SALF930 | Self Assessment: the legal framework: Making Tax Digital: Overview and legislation: Who does Making Tax Digital apply to?

Subject to exclusions set out below, MTD applies to a “relevant person”. A relevant person is a person who is carrying on or has carried on a “relevant activity”.

A relevant activity in relation to a person is any activity which may give rise to profits or other income from the following and which the person would be liable to income tax chargeable under Part 2 or Part 3 of ITTOIA 2005 if the person were UK resident:

• a trade, profession or vocation (Part 2 of ITTOIA 2005)

• a property business (Part 3 of ITTOIA 2005), or

• any activity which may give rise to profits or other income chargeable to income tax (Part 2 or 3 of ITTOIA 2005)

The following are not relevant activities:

• any activity carried on in Partnership

• any activity carried on by the trustees of a charitable trust, or the trustees of an exempt unauthorised unit trust

• the underwriting business of a member of Lloyd's

• holding shares in respect of which a distribution may be made which is chargeable to income tax

• participating in an open-ended investment company which may make distributions chargeable to income tax

‘Business’ for a relevant person or partnership is defined as:

• For a relevant person - as the relevant activity or activities that a person is carrying on or has carried on.

• For a partnership - as any activity or activities of the partnership that may give rise to profits or income that do not fall with those mentioned below

  • the underwriting business of a Lloyd's partnership (as defined in section 184(1) of the Finance Act 1993);

  • holding shares in respect of which a distribution may be made which is chargeable to income tax under Part 3 of ITTOIA 2005 by virtue of section 548(6) of CTA 2010 (distributions to shareholders in real estate investment trusts)

  • participating in an open-ended investment company which may make distributions chargeable to income tax under Part 3 of ITTOIA 2005 by virtue of regulation 69Z18 of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964) (property income distributions).

“Trustee” includes an executor or an administrator liable to tax under s.74(1) TMA 1970.