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Chancellor's Spring Statement - MTD spin

Its not the whole truth

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Page 5 of the Spring Statement document on Gov.Uk today is entitled 'Tackling tax avoidance, evasion and non-compliance'.  Page 5 covers Making Tax Digital.  Clearly whoever wrote it has completely ignored the representations of the accountancy bodies, the FSB and the scores of witnesses the House of Lords Economic Affairs Committee heard or received written evidence from.  It was the Committee Chairman, Lord Forsyth himself, who foresaw a 'car crash' if mandation went ahead.  It seems that his Committe's very detailed report has been airbrushed out of history and, in its place, a very positive / misleading spin put on the MTD project.  Perhaps that's just how politics is today.  Have a read yourself.

 

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By Duggimon
13th Mar 2019 16:14

It's here for those interested, since my learned friend forgot to include the link!

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

Of particular note the comment "the government will therefore not be mandating MTD for any new taxes or businesses in 2020." which I believe to be an update from the previous assertion that there would be no further changes until at least April 2020.

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By DaveyJonesLocker
13th Mar 2019 16:29

So all this expense they've incurred is just for us to submit the same box 1-7 figures.
What an absolute bloody shambles, though not surprising from the shower in charge supposedly called a Government.

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Replying to Duggimon:
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By John Stone
15th Mar 2019 15:47

No-one's ever used the adjective 'learned' about me before. Perhaps' forgetful' more appropriate here.

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By GHarr497688
13th Mar 2019 16:35

my clients refuse to sign up and just cant comply with this [***] of a law ( some laws have to be broken ) in the 1960's being gay was against the law remember !!! I urge you all to NOT sign up to MTD and then HMRC will be forced to re think this widely condemned new system thats cost the taxpayer millions already . Shambles of a government is an under statement .

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By ireallyshouldknowthisbut
13th Mar 2019 16:59

This is the main report on the tax gap:

https://www.gov.uk/government/publications/tackling-tax-avoidance-evasio...

It seems to me that given that filing the same boxes in a different digital system was somehow going to magically close the tax gap, they simply don't need to bother with any more changes in this area.

ie MTDfV is it, end of project.

What i find fascinating about the tax gap is the figure of £5.9BN for "failing to take reasonable care" which as anyone who has settled any sort of claim with HMRC is "every single flippin error, innocent or otherwise"

ie HMRC are unintentionally upping the tax gap, by claiming every error is in this category when they find it.

The basis for the tax gap has been demolished numerous times.

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Replying to ireallyshouldknowthisbut:
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By GW
13th Mar 2019 17:22

They don't identify how much is taxpayers "failing to take reasonable care" when completing VAT/CT/SA etc returns and how much is HMRC "failing to take reasonable care" when calculating the theoretical amount of tax due.

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By ireallyshouldknowthisbut
13th Mar 2019 18:34

Well quite, and also they make a ridiculous statement about lost receipts, which would not change under MTD and would mean, er less VAT claimed? its desperate stuff written by people who dont know zip about small business and tax.

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By memyself-eye
13th Mar 2019 18:01

I have a client who files their own VAT, clients for whom we file as agents, clients for whom we file using their log in. Some are on excel, some on quickbooks. One has two QB files for the same business with one VAT number (we just add two numbers together manually and submit one return....simples!).

Question.
What are the sanctions if we continue to file as we do now until (say) the September quarter- by which time MTD will have collapsed (please the lord!) or we will have a better idea how 'ess- h- one tee it really is?

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By GHarr497688
13th Mar 2019 18:37

I would recommend that no one joins up as this will give a message to HMRC/Government that SMEs are not hoppy with this unfair legislation. I have now discussed the proposals with a Takeaway owner , an Engineer , a small market trader , a carpet shop , a cleaning company , a restaurant , a landscaper etc etc and they are unable to believe the level of reporting thats needed. Its not that they are deliberately not complying its a case that they simply are unable to understand the software and feel conned by Government . This Government are self destructive and are just not listening even to their own delegates. With regard to the ASA its a disgrace to expect Accountants to re register all clients - then educate them on MTD and deliver a product that no one believes is to the good of anyone .

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Replying to GHarr497688:
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By legerman
14th Mar 2019 20:21

GHarr497688 wrote:

I would recommend that no one joins up as this will give a message to HMRC/Government that SMEs are not hoppy with this unfair legislation. I have now discussed the proposals with a Takeaway owner , an Engineer , a small market trader , a carpet shop , a cleaning company , a restaurant , a landscaper etc etc and they are unable to believe the level of reporting thats needed. Its not that they are deliberately not complying its a case that they simply are unable to understand the software and feel conned by Government . This Government are self destructive and are just not listening even to their own delegates. With regard to the ASA its a disgrace to expect Accountants to re register all clients - then educate them on MTD and deliver a product that no one believes is to the good of anyone .

Whilst I understand that you have several manual accounts clients I disagree with your comments.

To those who are able, inputting into a computer is no more labour intensive than writing it out by hand, indeed by the time you've added up the figures, it's quicker to do it by computer.

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Replying to legerman:
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By GHarr497688
14th Mar 2019 22:43

I must disagree - our clients are not computer literate and so bring the manual records to us and if we are to key in each and every entry that means that the books are being kept twice. Did you see the programme tonight about how many millions are struggling with digital technology.

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Replying to memyself-eye:
By ireallyshouldknowthisbut
13th Mar 2019 18:50

Rebecca wrote an article about penalties if you search for it or if you are ICAEW there is a comprehensive section on their website. They are very thin on the ground.

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Replying to ireallyshouldknowthisbut:
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By GHarr497688
13th Mar 2019 18:54

No penalty in year one where you have tried to comply. Im applying for exemption in all clients and carrying on as normal . Only way to get the message to HMRC is to overwhelm them with queries. When I ring the helpline 9 times out of 10 I get told they cant talk to me for security reasons , thats if I get through at all . Every single issue needs reporting .

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By memyself-eye
14th Mar 2019 10:31

Apply for all clients eh!

I like that approach. I see a 'cunning plan' forming.

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By TessaW
14th Mar 2019 14:52

I am a little uncertain why they think that forcing everyone to file digitally is going to reduce the "tax gap". In the last year I have taken on 3 clients who have moved to Xero or Quickbooks from a manual system & have now got bored so decided to get someone to help. All 3 have understated their VAT in their returns to date, although the VAT was fine when they did their books manually & filed their vat returns from that date. Either there have been some transactions missed when a bank feed has failed for a day or so, or they've duplicated some entries or they have just put analysis codes in & not noticed that they are claiming 20% vat on all expenses. The underpayment of VAT is about 10% of their annual VAT paid - so not insignificant.

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By John Stone
15th Mar 2019 15:53

Exactly. I really wish the powers that be at HMRC could see your post Tessa. Moving onto accounting software for your average hard-pressed tradesman is a big ask. A potential 'carcrash' as someone famously remarked.

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By spuddle
15th Mar 2019 10:29

Having left things to see how they would evolve, and the in the hope that MTDfVAT would just be quietly cancelled...., I recently registered my own company for MTD so that I could describe the process to clients. The process is not as simple as it should be and all I received back from HMRC was an email telling me that I had now signed up to use software to "submit my VAT Returns" - something I have been doing for years.... I was expecting to be have to use a different Government Gateway account to submit the data but apparently that isn't required so basically nothing has changed and I presume that will be the case for all those currently submitting VAT returns using accounting software programs (leaving aside spreadsheets) - except that the software charges probably will no doubt increase.....so I then have to explain all this to those clients but also tell them that nothing will change at the end of the pointless process... It may be difficult to charge anything for that! The issue for clients not currently using accounting software is obviously different but as others have pointed out, equally pointless and based on false presumptions. It's all been said here before. I'm sure we have much more important and productive things to do with our time!

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By djtax
15th Mar 2019 11:39

In his initial post John makes the point that HMRC have 'ignored the representations of the accountancy bodies, the FSB and the scores of witnesses the House of Lords Economic Affairs Committee heard or received written evidence from'.

I and two of the regular contributors to AWeb were among those invited to speak to Lord Forsyth's committee as part of their hearings on MTDfVAT last October. I was pleasantly surprised at the total unanimity of opinion amongst all those involved (apart, of course, from the software company reps and HMRC) - that HMRC were bringing this in too quickly and without adequate testing (and with an unwelcome cost burden to businesses). Apart from some damning criticisms of HMRC the Lords final report made the sensible recommendation to go ahead from next month but on a voluntary not mandatory basis for the first year or two. Many contributors to AWeb were hoping that the spring statement would announce just that.

A lot of people in the accounting/tax profession put in a lot of time in contributing to the Lords report (as did their lordships themselves - they all had a very good grasp of the issues and had clearly done their homework).

Given that HMRC have ignored everything we said on such a key issue I do not see why any accountant/tax adviser should ever again bother to take time out to offer well meaning, constructive feedback to HMRC on any topic.

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Replying to djtax:
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By John Stone
15th Mar 2019 15:56

Agreed. Heaven knows what Lord Forsyth feels about it. Perhaps keeping his powder dry until the 'I told you so' moment.

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By GHarr497688
15th Mar 2019 21:09

its easy do not sign up and then they will be made to answer for their contempt.

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Morph
By kevinringer
15th Mar 2019 13:51

MTD will not be extended during 2020. Maybe that is HMRC's reaction to the House of Lords report? It isn't an admission that HMRC are reacting to the report but it is different to what HMRC had intended therefore something has made HMRC change. HMRC would not want to admit to it because I'm sure heads would roll for wasting so much money for no result.

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By johnhemming
15th Mar 2019 16:20

The thing to understand is that HMRC have two controls on speed.
a) The speed at which they make things mandatory
b) The speed at which they apply enforcement.
From their perspective b) is a detailed control. There is no real sense in delaying a) unless there really is a systems problem and actually although there are a few errors the systems are working.

I remain of the view (and to be fair I have an interest in this) that people might as well get on with doing it. It does not have to cost much (and for many of my clients there is no cost in terms of systems changes, although there is a cost in terms of value of the time of the attention from the book keeper)

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Replying to johnhemming:
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By GHarr497688
15th Mar 2019 22:57

I respect what you say but I doubt many would on AW . I also think you need to talk to my Vat clients and see what they say. If it benefits no one then what’s the point and why not give the choice so that Hmrc’s reputation (if it has one ) remains intact . I also feel that the reality of what I do on a day to day basis is very different from yours . You seem to be alone in promoting MTD but fully understand why you might think the way you do .

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Replying to GHarr497688:
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By johnhemming
15th Mar 2019 23:27

GHarr497688 wrote:

If it benefits no one then what’s the point and why not give the choice so that Hmrc’s reputation (if it has one ) remains intact . You seem to be alone in promoting MTD but fully understand why you might think the way you do .


I may be the only MTD provider who says anything other than "buy my software" on AW. Hence I obviously have an interest in MTD working as a computer programmer who writes this sort of stuff.

However, there clearly are advantages to making sure that people's account add up. I don't have HMRC's information on what they find when doing inspections, but I do know that people try to evade tax in various ways.

To me it seems a reasonable way of ensuring there is a system which controls how the numbers are added up for vat. It should normally take less time to operate and does not cost that much (at least for the people I am dealing with) Some software houses may see it as a gouging opportunity, but I don't include myself in that category.

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Replying to johnhemming:
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By GHarr497688
16th Mar 2019 15:13

If I explained a few examples of problems with inputs on computers it might help you understand, a clients uses Xero because its sold as MTD Compliant and takes the stress away from Accounts , another client uses Sage Line 50 again to save admin time , another client uses Sage One and another an excel spread sheet. Based on what HMRC and Software companies advocate they say well we don't need you as an Accountant or we will use you as an Accountant but do not want to pay as the computer has done your work. Depending on the individual will decide how they proceed. The result is chaos as numbers are crunched into a system that us almost impossible to correct and almost impossible to understand due to the volume. The difference between computer and manual is that the "human brain " thinking is taken away. So you might say what do you end up with that's so bad - Xero a client claimed VAT on every transaction with everything posted to Sundries - Sage Line 50 - £15000 in Input tax and £15000 in gross ( sage allows this to happen ) .Sage One - only Vat transaction entered nothing for wages - nothing for rent and no bank balanced , Spreadsheet - not cross cast across or down due to formula errors etc . That is just the tip of the ice berg.

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Replying to GHarr497688:
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By johnhemming
16th Mar 2019 18:26

I do accept that people find systems that they understand better than systems that they don't and that they make less errors if they understand the system.

The difficulty with many computer accounting systems is that how they operate is not that clear in comparison and requires more knowledge to understand them normally than just a list of transactions in a cashbook or a similar approach.

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By GHarr497688
16th Mar 2019 20:03

Clearbooks had a great system but when in tried it the system jammed and froze , when I asked for help they never even got back to me . The main point is that to complete a set of accounts you need a great deal of tax and accounts knowledge that the average man in the street does not have . I wish someone could come up with a prepopulated spread sheet with standard headings that our staff could use to complete normal bank and cash records pre linked to bridging software . Life would be easy with this sort of thing and without me having to troll through procedures for learning spreadsheets and bridging software etc .

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Replying to GHarr497688:
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By johnhemming
16th Mar 2019 20:46

GHarr497688 wrote:

I wish someone could come up with a prepopulated spread sheet with standard headings that our staff could use to complete normal bank and cash records pre linked to bridging software .


That is quite an easy thing to do. If you send me a spreadsheet which is one that has the normal bank and cash records then I will modify and send it back with links to bridging software.

I have done this sort of thing from clients' records already.

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By GHarr497688
16th Mar 2019 22:17

that's what I am trying to get at . I need the spreadsheet formulated I.e Bank. Cash = Vat Purchases .Light and Heat .
Accounts fees so that . Bank plus cash equals the other columns that add down and across - this is effectively a computer version of a manual cash book .

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Replying to GHarr497688:
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By johnhemming
17th Mar 2019 08:38

Send me one of your manual cash books and then that is and easy thing to produce. What i am working on with scanning and processing is to produce a spreadsheet - with the calculations/formulae in it - which replicates the manual cashbooks.

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By SteveHa
15th Mar 2019 20:10

Has everyone forgotten that HMRC were bunged a chunk of treasury funds to digitalise tax, and given that HMRC generally have no clue how anything works, they have to justify that spend.

So, a failed department of a failed Government spending money on a failing project will always ignore negative comments.

Any attempts to stop this will fail, until reality hits and it fails all by itself.

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By GHarr497688
15th Mar 2019 21:10

if people don't sign up they will have to contact each an every person who does not , penalise them and collect the penalty. On top of this they have to deal with what is going to be millions of phone calls and letters. If they are that confident why not just switch off the portal. Every client I am now telling are enraged by such arrogance from Mel Stride and Teresa Middleton and are demanding answers. Although at the moment it seems the politicians are above the law and democracy .

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By sawebs
18th Mar 2019 22:37

I’ve just remembered I’m Amish. Do I have to comply with MTD?

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