PART 1General

Citation and commencement1

These Regulations may be cited as the Income Tax (Digital Requirements) Regulations 2021 and come into force on 6th April 2024.

Interpretation2

In these Regulations—

  • “TMA 1970” means the Taxes Management Act 1970;

  • “Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;

  • “designatory information” means information which enables HMRC to identify a relevant person, the type of business carried on by a relevant person, the commencement and cessation dates of the business or the basis used for calculating taxable profits for the purposes of income tax;

  • “digital records” has the meaning given by regulation 6;

  • “the digital requirements” has the meaning given by regulation 3(1);

  • “digital start date” has the meaning given by regulation 4;

  • “end of period information” means financial information2 and other information in respect of the business of a relevant person for a relevant period3;

  • “end of period notice” has the meaning given by regulation 12;

  • “HMRC” means Her Majesty’s Revenue and Customs;

  • “property business” has the same meaning as it has in section 263(6) of ITTOIA 20054;

  • “quarterly deadline” has the meaning given by regulation 7(5);

  • “quarterly period” has the meaning given by regulation 7;

  • “quarterly update” has the meaning given by regulation 7(2);

  • “relevant person” means a person to whom Schedule A1 applies by virtue of paragraph 1 or 2 of Schedule A1, other than a person to whom an exemption applies by virtue of Part 7 or 8 of these Regulations;

  • “retailer” has the same meaning as it does in Schedule 11 to the Value Added Tax Act 19945;

  • “retail sales notice” has the meaning given by regulation 16(1);

  • “Schedule A1” means Schedule A1 of TMA 1970;

  • “update information” means financial information and other information in respect of the business of a relevant person for a quarterly period;

  • “update notice” has the meaning given by regulation 8(1).

Use of functional compatible software3

1

A relevant person must use functional compatible software to comply with the following requirements (“the digital requirements”)—

a

to record digital records under Part 2;

b

to preserve those digital records until the end of the relevant day as required by section 12B(1A)(b) of TMA 19706;

c

to provide quarterly updates under Part 3; and

d

to provide an end of period statement7 under Part 4.

2

Where a relevant person has received notice to file for a year of assessment under section 8 of TMA 1970 and is required to file an end of period statement for that tax year8, that person may use functional compatible software to comply with the duty to file the things mentioned in subsection (1AB)(a) for that year9.

3

“Functional compatible software” means a software program or set of compatible software programs which comply with conditions set out in a software notice, where such notice has been made, and the functions of which include—

a

recording and preserving digital records in a digital form;

b

providing to HMRC quarterly updates and end of period statements and by using the API platform; and

c

receiving information from HMRC using the API platform in relation to a relevant person’s compliance with obligations under these Regulations.

4

“Software notice” means a general direction given by the Commissioners which is stated to be given further to this regulation and specifies conditions with which functional compatible software must comply.

5

A software notice may specify different conditions for different cases or purposes.

6

“API platform” means the application programming interface that enables electronic communication with HMRC, as specified by notice made by the Commissioners.

Digital start date4

1

Where a relevant person is carrying on a business10 immediately before 6th April 2023 the digital start date that applies to that business is 6th April 2024.

2

Paragraphs (3) and (4) apply where a relevant person—

a

commences carrying on a business on or after 6th April 2023; and

b

is required to make or deliver a return under section 8 of TMA 1970 including information relating to that business.

3

Where the exception in section 8(1G) of TMA 197011 applies to the return, the digital start date that applies to the business is 6th April in Year 4, where Year 1 is the year of assessment to which the return relates.

4

In any other case, the digital start date that applies to the business is 6th April in Year 3, where Year 1 is the year of assessment to which the return relates.