MTD - House of Lords report - our representative

Is our representative really representative?

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Rebecca Benneyworth was a witness at the House of Lords and I understood that she was invited in order to provide the views of our profession. She certainly made some excellent points that their Lordships appear to have taken on board in their report including the following:

"almost every accountant will be in a happier place when all their clients are using digital records to the extent of their capabilities. .... I have no doubt at all about the end goal. HMRC is absolutely doing the right thing. I am quite proud that our tax authority is doing this, but we need a lot longer to do it."

Does this really represent the views of participants of this forum?

Replies (7)

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paddle steamer
By DJKL
29th Mar 2017 17:46

Long term I believe it may be, the tricky bit is how long term is long term

I would prefer these changes to follow on from improvements in our banking system re recording transactions, automation of sales invoice from A becoming purchase invoice of B with some platform(s) to support same.

I do see this as a natural progression of the technology though I also carry some significant reservations re safety/security etc- all eggs in one basket leaves a bit of a mess if the basket is attacked.

I find MTD the wrong way round, the tax system should be following accounting systems rather than leading them, my concern is the actual accounts become secondary (and simplified) to satisfy tax compliance.

There is a power in accounts, they are not without problems re recognition/timing/valuation, but they do impart information to guide the path of a business; the rush for MTD I think will devalue them to the long term detriment of the SME sector ands I would much prefer a slower path letting tax follow accounts.

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By johngroganjga
29th Mar 2017 17:49

She may know the "end goal", but it has not been shared with us mere mortals.

All we know is that the whole scheme serves no purpose because the additional information that will have to be submitted on pain of swingeing penalties will not affect the amount of tax paid by a single taxpayer by a single penny.

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By Southwestbeancounter
29th Mar 2017 18:17

I definitely don't feel that way at the moment - give me five years when I have either bitten the bullet or retired and ask me again!! It's fine for large concerns but not little one 'man' bands who can't even send an email without putting the message in the topic heading! That doesn't mean that they aren't any good at the day job though - they're just no more an IT expert than I am a bricklayer, plasterer or a taxi driver etc etc

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By GW
29th Mar 2017 18:44

I don't see how making everything digital is the answer, given the limitations of computerised accounting systems.

Have you tried using Sage to deal with a payment into a US Dollar account that clears an invoice recorded in Euros? (yes it can be done but it is not straightforward), or what if you want to work with currencies and use VAT cash accounting at the same time, again most software can't cope.

Computers are not always the best answer and yet we are going to be forced to use computerised systems, unfortunately traditional bookkeepers who knew what they are doing and why they were doing it are becoming rare and replacing them with software and a less skilled operator does not always work - look at what that approach has done to HMRC.

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By Accountant A
29th Mar 2017 21:06

Saying "almost every accountant will be in a happier place when all their clients are using digital records" and then " HMRC is absolutely doing the right thing" is a complete non sequitur. Record keeping considerations and onerous (pointless?) reporting-on-pain-of penalties are completely capable of separation.

As mentioned by others "I have no doubt at all about the end goal." suggests some inside knowledge (unlikely) or an extremely naive assumption based on experience which probably runs counter to 99% of taxpayers and their advisers. I have met many reasonably senior HMRC people over the years and never found one who had a decent grasp of how businesses run. And that's not exaggerating for effect.

As for "I am quite proud that our tax authority is doing this,". I'm beyond staggered. Possibly hoping for an upgrade to the MBE ...

I saw some reference today to "Stockholm syndrome" so maybe that's the answer.

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abc
By Kim Jong Un's Hair
29th Mar 2017 22:05

I think MTD is a great idea; if actually used for tax collection as I figure it is ultimately intended.

However, putting that idea into practice is frankly a nonsense. It is too quick, too soon and with a pilot that won't test the full system (year end declaration).

I read on Aweb that third party software developers have been given a standard that they must adhere to that actually calculates tax incorrectly.

It is astonishing that HMRC are considering this project in the face of such fundamental failings. I think they need to concentrate on fixing the roof first.

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By Duggimon
30th Mar 2017 09:48

I mostly agree with the quotes in the OP, it is the way the system has to be run eventually and the issue with MTD has always been the timescale.

Tax, along with everything else, will need to be digital, that HMRC's plans to make it so are the right plans seems unlikely for all the reasons already beaten to death but the general direction is right.

edit to add: The system we have right now means that for clients using digital record keeping the process of entering transactions right through to generating the tax return is streamlined to the point where it can all happen very smoothly. Then a tax return is generated, sent through the gateway and the whole thing falls over in a steaming pile of dung, it takes too long for the return to show on the account, payment requests, updates to balances, transfers between taxes and just generally information from HMRC all become massive hassles. MTD, if done right (which is the ideal world I think Rebecca is alluding to) would fix all or at least most of those issues.

The concern of course is that it's not being done right, that doesn't mean the concept is flawed, it means the people executing it are.

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