Anonymous
Share this content
0
2848

Clients X and Y not massive fans of MTD

MTD objectors

Didn't find your answer?

Search AccountingWEB

New Years Resolution - sort out MTD foot draggers.

Wed 2.1.19 first day back at work - No messing.  Get on with it!  Straight off to see X who keeps (admittedly immaculate) handwritten records.  Explain the options are either full-scale accounting software or (second best) move towards spreadsheets.  Explain that HMRC reckon this will cut down on mistakes.  X insists he doesn't make mistakes and  - to cut a very long story short - refuses to change his ways.  Says he won't register for MTD and will continue to use the existing portal (which he thinks will remain available if he doesn't join MTD - I'm not sure about that).  I mention penalties.  X says he will challenge HMRC to find a single mistake on any of his VAT Returns.  They can go back as far as they like and if they find a single error he'll eat my trilby.  (Not sure why I come in to it).  He will be paying the right amount of VAT and that should be the end of the matter.   I leave.

Yesterday - 9.1.19 - Telephone Y who also keeps manual records.  I am more optimistic here as Y is a little more tech-savvy than X.  He does VAT cash accounting and I have high hopes of persuading him to move his cash book onto spreadsheets.  I explain about bridging software.  All going surprisingly smoothly until I mention that rather than show payments of multiple invoices from his main suppliers as single total amounts, he might have to record the individual invoices comprising the payment.  Flatly refuses.  After a good deal of bad language (mainly about HMRC rather than me) , he suggests that he might carry on doing his VAT exactly as now and then simply transfer the VAT Return amounts into nine boxes on a spreadsheet and then use bridging software to transmit the Return to HMRC.  What's the difference? Who's to know?  I end the call.  

Fortunately SA Returns can be my priority for the next three weeks - at least I have some measure of control over those.  So how long did your New Years Resolutions last?  (Sorry to post anonymously.  I know this is unpopular.  I have never done it before but I hope my reasoning for doing so here is fairly obvious)

 

 

 

Replies

Please login or register to join the discussion.

10th Jan 2019 08:43

No, it's not obvious really. We're all in the same boat here.

The whole MTD issue is based on the flawed assumption that errors will be reduced. Personally, I think they'll increase but - hey - let's see.

When challenged about error reduction at that House of Lords committee, the HMRC lass mumbled something about adding up - as though that's the only error it's possible to make.

If that's all they're looking for at enquiries, it's all very sad.

Thanks (3)
10th Jan 2019 09:13

Well that sounds pretty much like the things I and the other accountants sat and said to the Lords in their call for evidence.

My solution to such clients is tell them they are not compliant, but make it work for them. Ie smack the numbers into a spreadsheet via bridging software.

ie they take the risk, I supply the solution.

by the time HMRC even think of having the resources to check this, it will be and old and forgetting project like iXBRL. Anyone ever have an audit on that?

There seems to be a tendency with my fellow professionals to be overly precise with things. There is one basic question which must not be lost. "Is the VAT right?" If it is, then I don't think HMRC in 3 years time will give 2 hoots how you get there, so long as you file using MTD, and they can trumpet how successful and digital the UK economy is, knighthood please etc etc. It matters little what actually happens on the ground.

Thanks (7)
avatar
to ireallyshouldknowthisbut
10th Jan 2019 13:52

So - let me get this right ireallyshould...- you are saying that, as long as the VAT paid over is correct, you would be content for a client to simply transfer non-digital totals into a spreadsheet and then submit via bridging software. But would this not technically be a Suspicious Activity Report scenario given that the client was not complying with the law?

Thanks (1)
to John Stone
10th Jan 2019 14:08

I wouldn't file an SAR so long as the correct VAT was paid over.

What would I say ? The guy hasn't filled in some forms ?

Thanks (4)
avatar
By cbp99
to John Stone
10th Jan 2019 15:24

Edit - To John Stone
You think this would be money laundering?

Thanks (1)
avatar
to cbp99
11th Jan 2019 08:24

i honestly don't know. What is your view?

Thanks (0)
to John Stone
11th Jan 2019 09:21

Quote:

i honestly don't know. What is your view?

Not all offences are money laundering. There has to be a financial gain involved. Provided the guy has paid all the VAT he owes, he's gained nothing. For me, no report's needed. Other views are welcomed.

Thanks (3)
to John Stone
10th Jan 2019 15:22

@John, I would be quite happy with that position, so long as the client is aware that its not strictly correct, and could (in theory) get a letter from HMRC threatening them with a fine if they dont stop being a naughty little boy and doing what they are told, but its almost unheard of for those to be issued right now, no matter how poor and incomplete the paperwork is.

The key for me is if the VAT is right. That is what matters

How they get there is quire frankly not HMRC's business, and I think HMRC will have as much appetite for getting embroiled in it, as they did for the failed business record checks. If you recall they started off saying all this tax was going to be saved, and went they went away with a red face and "I told you so" echoing in their ears.

Thanks (3)
10th Jan 2019 09:16

What's interesting about the enter-all-the-invoices-separately business is that HMRC claim it's always been like that.

So if it's enforced as stringently as it has been for the last 46 years (might be a bit less - I don't think there was any cash accounting for the first few years but I can't remember when it was first allowed), we've nothing to worry about.

Thanks (1)
avatar
10th Jan 2019 09:17

The MTD for VAT is the trial run for the whole system. It wasn't meant to be. The HMRC is "licking its lips" when our subcontractors have to be submit every three months with full transaction data. That is when the tax take will go up.

The tax take will not increase with MTD for VAT, it is just a stepping stone.

Thanks (2)
to david.bransbury
10th Jan 2019 09:24

And will they be increasing their staff numbers to cope with this additional work ?

Well, let's see.

Though I vote No.©

Thanks (0)
avatar
to lionofludesch
10th Jan 2019 11:01

It is all going to be done by robots. I am not joking.

Thanks (1)
to david.bransbury
10th Jan 2019 11:46

Quote:

It is all going to be done by robots. I am not joking.

Yeah.

Right.

Thanks (0)
to david.bransbury
10th Jan 2019 13:26

Forgive me if I'm unimpressed.

What's the error rate ?

How will it correlate to individual businesses ?

Are we allowed to deviate from HMRC's "norm" or will we all be on flat rate allowances in twenty years' time ?

Thanks (1)
to david.bransbury
10th Jan 2019 09:51

@David,

that is the vision that has been sold

But the reality is there is not even any planning or dates for that for a bigger roll out.

If you watch Forsyth speaking to HMRC about this very issues, its was just deflected away, and they said in essence all resources are on VAT, there is no planning at all to expand this.

VAT will be the end of the road on this project, parliament wont want to spend another £3-4 billion on software that does not collect any more tax.

There is no reason at all to suppose that digitally records = more tax.

Just looking at a new client using Quickbooks who has "does not need any help with VAT", they have put all their drawings down as "office costs". With VAT on them. In fact virtually all their costs have VAT on them, and they owe thousands to the VAT man.

Thanks (2)
avatar
to ireallyshouldknowthisbut
10th Jan 2019 11:18

My understanding was £1.2 billion was for the whole project not just MTD for VAT.
Other parts are going ahead without much fanfare. Soon bank interest will be automatically be loaded into our tax software.
HMRC are not developing any software. Yes there are some internal system work to be done. However there are already a handful of people already filing quarterly accounts for IT.
My view is that it would be foolish to dismiss MTD for IT/CT. HMRC are much more keen to bring this in than MTD for VAT as this is where the tax take will go up.

Thanks (1)
to david.bransbury
10th Jan 2019 11:30

Some parts of the auto-population of tax returns are great - if they work properly,

We have seen the auto population for 2018 being much poorer than for 2017 for PAYE incomes.

but getting people to file quarterly returns of all costs? Its even more pointless than VAT, in that the data is not even used anywhere for anything and would be pure garbage. The ministers responsible for this project have all moved on long ago, VAT is the last fig leaf to show for all the cash wasted.

I think you would be foolish to assume its happening myself.

There is no evidence at all that submitting garbage data 4 times a year will result in more tax. The only genuine study into business records, coming out of the failed business records check (before it was dropped) concluded that most business keep decent and accurate records, or at least by the time accountants are done with them!

Thanks (2)
avatar
to ireallyshouldknowthisbut
10th Jan 2019 19:46

100% it is happening, we just don't know when.

Sometime in the future we are going to have transaction level reporting, more regular tax payments for the self employed (as the HMRC would rather they were PAYE) and possibly even all transactions recorded on a blockchain system that HMRC can use to reconcile UK purchases to UK sales.

If sometime this year I have 22 year old plumber come to me as they have quit being PAYE and want to be self employed, of course I am going to say to them they the tax reporting world is changing, that they can't just throw all their invoices and receipts in to a plastic carrier bag, to drop off at our offices on the 2 January in the year after the tax year has ended. I going suggest to them they be interested in some cloud software that they can run on their smart phone.

I have been in practice for over 25 years and have at least another 20 years to go. If I going to carry on I need to plan for the future.

Thanks (0)
to david.bransbury
10th Jan 2019 14:57

Quote:
My view is that it would be foolish to dismiss MTD for IT/CT. HMRC are much more keen to bring this in than MTD for VAT as this is where the tax take will go up.

I don't think that the tax take will go up. What is more likely is that HMRC will pursue payment of taxes, with menaces, based on these bullshit submissions that are subsequently shown to be not due when the final figures and adjustments are made.

In other words, the ordinary taxpayer will be forced to prop up government coffers by way of unauthorised (and, indeed, extorted) loans.

Thanks (2)
to SteLacca
10th Jan 2019 15:06

Quote:

Quote: My view is that it would be foolish to dismiss MTD for IT/CT. HMRC are much more keen to bring this in than MTD for VAT as this is where the tax take will go up.

I don't think that the tax take will go up. What is more likely is that HMRC will pursue payment of taxes, with menaces, based on these bullshit submissions that are subsequently shown to be not due when the final figures and adjustments are made.

In other words, the ordinary taxpayer will be forced to prop up government coffers by way of unauthorised (and, indeed, extorted) loans.

A very balanced and well thought out view.

Thanks (1)
to ireallyshouldknowthisbut
10th Jan 2019 11:47

Quote:

If you watch Forsyth speaking to HMRC about this very issues, its was just deflected away, and they said in essence all resources are on VAT, there is no planning at all to expand this.

On the other hand, HMRC are known liars on the subject.

Thanks (3)
avatar
By Echo761
to ireallyshouldknowthisbut
11th Jan 2019 10:53

Exactly MTD will just introduce a whole new raft of errors that HMRC have not even considered. Their justification for MTD is complete and utter bulldust!

Thanks (1)
avatar
10th Jan 2019 09:51

Does anyone know what HMRC are going to do with the additional information. They won't check it all and who is to say it's right or wrong ??

Thanks (0)
avatar
to bernard michael
10th Jan 2019 11:26

All data sent to the HMRC is automatically checked. Not by a person but by computers.

It is 10 years since I have had a genuine random enquiry. All these days the enquiries due to either to the HMRC already have some "evidence" of wrong doing e.g. an untaxed property sale from the Land Registry or a strong suspicion , a sub contractor with higher travel expenses than the benchmark figure.

Knowledge is power.

Thanks (1)
to bernard michael
10th Jan 2019 14:25

@ Bernard. There isnt any extra data. Its the same data as is filed now.

Thanks (0)
to ireallyshouldknowthisbut
10th Jan 2019 14:32

Quote:

@ Bernard. There isnt any extra data. Its the same data as is filed now.

.... at the moment.

There could be changes.

Thanks (0)
10th Jan 2019 10:06

Wasn't the true intent of RTI, to facilitate the transition to Universal Credit?
Well, that worked too.

Thanks (1)
10th Jan 2019 10:12

Your mistake with X was in trying to sell it to him using HMRC's garbled rubbish, indeed in trying to sell it at all.

Instead what I'll be telling people is:

Your current method isn't compliant.
I agree it's a stupid system.
There's no penalties for not complying yet, but there will be.
You have to use it because they've made it the only way to file after a certain point.
I agree it's a stupid system, and, by the way, it's a lot worse for me than you, you've only got one business, I have dozens of clients I need to file for.

Make sure you know you're on their side and not flogging them HMRC's harebrained scheme.

Thanks (7)
avatar
10th Jan 2019 10:34

In the original post X seems to think that if he does not formally register for MTD for VAT - then the current existing portal will remain open for him to submit his VAT numbers. Does anyone know if this is correct?

Thanks (1)
to John Stone
10th Jan 2019 11:24

This is *probably* correct, at least in the short term

What we don't know, as HMRC still hasn't told us, is what the exceptions will be, and how they are applied.

The system is not that everyone is swept into it, and you opt out, but you opt in via the highly complex methods outlined elsewhere, so logically as HMRC don't really know who should be in or out, it must still be open for use.

Thanks (1)
avatar
to ireallyshouldknowthisbut
10th Jan 2019 11:30

Yes this is general opinion on here. You have to opt in. There seems to be no evidence of automatic transfer.

There is a forthcoming HMRC MTD webinar. This is one question to ask.

Thanks (0)
to ireallyshouldknowthisbut
10th Jan 2019 12:01

Quote:

This is *probably* correct, at least in the short term

It'll be the long term if HMRC don't make it easier to sign up to this new system.

Thanks (1)
avatar
By acceje
to John Stone
10th Jan 2019 12:52

Agreed this is correct - having watched previous webinars it seems that the portal has to stay open to cater for those with t/o under £85000. HMRC doesn't have the resources to check that the return is filed by the correct means. It seemed at some time in the future they will look at those still filing via the old portal and send out penalties to those who shouldn't be.

Thanks (3)
avatar
By Echo761
to John Stone
11th Jan 2019 10:58

Yes its still going to be open; see comments at foot of the link.
https://online.hmrc.gov.uk/webchatprod/community/posts/list/15/2522.page

Thanks (1)
avatar
10th Jan 2019 14:37

Agreed but under MTD HMRC see more of it

Thanks (0)
to bernard michael
10th Jan 2019 14:43

Do they ?

Thanks (0)
avatar
By cbp99
10th Jan 2019 15:11

Do we know yet whether a photo of the pages of manual records counts as a "digital record". If it doesn't, why not?

Thanks (0)
to cbp99
10th Jan 2019 15:31

Well, I'm pretty sure.

But good luck to you if you wish to pursue that line.

Thanks (0)
avatar
By cbp99
to lionofludesch
10th Jan 2019 15:56

Sure it counts as a digital record, or that it doesn't count?

Thanks (0)
to cbp99
10th Jan 2019 16:06

Sure it doesn't.

Even if it's a new-fangled digital photograph.

Thanks (0)
avatar
By cbp99
to lionofludesch
10th Jan 2019 16:15

How about a scan of an invoice, ready for reading by OCR software? Is that, once scanned, a digital record, or only after it has been read by the OCR software?

Thanks (0)
to cbp99
10th Jan 2019 16:22

Crazy idea ©

It'd be easier to type the numbers into a real accounting database than scan every invoice.

Anyway, no.

Thanks (0)
avatar
By cbp99
to lionofludesch
10th Jan 2019 16:25

Lots of people think it's best to use things like Autoentry to scan invoices for OCR and transfer to accounting package; personally I disagree. But the point here is whether it's a digital record.

Thanks (0)
avatar
11th Jan 2019 08:41

I see that yesterday the HMRC updated the information on who can join the pilot and make no mention of
- New businesses
- Those who have defaulted in the past
- Trade with the EU

So by assumption that must now can join.

I think everybody who should be joining from 1 April rather than 1 October can join the pilot I believe.

Thanks (0)
avatar
to david.bransbury
11th Jan 2019 08:57

Their official position is that everyone who should be joining from 1st April is now able to join and some who are joining later are able to join. (I had an email yesterday)

Thanks (1)
avatar
By Echo761
11th Jan 2019 10:50

HMRC Have confirmed the portal will remain open and it is for businesses to ensure they comply. So people will still be able to submit their VAT returns on-line... until HMRC ever identify they should be using MTD - but what penalties will apply?
HMRC say;

"A VAT registered business is responsible for checking their taxable turnover, and must sign up for the new MTD service if their taxable supplies are over the VAT registration threshold (currently £85,000). We will only close the legacy VAT service (or online portal) for a specific customer once they have signed up to MTD - until they do, they can continue using the existing service. We are using the information provided by the customers on their previous VAT returns to identify whether they are potentially in scope for MTD. We are writing to them to ensure they are aware of their new obligations. If they have not already done so, this letter will prompt them to get ready for MTD.

Businesses can join the MTD VAT pilot now if they wish - or wait until their first return for the period starting on or after 1 April 2019. However, we would encourage businesses to sign up early to be sure they are ready well before they are madated to join. VAT Notice 700/22 on gov.uk has more information about the turnover test."

https://online.hmrc.gov.uk/webchatprod/community/posts/list/15/2522.page

Thanks (2)
avatar
11th Jan 2019 11:04

I do not agree with MTD because it won't solve errors (which is the reason HMRC are giving for its existence). Some of my clients will not be joining the scheme until they are forced to by penalties (their choice). All new clients are put onto VT with either our bookkeeper or a similarly qualified person, with quarterly updates, so we are all ready for what might happen.

Thanks (0)
11th Jan 2019 14:30

I have one client who is worrying me.

He is a fishmonger. Buys fish. Sells fish.
All sales are zero rated. Almost all his purchases are zero rated. But the level of sales is far, far in excess of threshold so he is VAT registered. He is always in a recovery position each quarter.

When I took on the client in 2016, I discovered, despite it being our responsibility, that no VAT return had been submitted since 2011. But this was also because he does not provide any records until (usually) ten months after the accounting year end. Sales chits are usually lost, and I've never seen a purchase invoice ever. His year end is always being shortened by a day every year. Sometimes twice.

HMRC have never questioned the late submissions because obviously, if he actually brought himself up to date, they'd owe him a lot of money.

I'm worried about MTD. Let's be honest, the guy isn't going to change his habit of a lifetime and get records in on time. What's the penalties for just not doing it?

Thanks (1)
avatar
11th Jan 2019 15:25

As the poser of the original post anonymously (can't quite remember why I did that), I take two interesting points from the responses as far as MTD foot-draggers / non-believers are concerned:

1. The old portals will remain open unless and until a trader formally registers for MTD. Some intend to just carry on as before using the portal - which seems fruitless as it will only postpone the inevitable (and invite penalties) because it will be very quickly obvious to HMRC that MTD should be in operation.

2. Some intend to simply transfer non-digital VAT numbers into a nine-box 'spreadsheet' and then use bridging software to submit to HMRC. The general consensus is that this would not be reportable under the AML regime (as long as the VAT actually accounted for was correct).

Anyway - thanks for all the responses.

Thanks (1)

Pages

Share this content