CIOT submission on MTD consultation document

Worth a read

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CIOT submission makes some good points regarding the timing, perceived benefits, software and complexities of VAT. Worth a read, I hope these comments are taken on board and the date put back. I would like to know what to tell clients who may need to move to software very soon.

https://www.tax.org.uk/policy-technical/submissions/draft-legislation-va...

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By Chipette
09th Feb 2018 20:20

Very informative. Thanks for sharing.

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paddle steamer
By DJKL
09th Feb 2018 20:58

A good read, but will it do any good, will HMG bother to listen?

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By tom123
10th Feb 2018 09:09

Have just read it. God, it's going to be a disaster isn't it.

Just thinking about my job in manufacturing.

Everything is based around invoice date - with no need to think about time of supply. I doubt they differ much, but they could I suppose.

We just record net/vat/gross for each invoice.

Some, (such as Fedex) would require multiple entries to split the vatable and non vatable parts. Similarly when dealing with vehicle fleet MOT tests etc.

No change to the VAT recovered, but twice as many entries in those cases.

Seems like more splitting will be required on overseas sales too.

Not seeing any benefit at all in our case. We record our transactions roughly in real time, with a little bit of a 'push' in the first week or so of the new month to close off the previous months board reports.

I have posted elsewhere about this potentially forcing either a system upgrade or the need for a further piece of 'linkware' to take the place of the 8 or so boxes I fill in currently.

Here's hoping the whole thing gets shelved, or at least re-thought.

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By adam.arca
10th Feb 2018 09:28

Yes, a good (as in interesting) read.

It's reminded me of two things, however:

Firstly, the timescales are ridiculously tight and totally unachievable.

Secondly, the absolute raft of unproven assumptions that the whole MTD farrago is based upon, not least:

Digital recording is somehow automatically more accurate than paper

There are always cost savings for businesses in recording digitally

Keying-in errors never happen when using software

The compliant community who submit VAT returns only make mistakes which reduce their liabilities

Those mistakes are never corrected and none of these traders have accountants who point errors out to their clients

In summary, once again it appears that the compliant community will be more harshly treated than the non compliant because they're easier to target and that the role of business is to work for HMG with a bit of profit squeezed if you're lucky for the last 5 minutes of the day

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Replying to adam.arca:
RLI
By lionofludesch
10th Feb 2018 09:42

adam.arca wrote:

Digital recording is somehow automatically more accurate than paper

My experience is the opposite.

A colleague of mine used to say "anyone can make a mistake but if you really want to cokc things up, use a computer."

Admittedly, that was in the 1970s when computers were as big as a house ......

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RLI
By lionofludesch
10th Feb 2018 09:39

I've been making the points at 2.1 and 2.3 myself for nearly two years now.

Only not so eloquently.

Far from being the simple tax it was claimed to be in 1972, VAT is now complex with a fair number of "special cases".

I would, actually, be happy with keeping records digitally - at least for businesses of a respectable size - if I could submit the returns as a separate process.

For the nano and pico businesses with turnovers of, say, £25k or less, it continues to make no sense.

And, of course, rental businesses, which were originally to be included, became more complex overnight when the new mortgage interest rules commenced,

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By bernard michael
10th Feb 2018 10:49

When are HMRC going to notify Vat registered traders of their reporting requirements ?
I suspect never as they'll be expected to know by second guessing or reading about it in the Sporting Life

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Replying to bernard michael:
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By tom123
10th Feb 2018 17:54

As I have commented elsewhere - if I just had my 'trader' hat on, rather than coming here - I would be blissfully ignorant.

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Tornado
By Tornado
10th Feb 2018 10:57

A very good submission by CIOT and much along the lines that I have been posting on AWEB myself.

I am still of the opinion that compulsory MTD for VAT simply will NOT happen in April 2019, and perhaps not for several years after that.

The software requirements are too complex for standard software packages to deal with, and many businesses who use bespoke systems to run their businesses will not be able to adapt them to provide the information that HMRC require.

HMRC are expecting far too much and if they think making it compulsory will work, then I would suggest to them that it will not work. Introducing a non-mandatory MTD type system over a period of time has a better chance of success and gives people an achievable goal to work to. Insisting on an unachievable goal means that many people will not even try to comply and might just retort "Go on, sue me!"

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