Share this content

Gov.uk and MTD for ITSA

Does any one know if Gov.uk will be rewritten

Didn't find your answer?

I have been following the threads on MTD for ITSA and I have to say it seems to be losing momentum. I can see that the software develeopers are getting worried that they will be expected to fill the gap when the Accountants withdraw from the farce. I will be telling client to ask SAGE or Xero the question as HMRC seem to think their software we give all the answers. In my research I note Gov.uk stills refers to things like : three line accounts - cheque receipts for Sales invoices etc. Gov.uk was possibly written 10 years ago and sounds very "dated" now so are HMRC/Government going to rewrite the entire Gov.uk guidance as MTD will need new instruction. Are Gov.uk going to delete all the old terminology i.e. cheques were to be phased out in 2019 (later  changed)  and much of what Gov.uk states would not apply to MTD . What are government plans?

Replies (34)

Please login or register to join the discussion.

ALISK
By atleastisoundknowledgable...
04th Sep 2021 13:08

Probably nothing until enough people tell them there’s no guidance online, which will be at some point after they’ve been telling everyone to get the answer from gov.uk

Thanks (1)
avatar
By johnhemming
04th Sep 2021 13:15

I don't answer for the government, nor HMRC and in fact I did not vote for the current government (which may not surprise people), but when I look for Making Tax Digital on www.gov.uk I find quite a few entries

https://www.google.com/search?q=making+tax+digital+site%3Agov.uk&oq=maki...

Thanks (0)
Replying to johnhemming:
avatar
By David Ex
04th Sep 2021 13:27

johnhemming wrote:

I don't answer for the government, nor HMRC and in fact I did not vote for the current government (which may not surprise people), but when I look for Making Tax Digital on www.gov.uk I find quite a few entries

https://www.google.com/search?q=making+tax+digital+site%3Agov.uk&oq=maki...

Not sure that points me to anything from HMRC that sets out exactly what I’ll need to do, how and when. I’m not sure that’s a big ask if HMRC regard this as such an important project.

If I’m wrong, can someone please post a link!

Thanks (1)
Replying to David Ex:
avatar
By johnhemming
04th Sep 2021 13:50

If you want just to look at MTD ITSA try this search

https://www.google.com/search?q=making+tax+digital+income+tax+self+asses...

This may be the best option off that search
https://www.gov.uk/guidance/follow-the-rules-for-making-tax-digital-for-...

ITSA is more complex than VAT because Income Tax is more complicated.

This video gives a bit of info
https://www.youtube.com/watch?v=gYswSicAwuY

Thanks (0)
Replying to johnhemming:
avatar
By David Ex
04th Sep 2021 14:39

johnhemming wrote:

If you want just to look at MTD ITSA try this search

https://www.google.com/search?q=making+tax+digital+income+tax+self+[***]...

This may be the best option off that search
https://www.gov.uk/guidance/follow-the-rules-for-making-tax-digital-for-...

ITSA is more complex than VAT because Income Tax is more complicated.

This video gives a bit of info
https://www.youtube.com/watch?v=gYswSicAwuY

I’d seen those pages but, for a subject so heavily reliant (in theory) on precise rules and definitions, I don’t think that the words used are in any way adequate.

For example:

-keep digital business records
- … business income and expenses updates

What “records” do I need to retain in digital form? And, from that, what exactly do I have to report? Amount (presumably). What about a description? “Fee”, adequate? “Legal fee”, sufficient? “Legal fees for acquisition of an investment property”. Is that enough? Do I need to include the payee’s name? Name and address? Bank details?? Digital image of the invoice?

Obviously, my example is a business expense but not one that will give rise to a current tax deduction. So do I include it with “business expenses” for MTD reporting purposes?

That’s me asking as an accountant so what are unrepresented taxpayers doing?

Thanks (0)
Replying to David Ex:
avatar
By Paul Crowley
04th Sep 2021 15:19

Time HMRC started to add links to Rebecca Cave articles and Aweb any answers

Thanks (1)
Replying to Paul Crowley:
ALISK
By atleastisoundknowledgable...
04th Sep 2021 16:29

Paul Crowley wrote:

Time HMRC started to add links to Rebecca Cave articles and Aweb any answers

We’ll that’ll hardy encourage people to comply.

Thanks (2)
Replying to atleastisoundknowledgable...:
avatar
By Paul Crowley
04th Sep 2021 18:50

But it would give taxpayers so much more awareness.
Perhaps HMRC should consider the balance issue the way BBC are required to to so.

Thanks (0)
Replying to Paul Crowley:
ALISK
By atleastisoundknowledgable...
04th Sep 2021 16:32

Paul Crowley wrote:

Time HMRC started to add links to Rebecca Cave articles and Aweb any answers

Re MTD, or just tax in general?

Thanks (1)
Replying to atleastisoundknowledgable...:
avatar
By Paul Crowley
04th Sep 2021 18:55

I was just thinking MTD
But I agree the principle that HMRC opinion is just an opinion. My opinion based on reading FTT cases could be just as valid.
On anything new I regularly tell clients that nobody knows the law until there are unappealed court cases.

Thanks (0)
avatar
By AdamMurphy
04th Sep 2021 14:12

"What are the Government's plans?"

That's a big assumption.

Thanks (2)
By petersaxton
04th Sep 2021 21:48

HMRC used to have a very detailed website. Maybe it wasn't as good as tax books but it certainly was quite accurate.
Then they scrapped it and it became part of gov.uk and it was dumbed down.
I think they are more likely to dumb it down even further and at the same time force you to listen to instructions say you can find all you need online before getting through to somebody who has very little understanding of tax and is unable to help with your particular problem.

Thanks (1)
Replying to petersaxton:
avatar
By Hugo Fair
04th Sep 2021 23:20

Agree about the quality of the pre-GOV.UK web guidance, but a few corrections:

1. Technically it wasn't scrapped, it was archived before being 'replaced' by the Noddy-lite crapola that is GOV.UK
2. All the communication policies and design criteria are outside the remit of HMRC ... being set by a small team in the Cabinet Office, who are wedded to the idea of a homogenous single govt website with 'standards' that they set.
3. Those standards, even if you're feeling generous, are designed for the 'man on the Clapham omnibus' (who appears to be credited with the IQ of a 5 year-old and attention span of the proverbial gnat).
4. For the first few years of GOV.UK, HMRC wasn't even allowed to write content ... they supplied drafts that were minced-up by some deviant who had no knowledge of the topic, and HMRC weren't even allowed to request or edit changes.
5. After a LOT of pressure being applied (through many unofficial channels) it's now possible for HMRC to have a little control over the message wording - but only within the strictures of the GOV.UK style book.
6. Unfortunately (whether deliberately or not), by there's now a dearth of people in HMRC who have the requisite expertise (subject matter) and skills (writing) ... so the centrist demand for dumbed down guidance aimed only at 'consumers' (and ignoring anything for practitioners let alone experts) has already won.

So your conclusion is correct - whether due to a deliberate plan to disempower people or merely the incompetence and short-termism of politicians & civil servants (including senior management within HMRC)!

FWIW the introduction of RTI and AE et al were sufficiently 'containable' that experts (from software developers to PBs and various quangos) came together to create all the core guidance - which, despite the rubbish from GOV.UK, became widely disseminated to those who needed it.
[I know because I wrote quite a lot, and helped review/edit much of the rest, of it].

Unfortunately we're now facing a triple whammy/wave:
a) The breadth of changes (and the people affected) ... viz MTD
b) The move to 'agile development' within govt ... which actually means starting development without a full specification that 'evolves' in parallel with further development (supposedly to absorb/reflect feedback but mostly consumed in trying to put plasters on design flaws that weren't spotted at the start)
c) The 'discovery' by govt that they can 'get away with it' (rushed changes that are neither thought through nor properly documented) ... vis CJRS / SEISS / etc

Hence my dyspeptic comments that crop up on this site!

Thanks (5)
Replying to Hugo Fair:
avatar
By johnhemming
05th Sep 2021 09:18

I cannot really comment about any changes to what is on the websites, but I have myself found that I can get the information that I need.

This sort of stuff is available:
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim40000

On the issue of agile development. It has always been the case that things are missed out of specifications. It isn't until people try to making things work that they spot the errors. Hence that sort of iterative approach will normally get the best results.

Thanks (0)
Replying to johnhemming:
avatar
By Hugo Fair
05th Sep 2021 17:14

The BIM and EIM pages have indeed remained (so far) outside the control of the GOV.UK style police - presumably because they're meant to be for internal use by HMRC staff not the great unwashed (general public).
However that doesn't help with the complaint I (and countless others) have been making since the arrival of GOV.UK:
* the 'early' guidance (during consultation/specification/pilot/etc stages) that is required to inform those trying to plan (whether developers or practitioners) is not, for obvious reasons, covered by the BIM/EIM series;
* and anyway those series are solely guidance to HMRC staff on how to respond to claims/submissions/etc ... i.e. an interpretation not an exploration or dissertation on the topic and potential anomalies in practice.

And I'm afraid that I couldn't disagree more wholeheartedly with your assertion that 'agile development' will normally get the best results.
I've been through this cycle of development fashions 3 times now and, once you strip away the king's clothes, it really simply describes the elision of prototyping with development - whilst predominantly ignoring the boring specification effort (except occasionally as an after-the-event administrative overhead).
If all you want is a set of prototypes (as proofs of concept) that's fine, or if you are building a fairly simple App with an expected short shelf-life then it's probably a worthwhile swap with rigorous quality.
But if you are trying to develop a new foundation structure that will deliver for 10+ years (and hopefully considerably longer), then it's worth taking the time to check/question and understand the objectives before contemplating all the ways in which it will be used (and potentially mis-used) ... and only then documenting a set of User Requirements and Technical Specifications documents.
Of course even then "things (can be) missed out of specifications" - but that's what version control (for documentation) and release control (for software) are designed to accommodate.
Without these elements, you have people playing at development (not so much the coders but those in charge of the environment) ... leading to the increased frequency of flocks of headless chickens observed enjoying the sunshine.

Thanks (1)
Replying to Hugo Fair:
avatar
By johnhemming
05th Sep 2021 17:29

Hugo Fair wrote:

But if you are trying to develop a new foundation structure that will deliver for 10+ years (and hopefully considerably longer), then it's worth taking the time to check/question and understand the objectives before contemplating all the ways in which it will be used (and potentially mis-used)

This is an important point. I would agree that it is worth checking and reviewing the objectives at a high level. That is absolutely crucial.

However, when you start putting that together into a specification you should not expect the specification to be set into stone before coding starts.

My main business that I sold in 2019 was in the world of securities trading. That is a really complex business area because of the law, procedures and accounting principles.

There has always been a tension between software providers and users of software. Often this has been resolved by having everything written down at the start.

The problem with this is that people are not good at reviewing systems of rules in abstract so they get it wrong. Hence we get into a situation where the software provider can say "that's what's in the spec" and the user has to accept this and pay for a change to the systen,

Accepting that writing a detailed spec that is right will not work is a good thing. It causes some commercial challenges, but it faces up to reality.

Coming back to MTD we need to separate out some of the things people get really stressed about (quarterly submissions) and look at the general principles.

I think the general principles are really good. Hence looking at the absence of a detailed initial spec is a mistake.

Thanks (0)
Replying to johnhemming:
avatar
By Hugo Fair
05th Sep 2021 22:10

Well, we've found another area on which we're obviously not going to agree!

You say: 'Hence we get into a situation where the software provider can say "that's what's in the spec" and the user has to accept this and pay for a change to the system'. This *can* be true - but only where a) development is a bespoke project for a single client, and b) where there isn't a good relationship between the two parties.

I hope that doesn't sound either patronising or smug, but whenever I've quoted for bespoke developments in the past ... we've included both project processes and contractual T&Cs that cover how changes to spec are managed, depending on when & how the change arises. The net result has always been a satisfied client, even if our profit margin has varied a little from plan (but that helps goodwill).

Conversely, for general market products we liaise closely with the authors of the underlying legislative framework (asking awkward questions as well as simply seeking clarification) and establish pilot groups for alpha & beta testing - with documentation and training courses developed in parallel.
We also recognise that nothing is set in stone (whether due to missed design issues or changes in govt policy / spec) ... so the project never has an 'end point', just scheduled release dateS (including fixes, regular maintenance and upgrades).

I'm not saying it's my way or the highway but, having been through cycles of development fashion for over 40 years, I'm happy that our approach works to the advantage of all parties - in both the short and long term - even if it might not be attractive to the short-term only appetites of those in govt!

Thanks (1)
Replying to johnhemming:
avatar
By NotAnAccountant2
05th Sep 2021 18:24

johnhemming wrote:

On the issue of agile development. It has always been the case that things are missed out of specifications. It isn't until people try to making things work that they spot the errors. Hence that sort of iterative approach will normally get the best results.

HMRC are not doing "agile development." They aren't even doing "coincidence programming" (where you make random changes to code until it appears to work.) They're doing "lets pay (presumably expensive) consultants to write *** at taxpayers expense until it's impossible to pretend that what they've written can possibly do what is needed"

One of the purported benefits of agile development is to uncover missed requirements and corner cases early. So why, 18 months from go live for absolutely every possible property owning taxpayer who receives more than 10K in gross rents are we still asking "what does it mean to keep digital records for a husband and wife with a jointly owned property".

Once that is answered we can then start on the slightly more difficult cases like two properties owned in different proportions, two properties where a different taxpayer keeps the records for each, three taxpayers where it is no longer possible for a single taxpayer to keep all the records, whether the quarterly and annual submissions need to be done with the same accounting basis, what you do when you realise there's a mistake in an earlier quarter's submission, do you need to preserve the audit trail for how that submission was done and enter a journal or can you just correct the bad record (which will then be reflected in the EOPS correcting submission)

I've already said, elsewhere, that I think that if you use accruals basis, one year AST and ignore expenses then ALL you need for the quarterly "digital records" is a copy of the two ASTs in effect during the tax year to define the income[1]. I'm 95% sure that HMRC, if/when they see someone try that will say "that isn't what we want" so WTF do they want?

[1] And yes, I don't know what I'm talking about - so this may be hilariously wrong - but I'm one of those "unrepresented taxpayers" who has ideas above their station.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By johnhemming
05th Sep 2021 18:34

NotAnAccountant2 wrote:

So why, 18 months from go live for absolutely every possible property owning taxpayer who receives more than 10K in gross rents are we still asking "what does it mean to keep digital records for a husband and wife with a jointly owned property".


I don't really know. I have myself assumed it is much the same as VAT. I accept that the statutory instrument is not yet published, but that is not a coding thing.

I would assume it is simply a question of tracking payments and receipts.

I have difficulty working out what else it can be.

Thanks (0)
Replying to johnhemming:
avatar
By NotAnAccountant2
05th Sep 2021 19:17

johnhemming wrote:

NotAnAccountant2 wrote:

So why, 18 months from go live for absolutely every possible property owning taxpayer who receives more than 10K in gross rents are we still asking "what does it mean to keep digital records for a husband and wife with a jointly owned property".

I don't really know. I have myself assumed it is much the same as VAT. I accept that the statutory instrument is not yet published, but that is not a coding thing.

I would assume it is simply a question of tracking payments and receipts.

I have difficulty working out what else it can be.

Apologies if my earlier comment in any way appeared as a criticism aimed at you. I hope it was obvious it was aimed at HMRC. I think what you are doing, supporting the pilot users, keeping up with the API changes etc are admirable and I wouldn't think it a waste of money if you receive taxpayer money in return for committing to doing that during this phase of the pilot.

Your answer quoted says 'quarterly submissions should be done on the cash basis.' I have no objection if that is what HMRC want, and it does have some sense and logic behind it but lets be clear, if that's what HMRC want then it makes a mockery of the claims that quarterly submissions will help taxpayers estimate their tax bills (except for those using cash accounting where HMRC could have posted a one sheet excel file for them to fill in and get the same result)

If that's what HMRC want then will they please tell us. I really don't know what accountants will make of it, but perhaps if the 'it's to make estimating tax bills easier' was off the table they wouldn't have the same objection to uploading what is garbage from an accounting and tax perspective. Businesses do have to care about cashflow, and perhaps HMRC want insight into it too, something they cannot do via the current SA process. (although if that is the rationale then I'm at a loss to understand why they don't care about expenses)

And from a cashflow perspective, non deductable expenses matter too - so should we be including the mortgage repayments in the quarterly submission? I think it's CR cash, DR mortgage in the accounts.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By johnhemming
05th Sep 2021 20:14

I am confused by this.

a) I am not aware of any proposals that I am getting any public funds.

b) I don't remember saying quarterly submissions should be made on a cash basis.

Quarterly submissions could be done on a cash basis and then accruals put through as adjustments.

Obviously paying off a debt would not be a tax allowable expense.

Thanks (0)
Replying to johnhemming:
avatar
By NotAnAccountant2
05th Sep 2021 23:00

a - I didn't think you were. However, I think it would make sense for HMRC to get companies involved in the pilot process in a more formal role where 'difficult' cases are brought on board and everybody works together to solve the problems that occur and document the methods adopted to solve them so that others know what is an approved workflow. The companies would clearly be doing this for HMRCs benefit and so should be compensated.

b - "I would assume it is simply a question of tracking payments and receipts." This is cash basis.

"Quarterly submissions could be done on a cash basis and then accruals put through as adjustments." Are you saying this or are HMRC saying this? The adjustments aren't necessarily small.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By johnhemming
06th Sep 2021 02:12

Obviously only the smaller self-employed businesses are allowed to do their accounts on a cash basis.
https://www.gov.uk/simpler-income-tax-cash-basis/who-can-use-cash-basis

and there is guidance on how to record payments and receipts on a cash basis
https://www.gov.uk/simpler-income-tax-cash-basis/income-and-expenses-und...

There is a service guide for MTD ITSA (aimed at developers, but publicly available)
https://developer.service.hmrc.gov.uk/guides/income-tax-mtd-end-to-end-s...

Each year there is a total of income and expenditure. If the taxpayer or their agent wishes they can have an adjustment to that.

This is the API for setting that up
https://developer.service.hmrc.gov.uk/api-documentation/docs/api/service...

That can be the accruals.

A consultation in 2016 looked in detail at accruals
https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

(see chapter 4)

I am only using google to find these documents and just for now have not found an up to date set of guidance on this, but I would assume it has not changed from 2016 save that we now have the adjustment endpoints.

Thanks (1)
Replying to johnhemming:
avatar
By NotAnAccountant2
06th Sep 2021 03:47

Thanks. I hadn't seen the last one before.

I've only done a very quick skim of some of it but at first glance 3.14 seems to imply that accruals basis (for businesses that use it) will need to be done for each period 'so that the profit estimates remain accurate' so perhaps accountants really will have to make up accounts to the fifth of the month!
(edit read some more and I think it's ok for the quarterly entries not to have any accounting adjustments, not so clear if they need to be done on an accruals basis or cash is OK.)

Which, of course, is in direct contradiction with the other advice that expenses don't have to be accurate and zeros can be submitted.

And I'm back to my accruals basis AST let property. Income - trivial, defined by the AST. Management fees, trivial, a percentage of the income. Insurance - also an annual event. So the only bits we're left with is mortgage interest - which will be a complete pain for most people to estimate regardless of cash or accruals, and expenses the managing agents deduct from the rent received from the tenant which I guess will need to be manually entered as they arise. I can't help feeling that this isn't what HMRC want (especially if expenses really can be left to the EOPS adjustments) but leaves the question, if the tenant doesn't pay the rent for three months and falls into arrears that rent receivable still needs to appear in the accounts as taxable income so what is the 'digital record' other than an entry by reference to the AST?

Thanks (0)
Replying to johnhemming:
avatar
By NotAnAccountant2
06th Sep 2021 04:11

4.43 4.44 4.45 and 4.46. The API doesn't support what they suggest here. I think the suggestions make sense - I've even proposed something similar recently in Rebecca Cave's 3rd Sept article:

If I'd been designing the MTD API, I'd have made the quarterly submissions be by property (or where multiple properties are held in identical beneficial ownership, 'property group') and disconnected it from the SA submission which is by taxpayer. Each property group would have a list of taxpayers, and each taxpayer would have a list of property groups.

I'd add that for managed properties, the agents could do the quarterly uploads, there would need to be a two step EOPS adjustment, one to bring in expenses not via the agent and another to apportion the property profits to the taxpayers. I would imagine the latter part being the taxpayer 'claiming' a proportion in their SA return. HMRC would then have visibility into unclaimed (untaxed) profits.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By johnhemming
06th Sep 2021 06:48

I did say the consultation was 5 years old. I am now preparing for the school run and checking RNS from 7am, but I may put the effort into finding something more up to date some time over the next few days.

Thanks (0)
Replying to johnhemming:
avatar
By NotAnAccountant2
06th Sep 2021 07:16

Thanks - although I think everyone (including yourself) would agree that you shouldn't have to. This information should be linked from the MTDAPI pages (or somewhere else equally sensible)

I will also have a google to see if I can find the HMRC response to that consultation.

Edit: it's here:
https://www.gov.uk/government/consultations/making-tax-digital-bringing-...

I haven't read it and won't have time today.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By NotAnAccountant2
06th Sep 2021 17:54

NotAnAccountant2 wrote:

https://www.gov.uk/government/consultations/making-tax-digital-bringing-...

I have read it. It does answer one question I was concerned about with spreadsheet solutions: the audit trail to a quarterly submission. The response says you can (possibly should) upload a corrected earlier quarter. I was struggling to see how a spreadsheet solution could protect against a taxpayer correcting older data after submission but before EOPS.

The accountants might be entertained by the government responses as to why the quarter end rush won't be a problem. Or they might just despair. The solution, for those who don't want to wade through 80 pages, is to have differing year ends...

It is my opinion that the conclusions on jointly owned property are fundamentally flawed. HMRC need to provide examples as to how they want this to work. Leaving it to software developers is either going to leave some cases unhandleable, going to require workflows that are an anti-pattern to digital record keeping, or are going to involve masses of duplicated work for taxpayers.

I also think jointly owned property has a problem where one taxpayer fails to fulfill their digital record keeping obligations (which could be for reasons up to death) The other taxpayers waiting on this data have possibly merely days to submit. And because it's all or nothing, someone with multiple properties has to submit none or inaccurate data.

This problem doesn't appear to exist for partnerships as there is a 'responsible person' and the other partners get their data populated automagically.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By johnhemming
06th Sep 2021 17:58

The current solution for jointly owned property is to put a percentage against each owner. Given that the percentages can vary from property to property I would expect there still to be a submission for the total of property in each category for each taxpayer.

Thanks (0)
Replying to johnhemming:
avatar
By NotAnAccountant2
06th Sep 2021 18:35

johnhemming wrote:

The current solution for jointly owned property is to put a percentage against each owner. Given that the percentages can vary from property to property I would expect there still to be a submission for the total of property in each category for each taxpayer.

Agreed. But that breaks down when A and B own one property, B and C own a second and C and A own a third. Or possibly more common, A+B, C+D and B+C where A+B are married, ditto C+D and B+C are siblings. Or even A+B (married, A has 1% share) and A+C (siblings 50/50) where B and C keeps the records.

Thanks (0)
Replying to NotAnAccountant2:
avatar
By johnhemming
06th Sep 2021 19:44

Its the same as doing a SA105 tax return, however.

Thanks (0)
avatar
By Leywood
05th Sep 2021 17:47

It should be confined to the bin

Thanks (0)
By Duggimon
06th Sep 2021 09:32

Another sterling thread from Chicken Little.

I thought you were both going to retire before MTD for IT and also secure exemption for all of your clients from MTD for IT, so it seems odd that you're so concerned about the government guidance for MTD for IT.

Thanks (0)
avatar
By GHarr497688
06th Sep 2021 16:14

Thanks for all your valuable replies apart from Mr Arrogant himself lol!

Thanks (0)
Share this content