HMRC has published long-awaited guidance on how digitally excluded individuals should apply for an exemption from Making Tax Digital (MTD) for Income Tax. Gaining HMRC’s agreement that a person is digitally excluded is essential.

WHAT DOES ‘DIGITALLY EXCLUDED’ MEAN?

The MTD legislation defines digitally excluded individuals as those who are unable to use electronic communications or keep electronic records due to their religion, age, disability, location, or any other reason. Unfortunately, HMRC’s guidance does not tell us how they intend to interpret the legislation, although they say they will not accept applications for an exemption if the only reason for applying is one of the following:

• The individual previously filed a paper return.
• The individual is unfamiliar with accountancy software.
• The individual has a small number of digital records to create each tax year.
• It will take extra time or cost for the individual to sign up for and use MTD for Income Tax.

APPLYING FOR EXEMPTION DUE TO DIGITALLY EXCLUDED STATUS

To apply for digital exclusion, you or your representative should either call HMRC’s self-assessment general enquiries line (0300 200 3310) or write to:

Self Assessment
HM Revenue and Customs
BX9 1AS
United Kingdom.

If you would like a friend or family member to call/write on your behalf, you should authorise them to do so, either over the phone or by writing to HMRC.

The application should include the following information:

• Your name, address and National Insurance number.
• Details of how you currently submit your tax return (including if someone else helps you do this).
• The reason you think you are digitally excluded. This should include any additional information to support the claim.
• Whether you have an agent (for example, an accountant) and what they will do for you.
• Any additional needs you have, so that HMRC can provide the right support.

Written applications should use the following title: ‘Making Tax Digital for Income Tax – digitally excluded application’

HMRC should respond within 28 days. If HMRC disagree that you are digitally excluded, you can appeal, in writing, to the address provided in the decision letter.

INDIVIDUALS ALREADY EXCLUDED FROM MTD FOR VAT

If you are already digitally excluded for MTD for VAT purposes, you should contact HMRC by phone or in writing, using the contact details provided above. Provided your circumstances have not changed, HMRC will agree that you are exempt from MTD for Income Tax. HMRC will need the following information:

• Your National Insurance number.
• Your VAT registration number.
• The reason you are digitally excluded from sending VAT returns using MTD compatible software, and if your circumstances have changed.

For more information please get in touch with us – we can discuss your situation and help you plan your approach to MTD for Income Tax.