UK: Corporate Tax Reporting Changes are Coming for UK Businesses

The digital transformation roadmap recently published by the UK tax authority confirmed what many suspected—that Making Tax Digital for Corporation Tax is no longer going ahead. For businesses and advisers, it’s a pragmatic and welcome step.

But while the end of this initiative lifts the threat of quarterly digital filing obligations, it doesn’t mark the end of HM Revenue & Customs’ reform efforts.

In fact, HMRC is already moving ahead with a quieter but potentially more important change: It plans to standardize how companies prepare and report their corporation tax, requiring more detailed disclosures and affecting how tax data is managed.

The MTD regime would have obliged companies to file quarterly updates containing details of business income and expenditure, dates, amounts, and descriptions—creating an administrative burden.

A repeated complaint about using MTD for corporation tax was the frequently wide variance between the net income per the cashbook and the final taxable profit for companies.

By dropping MTD for corporations, HMRC has acknowledged that a one-size-fits-all model doesn’t work for every tax.

HMRC’s Ongoing Plans
This cancellation doesn’t mean HMRC is excluding corporation tax from its digital transformation plan. Instead, it’s introducing standardization on the format and content of corporate computations.

The aim is to improve consistency, enhance data quality and support better risk-assessment, all while minimizing cost to taxpayers.

The first element of this standardization program, already published, covers the layout, content and iXBRL tags to be used for accounts adjustments and capital allowances.

HMRC is keen to avoid burdening business with unnecessary cost and so is in discussion with software houses and the representative bodies regarding the proposed new disclosure.

For most taxpayers, this first element of the project largely will be absorbed “behind the scenes” by the software providers, though companies with minimal disclosure practices may need to provide more detail.

HMRC has stated that the standardization plans won’t stop with accounts adjustments and capital allowances, but hasn’t yet released details of the areas that future elements will cover.

Later stages of the project are expected to cover areas of the computation where there is more variation in the level of disclosure provided by various taxpayers. This includes a profit-and-loss account and fixed-asset note, a breakdown of administrative expenses, and expenditure items that commonly have tax add-backs such as legal fees, provisions, and hospitality.

Any increase in the required disclosure in these areas could greatly affect taxpayers who currently produce computations with minimal levels of disclosure because they would be required to disclose, and possibly prepare, more detailed computations.

This signals a move toward deeper, more structured disclosure for corporation tax computation, albeit without the need for quarterly filings.

The effect of these changes may feel modest at first, but the direction in which HMRC is heading is clear when it comes to standardization, increased data visibility, and scrutiny.

These changes will improve HMRC’s ability to risk-assess companies and enable it to improve the quality of tax computations by challenging high-risk companies or those with anomalous elements to the computations compared to their peers.

Businesses currently using simplified computations may need to upgrade their internal processes or technology to meet future expectations. They should confirm with their software provider that it is aware of the new requirements and that their software will be compliant when the company comes to file its tax return.

The first stage of the project will apply for tax return periods ending March 31, 2026 onward: A practical problem then arises as the proposals are not yet final, but some periods that will be subject to the new disclosure have already have started.

Going forward, companies may need to provide significant additional disclosure in their tax computations. While there are currently no details about the contents of the next stages of the project, the intention will be to address common sources of error.

Companies may find it useful to review HMRC guidance such as that found on specific deductions in HMRC’s Business Income Manual and in the Corporation Tax Toolkits and ensure that their tax computations correctly treat the common risk issues noted and that in the future they will be able to provide sufficient disclosure for this care to be visible to HMRC.

HMRC is consulting on the proposed changes and is keen to avoid imposing onerous administrative burdens. But policy direction on this is firm. Unlike MTD for corporation tax, this project has a defined start date.

Businesses shouldn’t view this as the end of the road, but rather the beginning of a different kind of change—one that places greater emphasis on structured data, transparency, and readiness for risk assessment.

Now is the time for companies to review their existing systems, ensuring that they can meet enhanced disclosure standards and prepare for a new era of digital corporation tax compliance.