAT credit recovery fundamentally breaks that mindset. From 1 January 2026, VAT credits are no longer indefinite. They are wasting assets. The legal change explained Under the amended UAE Tax Procedures Law, excess recoverable VAT must be: Refunded, or Offset against future VAT liabilities within five years from the end of the tax period in which the credit arose. Credits not utilised within this window expire permanently. A transitional rule allows businesses until 31 December 2026 to claim credits that were already more than five years old at the start of 2026 - but this is a one-off opportunity. Why the UAE made this change Indefinite carry-forward of VAT credits is unusual internationally. The change aligns the UAE with jurisdictions that treat refunds as procedural rights rather than permanent entitlements. From the FTA’s perspective, the reform: Reduces dormant credit build-ups Improves cash-flow forecasting at a system level Forces timely reconciliation and review Practical impact by sector Certain sectors are disproportionately affected: Real estate developers with long build phases Exporters with zero-rated outputs Capital-intensive businesses with heavy upfront VAT Many of these businesses hold legacy credits going back to 2018–2020, which are now approaching hard expiry. Audit risk and timing Refund claims made close to the five-year deadline are expected to attract greater scrutiny. The FTA has explicit powers to extend audit scope where refunds are involved, meaning that a late claim may reopen multiple historical periods. Conclusion VAT credits are no longer neutral bookkeeping items. They now carry time risk. Final thoughts Businesses that do not actively manage VAT ageing may see real cash disappear through procedural expiry. Call to action Run a period-by-period VAT credit ageing analysis and prioritise refund claims before transitional relief closes. If you have any queries about this article or UAE or UK tax matters, then please get in touch.