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Are your clients getting reminder letters ?

HMRC are sending out reminder letters when clients are exempt.

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We have clients who have been exempted from MTD and received letters a month ago. Clients are now ringing me saying that HMRC have written and said they have missed a deadlne for filing under MTD. The letter does not mention that if you are Exempt then the letter should be disregarded. Interestingly at the time of filing one  clients VAT account was suspended due to an address change and so would be unable to file in any event. 

I am wondering why standards at HMRC seem to have fallen so far, usually standard letters are thought through carefully. In the case of MTD the procoess seems to have been rushed through, not adequately tried and tested and then taxpayers have been hounded into submission so that the cost of the initiative is justified. I would be interested now we are past the filing date to hear your views. I am hoping that if you are pro MTD or anti MTD the way HMRC has handled this initiative is correct.

I am publishing this anonymously as I have been told by  HMRC that they monitor this site. ( this content was changed after original posting)

Replies (19)

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By ireallyshouldknowthisbut
27th Aug 2019 10:39

To be fair to HMRC the only one I have seen says on the first line something like:

"if your turnover is below £85,000, or you are in the process of signing up, ignore this letter"

And as regular posters will know, I am not exactly a fan of MTD.

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Replying to ireallyshouldknowthisbut:
By jon_griffey
27th Aug 2019 12:16

Quote:

To be fair to HMRC the only one I have seen says on the first line something like:

"if your turnover is below £85,000, or you are in the process of signing up, ignore this letter"

And as regular posters will know, I am not exactly a fan of MTD.

The subject line says in bold type "Your business has missed the deadline for new VAT filing regulations". That's quite an unequivocal statement. The client basically stops reading at that point and picks the phone up.

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By GHarr497688
27th Aug 2019 12:52

Yes my clients have had the same letter and picked up the phone to me asking for reassurance. I must say I am quite surprised as HMRC usually get things right eventually. With MTD it seems one problem follows another. I would think that HMRC will soon realise all the other issues MTD will cause with record keeping.

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RedFive
By RedFive
27th Aug 2019 15:06

There are two different letters.

One says a few lines down that if you are below the £85k then ignore. I agree though that the first bit states they have made an error and may be shot.

The other states they were not exempt and will be shot. That was sent to my client with a £75k t/o in last rolling 12 months.

It's a shambles.

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Replying to RedFive:
By ireallyshouldknowthisbut
27th Aug 2019 15:18

Ah, its the old "two letters and we will see which one makes more people cry" scenario.

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By SXGuy
27th Aug 2019 21:00

Can someone give their opinion on this situation please.

Client previously had a T/O above 85k. Was due to enroll for MTD from 1st April. However just prior to this he was taken ill and had subsequently reduced his income.

Last vat quarter was just 14k Net.
He will continue to operate with a reduced income as he wants to cut his work load done and we expect each vat quarter moving forward will also be around 14k Net.

Hmrc are saying he has to apply for exemption, my argument is that as he dropped below the threshold at the same time he was due to switch over there's no exemption needed since he's no longer required to be under mtd.

I apreciate that for 12 months prior he would have been required, but moving forward he no longer would be. There could be an argument for enrolling for one period of vat then de enrolling but I don't agree with hmrc that exemption is needed.

Your thoughts?

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Replying to SXGuy:
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By Matrix
27th Aug 2019 21:34

There is no possibility to de enrol. If the business was making taxable supplies in excess of the threshold at 1 April then it has to comply with MTD unless it receives an exemption or deregisters for VAT. Once in you stay in.

What were the 12 month sales to 31 March? And to end Feb? I think the business is exempt if the 12 month sales were below the threshold for both months.

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By SXGuy
27th Aug 2019 22:20

Thanks for your reply. At this stage I don't know. Client deals with vat himself I only deal with year end so until I see his books I can't say for sure.

His last year end was 31st Jan 19 and turnover was 104k at that point. I'll double check with him this week but I believe Feb and March was around 4.5k for each of those months.

Edit: actually now you asked I can see he's probably required. Taking in to account Feb and March 19 the previous 12 months would still be over 85k.

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By rmillaree
30th Aug 2019 10:40

Perhaps a silly question SXGuy- but are you calculating total sales here or turnover excluding vat - if for example its 100k total sales at 31/3/2019 that would net down to only 83.3k net of vat which i "believe" is probably the relevant figure to use for the calculations.

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By SXGuy
30th Aug 2019 11:14

Not a silly question at all! but the figures I gave were Net :)

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By [email protected]
30th Aug 2019 10:11

Unfortunately HMRC didn't have the data previously to know who was above the turnover threshold and who wasn't (along with the other exemptions), main reason we had to go through the pain of informing them who would be now submitting via MTD, and they'll take a blanket approach to warning those who haven't.

A lot of our partners have just moved all their VAT clients across, saves the time dealing with unnecessary letters and client concerns!

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Replying to [email protected]:
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By Matrix
30th Aug 2019 10:19

Strange action by the partners. I would never give HMRC anything I was not legally obliged to do so would only register a voluntarily registered client for MTD if it was their choice.

I didn’t know these letters were going to voluntarily registered businesses.

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Replying to Matrix:
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By [email protected]
30th Aug 2019 10:55

Saves the hassle of doing it again in a years time, and having 2 different filing processes in the meantime. But completely understand, this approach wasn't taken by all!

Not confirmed - but from what I've seen these letters are going to all businesses that didn't submit via MTD, including our family business with turnover circa £40k (de-registering this quarter, glad we hadn't moved across so can still do this online :)) Of course I still got the panicked phone call...

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Replying to [email protected]:
By coolmanwithbeard
31st Aug 2019 06:58

I have only moved clients across where required to do so. If MTD were simply about sending the same info via a different computer (as it is at the start) then I may have thought differently but, ultimately, it is about sending HMRC more information and I do not wish to burden clients with this if it is not required.

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By GHarr497688
01st Sep 2019 11:45

Very worrying a client has received a letter who struggles with anxiety and Hmrc were informed about this . We have an exemption pending . Today a letter came through with a veiled threat that if they ignored signing up they would be treated as if they were ignoring MTD . I would ask if this is treating a taxpayer fairly under The Charter .

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By clark.hall
02nd Sep 2019 16:17

In my case client received email "We notice that you still haven’t signed up to Making Tax Digital despite our previous communications.
We want to help you get it right so we are sending you this reminder.
You should act now, so that your next return can be submitted through the new system."

However this client has chosen not to register for MTD being that his turnover (sale of services to EU) is Outside the Scope. Box 6 therefore exceeds VAT reg threshold so I imagine that's the prompt for the email.

Just to report to community - I phoned VAT General Enq and have had the response "well, client should probably register-MTD as that's what we want all to do ultimately. We have no ability to mark the file and stop the letters".
UNBELIEVABLE!

Anyway, I asked that a note was made on file for client's reason not to sign-up and client will start to ignore those letters. Best I could do but it doesn't feel comfortable and as has happened before - I wonder if it leaves client doubting my guidance.

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Replying to clark.hall:
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By clark.hall
08th Oct 2019 10:16

Resurrecting this post in the hope others have some experience too. Per my comment 2 Sep 2019 and to summarise: Client sales are almost exclusively services sold to European countries. Turnover is therefore Outside of Scope. Any services sold to UK customers are well below £85,000. THIS CLIENT IS THEREFORE EXEMPT FROM MTD and yet -
he's now received a letter (in addition to previous email) "Your business missed a VAT filing regulations deadline on 7 September" with details of "what you need to do now".
Seemingly they've no system to identify businesses that are exempt and opt-them-out of such communications. Any experience or ideas of how best to proceed?

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Replying to clark.hall:
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By rmillaree
08th Oct 2019 10:46

I have no answers but am happy to have a rant :)
I am currently taking hmrc to task ref similar letters - i can chuck this general issue into the mix too if i get a suitable chance.

My specific complaint is somewhat pedantic but there was quite a few clients where hmrc simply failed to collect direct debit as should have been the case last month (collection date 11th september). I got apology and confirmation it would not happen this month (don't have long to wait to find out). But they sent snotty letters advising our clients they had missed the payment deadline and warning of future penalties when it was due to their error that funds where not collected. I guess things will only change if they are continually taken to task on these poorly worded / poorly targeted fishing letters - it bad enough with tax but with vat when one has done nothing wrong one has a human right not to be harassed unnecessarily by hmrc surely?. It's very sad this hasn't been taken up at the highest level in this regard - a simple rewording of the letters would be an immediate starting improvement - albeit i would not expect continual harassment whereby one has to continually ignore letters that are targeted at the wrong bods. Makes one wander what the accounting bodies and hmrc sit down and talk about when they sit down and talk.

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Replying to rmillaree:
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By clark.hall
09th Oct 2019 14:01

Thanks for your input - I completely understand your frustration!

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