Podcast: All quiet on the MTD front

Accounting WEB
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The policy holiday surrounding taxation has been extended by the general election result on 8 June. This month's MTD podcast presents a progress check and considers the implications of all this uncertainty for HMRC's digital tax project.

The election fallout has been messy for MTD, combining elements of the “same as it ever was” and “hung Parliament” scenarios sketched out in AccountingWEB's election-eve analysis. Contrary to the rumours that suggested Chancellor Philip Hammond was on his way out the door at Number 11 Downing Street, he remains as a centre of, ahem, strength and stability within a reformatted Treasury team.

Hammond has been a relatively passive Chancellor so far and is already emphasising the need for reassuring calm in the wake of the election result. He was due to present the annual Mansion House speech on Thursday night, but pulled out at the last minute following the London tower block fire. We can safely assume that he will wish to go back to the autumn Budget plans that were so rudely interrupted by Theresa May’s ill-advised electoral gamble.

Among those unseated by Labour’s surprising surge was Exchequer Secretary to the Treasury Jane Ellison, who was the minister with day-to-day responsibility for HMRC.

Her replacement, Mel Stride will need time to get oriented to the workings of HM Treasury and HMRC and need to review the MTD programme before making any final decisions about the timetable.

As RSM tax consultant and Taxation magazine editor-in-chief Andrew Hubbard suggested this week, the unexpected election result offers for a pause for thought, and perhaps a reassessment of the MTD timetable. Our podcast panel of John Stokdyk, Rebecca Cave and Mark Purdue decided to do just that.

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By Eric T
18th Jun 2017 11:45

I see people are querying what type of reporting non sole traders/partners/landlords need to make under MTD. The assumption seems to be that unless you are one of the above categories, all you need to do is check your Digital Tax Account once a year to see if HMRC has prepopulated everything correctly. That, to me, sounds woefully inadequate.

What is the position for those who receive irregular income from sources which are not automatically notifyinh to HMRC as a matter of course?

Foreign income is one I can think of but probably the most common will be irregular dividends paid by owner managed companies to their shareholders. Is there going to be a requirement by owner managed companies to have to notify HMRC of dividend payments on a real time basis. I see the return of dividend reporting as used to be done under the CT61 (Z) system - only through online processing rather than a paper form.

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By MarkP
to Eric T
20th Jun 2017 11:07

Fair comments Eric. In the podcast, I may have over simplified the annual process.

Quarterly reporting only covers trading and property (although optionally, you will be able to include other income in the quarterly updates as well.

There will be an annual process of reviewing the tax account to ensure it is complete and correct. This process will also include the need to provide any data HMRC are not aware of.

Regarding specifically the reporting of dividends by owner managed businesses - I suspect, when "MTD for corporates" arrives in 2020... there may be some sort of provision for reporting dividend payments made, which will then populate the tax account of the shareholder... this is just an assumption on my part. There will be a consultation on MTD for corporates later this year

Mark Purdue
Product Manager
Thomson Reuters

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18th Jun 2017 12:42

Thanks to AW podcast today for the best possible reply they can give to my client s question , given the ( lack of) specificity of MTD data available at this time .

Eventually clarity will ( hopefully) dictate whether the onshoring of his overseas bank income portion will absolve him from entering in any shape/ form into MTD . In this latter hypothesis the whole of his income would be non earned AND also UK sourced and thus could ( ideally) qualify for being managed totally within his Personal Tax Account which
would ( again presumably) be automatically populated totally via input from UK based financial providers (??) thus obviating the need for anything other than a cursory formal confirmation that the inputted data is correct and there is nothing else to declare.

The opposite to this scenario would of course mean anybody " receiving" income over £10 k ( even bona fide UK sourced ) would need to enter MTD .
When even the majority of pensioners , low
earners and benefit claimants " gross" over this amount per year ( taking all peripheral benefits into account) it will be evident that if implemented strictly this mandate will equate to the slow descent into the Seven Circles of administrative Haides for both HMRC and the phalanx of low earning taxpayers who for whatever reason have never had to confront the completion of a tax imput in their lives .....

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19th Jun 2017 10:24

My question, which no-one can answer yet, is whether, for my clients who use less mainstream software, do they need to be quizzing their software suppliers now to determine whether their software will be MTD compliant in April, or not?

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By DJKL
to bendybod
19th Jun 2017 10:59

Yes, interesting question.

I am visiting a software company tomorrow to be shown their offering re property letting software, one of my initial questions was re their software and MTD which to date has not been answered.

Maybe we are looking at a two stage solution, export data in one form from the in use software then process /manipulate data within MTD software before it is lodged from same.

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to DJKL
19th Jun 2017 12:55

Yes, I have two clients who, for their own reasons, have less mainstream offerings. Both are adequately adept at using their software. One, because of the complexities of linking to their front of house operations, I would say would be resistant to change. The other, I would say, could be open to change if it had to happen but, much like many of us 'knows what to do and where to do it' in their current software and 'if it ain't broke, don't fix it'. They are the one that I am most concerned about as they are above the VAT threshold in terms of turnover but, for their own operational reasons, don't have to be VAT registered. Almost all other clients over the VAT threshold, we do VAT returns for them quarterly anyway, so I suspect MTD will become an extension of the bookkeeping that we, or they, do to produce the VAT returns.
The client to which I refer above is used to just producing the records once a year and it is a fairly painless process to turn their records around into a set of compliant partnership accounts. They certainly won't be open to suddenly having to send stuff to us four times a year because their software can't handle it and will require some serious hand-holding to get them to a state of compliance if this is the case. A quick internet search of their particular software doesn't encourage me.

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20th Jun 2017 08:42

HMRC themselves don't even know what is happening yet due to the election so we can't plan anything

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By Eric T
21st Jun 2017 13:15

Any updates following "The Queen's Speech" today?

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