HMRC have published a consultation on the potential design of Making Tax Digital (MTD) for corporation tax which was run for 16 weeks from 12 November 2020 to 5 March 2021. The consultation considers several areas, including the scope of MTD for corporation tax, digital record keeping, filing updates, establishing the final corporation tax liability and special cases and exemptions. The MTD for corporation tax consultation proposes that MTD will apply to all entities within the charge to corporation tax, with only a few minor exceptions.

Under the requirements of MTD for corporation tax, companies will need to maintain digital records of their income and expenditure; provide quarterly updates of income and expenditure to HMRC using MTD compatible software; and file their annual corporation tax return using MTD compatible software. Companies will need to use MTD-compliant software to calculate and submit their normal end of year corporation tax return. In addition to this also need to include some non-financial data, such as company type, industry classification, addresses of properties and a group structure, with entities in the charge to corporation tax clearly identified.

HMRC have stated that MTD for corporation tax will not before April 2026, but a pilot scheme of the MTD Corporation Tax service will be launched in 2024.

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