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(Draft) Notices made under regulations 3, 6, and 8 of the Income Tax (Digital Requirements) Regulations 2021 (SI 2021/1076)

Published 7 December 2023

The Commissioners for His Majesty’s Revenue and Customs (HMRC) make the following notices in exercise of the powers conferred by regulations 3, 6 and 8 of the Income Tax (Digital Requirements) Regulations 2021 (SI 2021/1076), as amended by the Income Tax (Digital Requirements) (Amendment) Regulations 2024 (SI 2024/ ….)

Software notice – made further to regulation 3. 

Functional compatible software must comply with the following condition: once a digital record has been entered into a software program that forms part of the functional compatible software, any transfer, recapture, or modification of that digital record within the functional compatible software must happen digitally and not manually. 

Joint Property Owners – notice made further to regulations 6 and 8.

A relevant person that lets property jointly may choose in respect of each tax year that the digital records and quarterly update information are those specified below.

Digital record-keeping

A relevant person that lets property jointly:

• must, when appropriate, include only their share of income and expenses
• in relation only to income and expenses that arise from properties they let jointly, they should either create:
  • one digital record for each category of income and expenses that was received or incurred during a quarterly update period; or
  • digital records of each item of income and expense

Quarterly update information

A relevant person that lets property jointly:

• must, when appropriate, include only their share of income and expenses
• must include their share of the property income totals in their quarterly update information
• can either provide details of their share of property expenses:
  • before they deliver a return under section 8, Taxes Management Act 1970 for the tax year or if earlier, the end of 31 January following the tax year; or
  • in their quarterly update information

Update notice – made further to regulation 8. 

The update information that must be provided in a quarterly update period is dependent on the relevant person’s business or businesses.

A relevant person within charge to Income Tax under Part 2 of the Income Tax (Trading and other Income) Act 2005 (ITTOIA 05)

A relevant person with trading income must provide the following update information in each quarterly update: 

• quarterly update period start date
• quarterly update period end date
• totals of the amounts falling within income and expenses set out in the following table:

Business income	Business expenses – allowable and disallowable
Turnover	Cost of goods bought for resale or goods used
Other business income	Construction industry – payments to subcontractors
	Wages, salaries, and other staff costs
	Car, van, and travel expenses
	Rent, rates, power, and insurance costs
	Repairs and maintenance of property and equipment
	Phone, fax, stationery, and other office costs
	Advertising
	Business and entertainment costs
	Interest on bank and other loans
	Bank, credit card and other financial charges
	Accountancy, legal and other professional fees
	Other business expenses

A relevant person with property income and profits of which are chargeable to income tax under Part 3 of ITTOIA 05 (property income)

A relevant person with property income must provide the following update information in each quarterly update period:

• quarterly update period start date
• quarterly update period end date
• totals of the amounts falling within property income and expenses set out in the following table:

UK property - not UK furnished holiday letting (FHL)

Property income (non- UK FHL)	Property expenses (allowable and disallowable)
Total rent	Rent, rates, insurance and ground rents
other income from property	Property repairs and maintenance
Premiums for the grant of a lease	Non-residential property finance costs
Reverse premiums and inducements	Residential property finance costs
	Legal, management and other professional fees
	Costs of services provided, including wages
	Travel expenses
	Other property expenses

Foreign property (not EEA FHL)

Foreign property income	Foreign property expenses (allowable and disallowable)
Total rent	Rent, rates, insurance and ground rents
other income from property	Property repairs and maintenance
Premiums for the grant of a lease	Non-residential property finance costs
	Residential property finance costs
	Legal, management and other professional fees
	Costs of services provided, including wages
	Travel expenses
	Other property expenses

UK FHL

UK FHL income	UK FHL expenses (allowable and disallowable)
Total amount of rent and any income for services provided to tenants	Rent, rates, insurance and ground rents
	Property repairs and maintenance
	Non-residential property finance costs
	Residential property finance costs
	Legal, management and other professional fees
	Costs of services provided, including wages
	Travel expenses
	Other allowable property expenses

European Economic Area (EEA FHL)

EEA FHL income	EEA FHL expenses (allowable and disallowable)
Total amount of rent and any income for services provided to tenants	Rent, rates, insurance and ground rents
Premiums for the grant of a lease	Property repairs and maintenance
Reverse premiums and inducements	Non-residential property finance costs
	Residential property finance costs
	Legal, management and other professional fees
	Costs of services provided, including wages
	Travel expenses
	Other property expenses

Turnover below the VAT registration threshold

A relevant person with an annual turnover below the VAT registration threshold, as amended from time to time, may choose to provide the total of all income and the total of all expenses instead of the totals of the amounts falling within each category listed in this Update Notice.

Retail sales

A relevant person may choose in respect of each tax year that the digital records in relation to the retail sales of that business are those specified below.

In respect of the retail sales of the business of a retailer, digital records means a single digital record of the daily gross takings for any retail sales made.

The gross daily retail sales digital record must include:

• all payments as they are received by the relevant person or on the relevant person’s behalf from its own cash paying retail consumers. This includes payments by cheque, debit or credit card, maestro, visa or similar electronic transactions and electronic cash.

• the full value of all credit or other non-cash retail sales received by the relevant person or on the relevant person’s behalf. This includes the full value of credit sales, the cash value of payment in kind for retail sales, the face value of gift, book and record vouchers received and any other payments for retail sales including those sales completed via third party online sales platforms.

The following may be excluded when calculating the amount of daily gross takings:

• counterfeit notes
• illegible credit card transactions
• inadvertent acceptance of a cheque guarantee card as a credit card
• inadvertent acceptance of foreign currency (where discovered after their acceptance)
• inadvertent acceptance of out-of-date coupons which are not honoured by promoters
• instalments in respect of credit sales
• receipts recording for supplies which are to be recorded outside of the election
• refunds to a consumer for overcharges or faulty/unsuitable goods
• float discrepancies
• unsigned or dishonoured cheques from cash customers
• use of training tills
• void transactions