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And the clients who put their invoices in a Tesco bag? Who don't use smartphones or don't have time to?
I'm going to use this to describe MTD from now on when discussing it with clients/the press/my MP/The Treasury etc.
Making Tax Difficult
Has a certain campaign ring to it!
(As long as you don't mind me stealing it!).
Not my idea! I heard this from another accountant a couple of months ago.
Feel free to spread the word..
In my opinion it's too early for a national awareness campaign, as the proposals are far to broad. It's not yet clear what detail will come out after the consultation period.
That said, the natural follow on to this is that the timeline of mid-2018 is for Income Tax is unachievable. It requires up to 3m sole trader businesses to switch from manual / Excel records onto digital software compliant with HMRC's new requirements - software which is not yet available on the market.
Time to deadline for first filing is 1 year 9 months 6 days.
No software licensed yet.
No specifications.
Not yet decided who is affected.
I despair.
It's such a circular problem at this point.
No awareness campaign means no meaningful consultation for small business.
No meaningful consultation with small businesses means no clear answers about exactly what will be required.
No clear answers about requirements means no direction for software development, means no truly meaningful feedback from either software providers or front-line users, which means even less clarity about direction...
While I can understand the argument that a lack of focus in the proposals means that an awareness campaign wouldn't be ideal, it would at least get more of a conversation started.
You have to ask yourself why HMRC aren't publicising. The answer is very simple they haven't got a clue what they are doing and have no answers. Just think what fuss business will raise once they realise what is supposed to happen. It'll make the Accountants feedback seem like a tea party.
The software companies haven't got a clue either. This is all going to cost a lot more and I suspect won't come on line till 2020 at the earliest.
I remember being involved in the early days of SA. HMRC new the answers and it worked really well. Then having all income in one year on one return does actually make sense. Having 5 returns in one year for no reason (oh yes it benefits the business - who says it does???????) doesn't make any sense at all.
I am a small business owner and have responded specifically to HMRC's consultation, written to my MP an the issue and also filled out the on-line questionnaire from HMRC. Do I have confidence that they are listening? Short answer - No!
Most of our business is overseas - as such, we are an exporter of business services. Almost all of our revenue is in foreign currency.
I am horrified (but not surprised) that there is not a single mention in the entire consultation documentation about the challenges of multi-currency accounting and the calculation and recognition of profits in a market where exchange rates are fluctuating.
It is as if we small business exporters didn't exist. Well, here's the news - unless we get some support we won't!
I see you've written to your MP. Good luck, if they are anything like ours in Braintree, you are wasting your time.
I see you've written to your MP. Good luck, if they are anything like ours in Braintree, you are wasting your time.
I have emailed my MP with the link to the Select Committee meeting video. I have warned him of the "perfect storm " and commented that MP Helen Goodman was able to attend in support if her constituents whilst he is sitting on his hands claiming the "devil is in the detail".
Ignoring the abilities of clients and accuracy etc., what I do not understand is why they are demanding that everyone has to use cloud based systems. They did not require it for RTI and seem to be happy with desktop payroll systems sending files of data, so why not for MTD?
If cloud was not required, lots of smaller software companies could just build form like apps that would allow everyone to enter their quarterly data from their spreadsheets/ cash books etc. It is the obsession with the cloud that I find so suspicious (for want of a better word!)
It doesn't have to be cloud-based, just digital. So a desktop product would be fine, but it needs to be able to communicate with HMRC's API, so an internet connection will be vital.
Dear software providers,
Here is what I want my new package to do. Take last year's completed figures, divide by four, reduce it to three lines, and submit that every three months. Allow figures to be adjusted in case we need to increase/decrease based on talking to client.
Then allow amendments to be made so that the actual figures are completed once a year when the client drops off his piles of paper/spreadsheets/bank statements etc.
If HMRC think clients are going to suddenly embrace some accounting package because HMRC says so they have another think coming.
If HMRC think clients will want to pay for quarterly reporting when there is ZERO benefit to them and it costs £XXXX in fees they are living in even further la la land than we already thought.
There is ZERO benefit for clients for MTD, but HMRC will continue to deny this as they have decided it's coming because they say it's a good idea.
Dear software providers,
Here is what I want my new package to do. Take last year's completed figures, divide by four, reduce it to three lines, and submit that every three months. Allow figures to be adjusted in case we need to increase/decrease based on talking to client.
Taking this one stage further, Most people have a rough idea what their business profits will be for the year ahead. That being the case, why not simply, at the start of the tax year provide HMRC with an estimate of the likely profits for each month/quarter of the forthcoming year (either as part of the tax return or perhaps input this info into the Personal Tax Account) and forget about quarterly updates and software altogether? It will save a lot of work, likely be no less accurate and achieve the same result. It will enable them to assess Universal Credit, enable pay-as-you-go and whatever other nefarious purpose they intend with quarterly information.
Software companies are now beating a path to my door, with Iris, Digita and Xero all proactively trying to do more business with my practice. January is looming so the timing is not ideal.
However, I'm worried if I start signing up clients for their products I might look like a Charlie if - as seems possible:
1. HMRC either raise the 2018/19 'de minimis' level from £10,000 to £83,000.
2.HMRC postpone the introduction for 12 months and blame it on Brexit.
3. Some philanthropic software developer comes up with free software that converts Excel to a Quarterly Submission.
The MTD timelines are already screwed. HMRC need to delay implementation by a year in order to buy sufficient time to get this sorry project back on track.
You have forgotten:
4. The software from the supplier you select doesn't actually get HMRC approval.
No software has been licensed yet and HMRC have issued no information as to who is in the running or when approvals will be issued.
Still, no need to worry, the first filings aren't due for another 21 months...
I attended the Manchester HMRC MTD meeting. HMRC said that currently there are 25 software suppliers and 1000 taxpayers taking part in a "private" beta. So there must be software albeit not available for public release. HMRC said that they're hoping to get 400,000 taxpayers to participate in the public beta starting spring 2017.
Interesting. At the London event yesterday, HMRC said that there were 18 suppliers on the software beta. Right hand, left hand, etc.
However, I'm worried if I start signing up clients for their products I might look like a Charlie if - as seems possible:
As a Charlie, I resent this.
Question re start of MTD: start date April 2018 so 2018-19? What happens if the basis period is 01/05/17-30/04/18? Is the last month only brought into MTD? How will the first 11 months be returned to HMRC?
I didn't make an accurate note on this point, but I *think* the answer to this at the event yesterday was in this situation it would count as the final return outside MTD, with future returns falling in scope.
RB stated on Monday's seminat that it is a roll in process.
So MTD will start, from your illustration, on 01/05/18.
Normal service until 30/04/18 to be in 2019 Tax Return (the last one in this case).
I've seen a list of suppliers who are developing MTD software but can't locate the list on GOV.UK. If anyone knows it could you post a link please?
"FreeAgent said that recent research it did found that 43% of the UK’s micro-business owners have no idea what Making Tax Digital is"
Presumably that 57% who are aware of MTD are FreeAgent users, who have been bombarded with MTD information from FreeAgent.
The true figure for micro-business owners unaware of MTD (including unrepresented taxpayers) is likely to be north of 90%. They have no idea of what is possibly coming in 18 months time.
"Although HMRC has recently not said much to the press about MTD, it is carrying out thorough consultation with businesses and accountants."
I don't think it's that thorough. There's not a single reference in the condocs to TMA1970 and how the basis of self-assessment, creation of a tax liability and maintenance of records will all have to be fundamentally re-engineered for taxpayers in the interim reporting regime (MTD) - while of course we'll still need (most) of the existing machinery in place unmodified for those who remain on a pure fiscal year basis. Plus transitional provisions for those moving from one regime to the other.
All of that should have been settled before they started trying to write the software that's supposed to be implementing it; Agile Development is one thing, but this is more like clairvoyance.
GHUA
God help us all. My clients are the black bag brigade and I have to work until I'm 70 so the government tells me
(5 years yet) I have trouble understanding all the changes let alone my 50 clients.
HMRc are keeping this very cloak and dagger, it has the hand of George Osborn allover it. Its all become a secrecy cold war HMRC against Clients, each one desperate to steal an advantage, secrecy and surprise is everything in this war.
Extract above
Contrast this, some experts say, to publicity campaigns for automatic enrolment and campaigns against tax avoidance in different parts of the economy.