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HMRC's Guidance "Using MTD for IT" on GOV.UK

Only published a fortnight ago ... but still full of holes?

Didn't find your answer?

https://www.gov.uk/guidance/using-making-tax-digital-for-income-tax

1. Software: It says "You’ll need to use compatible software to keep digital records of all your business income and expenses from your self-employment or property business.  You’ll use this software to keep records and send updates." ... so what happened to the the right to use different software to keep/maintain digital records and separate (bridging) software to submit returns?

2. Quarterly dates: It says "You can use standard quarterly period dates .. or use calendar quarter dates" ... but no other options, so what happens if the proposal to 'fix' basis periods doesn't proceed?

3. EOPS: It says "Submitting an end of period statement: At the end of the tax year you need to finalise your business income.  For each income source you’ll submit an end of period statement.  Your software will produce statements for you.  This is where you confirm that the updates you sent are correct and make any accounting adjustments" ... so EOPS includes 'any accounting adjustments' - but doesn't according to John Hemmings (who should know as a developer)?

4. Deadlines: It says "The deadline for submitting end of period statements is 31 January after the end of tax year" ... which is no longer logical with the intervention of deadlines for next 3 quarterly returns (as well as clashing badly with the 5th Feb deadline of quarter 3 of subsequent tax year)?

5. Final Declaration: It says "The final declaration replaces your Self Assessment tax return.  Once you’ve finalised your income by submitting an end of period statement, you’ll need to: * tell HMRC about any personal income you have and submit claims for reliefs, and * submit your final declaration for the tax year" ... so is the Final Declaration a separate return from EOPS (as it appears you are only asked to complete the rest of the SA-like data *after* EOPS and either *before or as part of* the Final Declaration?

Given that the page is but a simple set of introductory guidance (which doesn't even mention Partnerships of any type) ... I'm looking for any feedback that points out where I've missed a trick in understanding what's been written.

P.S. At least this page has a fairly intelligble heading ... unlike its sister page at https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digit... Eligible?!?  There's no choice involved - presumably they meant to say 'liable'!

Replies (63)

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By rmillaree
08th Oct 2021 14:36

"5. Final Declaration: It says "The final declaration replaces your Self Assessment tax return. Once you’ve finalised your income by submitting an end of period statement, you’ll need to: * tell HMRC about any personal income you have and submit claims for reliefs, and * submit your final declaration for the tax year" ... so is the Final Declaration a separate return from EOPS (as it appears you are only asked to complete the rest of the SA-like data *after* EOPS and either *before or as part of* the Final Declaration?"

Ughhhhhhhhhhh what ???? exits the building >>>>>>>

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Replying to rmillaree:
Tornado
By Tornado
08th Oct 2021 16:13

This all seems to imply that your main source of income is just one business but it is typical for some of my clients to have myriad UK and foreign income often amounting to greater income than the 'main' income. There is also Capital Gains Tax, allowance claims, government grants, etc, etc, all of which is currently very efficiently dealt with in ONE Self Assessment Tax Return each year and ONE tax calculation each year. Why complicate the process for no demonstrable benefit.

I must be stupid, but I fail to see how MTD will make anything more accurate or easier by adding a significant number of actions that are of no benefit to anyone at all.

I think HMRC will be unable to deal with the millions or even billions of additional submissions and all for nothing anyway.

I know it is becoming a bit of a running rant, but as we find out more and more about this project, the more unbelievable it becomes that ANYBODY thought it would be a good idea.

Unbelievable!

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By alialdabawi
08th Oct 2021 14:42

Second link goes to:

Page not found
If you entered a web address, check it is correct.

You can browse from the homepage or use the search box above to find the information you need.

But this one seems to work
https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digit...

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Replying to alialdabawi:
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By Hugo Fair
08th Oct 2021 15:32

Apologies ... and thanks (my copy'n'paste seems to have picked up a few extra and spurious characters at the end of the string)!

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By ireallyshouldknowthisbut
08th Oct 2021 14:52

Re 5 they mean, instead of submitting one tax return at the end of the year you have to submit

1. Quarterly submission which we will completely ignore, but you need to to show us you are doing them.
2. The EPOS (which of course could be several of those if you have a sole trade, a let property, another let property with a third party)
3. Some other random thing with claims on we haven't invented yet but will be needed as we know people have other entries on their tax return
4. Yet another document (the final declaration) which we also haven't invented yet, but will presumably be a summary of 1-3, almost like a tax return, but not a tax return as those are bad and not digital. Even the 99% of them filed digitally now are not digital. (fingers pressed into ears).

Anyhow we will get back to you on that, it will be really easy. A button press. Sunny uplands. Future brilliant and clean and white and clear. All wonderful and clean and easy. Computers computer and no staff for HMRC. Computers know it all and are the best. Just make it digital. Its just so simple.

And it will all take you less time than now you morons for not using cloud software like we told you to. What? You think it will take longer? Really longer? Like 3 or 4 times longer than now? You think some tax payers wont be able to cope at all? You are just so backward and non-techy. I am not listening to you. Its all lies from accountant who don't know anything are just on the take.

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By Paul Crowley
08th Oct 2021 15:14

There it is
5 returns for self employment
5 returns for letting (each if joint)
5 returns for holiday letting

and a final tax return like thing that is not a tax return
All being done in less time than the actual real tax return once a year
Where does the cooking ordinary CGT go?

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Replying to Paul Crowley:
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By CBPTS
08th Oct 2021 16:17

The cooking CGT will be on the 30 day report for all single transactions, silly!

I always said that the Revenue would 'retire' me. I was imagining that there would be no tax allowances and just a single basic rate! Little did I know!

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Replying to CBPTS:
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By Paul Crowley
08th Oct 2021 17:56

Good news
A new extra CGT report for all the non residential gains is what to expect?
They have yet to make the residential one work yet

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Replying to Paul Crowley:
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By johnhemming
09th Oct 2021 17:49

My understanding is that non-residential CGT is part of the MTD ITSA tax return.

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By RichBlack
08th Oct 2021 17:41

Why don't they just cut to the chase and ask for quarterly POAs

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Replying to RichBlack:
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By David Ex
09th Oct 2021 11:34

RichBlack wrote:

Why don't they just cut to the chase and ask for quarterly POAs

Exactly. The whole MTD for IT looks like an horrendous “solution” looking for a problem. The vague, generic platitudes that come from HMRC, etc., demonstrate the lack of any compelling rationale for the whole project. Well, a rationale that they will admit to in public.

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By johnhemming
08th Oct 2021 20:10

On the EOPS it appears this is compatible with the SI. Strictly the EOPS endpoint is only the agreement to the figures stored on the HMRC systems. However, it appears that from a legal perspective they are including the Business Source adjustments in the definition even if they are different technical endpoints.

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Replying to johnhemming:
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By Hugo Fair
08th Oct 2021 21:14

Sorry, John ... but what does that mean in plain English? I'm not being rude, just unable to translate your post into terms that I understand.

Forget 'endpoints' (whatever they are) :
* What are the separate submissions/filings that a taxpayer has to make at year-end?
* In which of these do any corrections/adjustments to those already submitted (in the Quarterlies) get included?
* In which of these do any other values like allowances/etc get included (in order to equate to a full SA return and to show the basis of calculation of tax due)?
* In which of these are declarations (of completeness and accuracy) made? And are separate declarations relevant to the ytd state of Quarterlies and to y/e accts?
* In what order are these submissions to be made? And what happens if they are filed out-of-order?

I would expect by now that there would be simple (non-technical) answers to all those questions - but recognise that it is not your job to have all the answers (so "Don't know" will be an understandable response to some/all of them). But any to which you do know the answer would be helpful to everyone else ... please!

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Replying to Hugo Fair:
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By johnhemming
09th Oct 2021 08:22

Sorry, I spent maybe 9 or 10 years on a committee that reviewed Statutory Instruments (SIs) from the perspective of vires. Hence I may use abbreviations perhaps when I should type the whole words.

EOPS is the End of Period Statement.

I think the problem is that MTD involves a number of interactions with the HMRC computer. Whereas if you are typing something into a series of web pages, MTD has a set of different endpoints/transactions when something is done.

Hence the answer that in fact there is only one tax return is a truthful answer. It, however, builds up and how many interactions there are between MTD software and the HMRC servers will depend on the complexity of the taxpayers income and claimable expenditure.

So if a taxpayer is claiming charitable donations as a deduction then that will be sent as a separate transaction.

How an MTD supplier implements the User Interface (UI) will vary.

So, for example, if we take a self employed person who has done quarterly submissions and the accountant wants to put in adjustments there are things that need to be done.
a) The HMRC server needs to be told that an adjustment is needed
b) The adjustment needs to be submitted.

This could be done by MTD software in a number of ways and does not necessarily require two interactions with software from an accountant.

EOPS itself for any source of business, however, has an element of interaction with the taxpayer or their agent.

You can see the specification (in I think relatively non-technical language) here:
https://developer.service.hmrc.gov.uk/guides/income-tax-mtd-end-to-end-s...

The nub of it, however, is that the EOPS itself which is points 18 to 25 on the diagram summarised it is as follows:

a) The taxpayer or their agent thinks they have done everything they need to do.
b) They ask HMRC what HMRC thinks the figures are for a business.
c) That is displayed on their computer
d) They agree that the information is correct and submit a message to HMRC saying that it is agreed.

Hence there are essentially two clicks to finalise an EOPS
a) What are the figures
b) Yes those are right. (obviously if they are not right people will then look to find out why)

Some of the confusion has I think arisen because there is an EOPS transaction/Endpoint. There are also annual allowances and potentially end of year adjustments. This is described as "finalise business income" and I personally think it will continue to cause confusion to have EOPS used to describe things in different ways.

However, these all form part of one actual tax return (with a number of pages)

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Replying to johnhemming:
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By rmillaree
09th Oct 2021 09:59

johnhemming
"So if a taxpayer is claiming charitable donations as a deduction then that will be sent as a separate transaction."

This really does sound like the whole systemn is morphing into something beyond ridiculous.

How on earth can it be sensible to take one simple annual task and break it down into a mind numbing array of "different discrete tasks"" tat are spread over thethe whoel year but acheive nothing tiill teh last task is done.

Are you saying ontop of all the in year submissions and end of year summary submission there will be separate submisions

for chariry payments

and sepaarte submision for pension payments

and separate submission for marriage transfer claims

and on?

I think we will need to bring back the Ariston advert from the 1980's my "annual ("cough") tax submisions will go on and on and on and on .

I really cannot see how anyone who looks at this whole scheme in the tiniest bit of detail can conclude its anything other than one of the most stupid ideas in the history of the universe. Those that haveinterationw ith this abonimationshoudl be shouting most loudly for its cancellation if they have any shred of sense (IMHO feel free too ignore my thoughts)

are they really gonna make a pensioner or a 50 year old joiner go through all this crapola ? unless they are able to beg an exemption. If exemptios will be easy to get it makes the whole mandationthing pointless and i dont see why anyone should have to go begging for any OTT complicated onlineIT nightmare.

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Replying to rmillaree:
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By David Ex
09th Oct 2021 11:53

rmillaree wrote:

This really does sound like the whole systemn is morphing into something beyond ridiculous.

How on earth can it be sensible to take one simple annual task and break it down into a mind numbing array of "different discrete tasks"" tat are spread over thethe whoel year but acheive nothing tiill teh last task is done.

That’s how I’m reading it.

But you missed the important bit. All this is being done for no demonstrable, properly measured (net after costs and significant stress!) benefit to taxpayers or the Treasury.

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Replying to rmillaree:
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By johnhemming
09th Oct 2021 12:24

The users have to type numbers into boxes. They don't really need to worry necessarily about how that data gets to HMRC. The MTD software can decide if it is written that way to only submit data when it has that data.

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Replying to johnhemming:
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By Hugo Fair
09th Oct 2021 12:25

Whilst I appreciate the effort, John, your response doesn't attempt to answer any of the 7 specific questions I asked in my post of 8th Oct 2021 21:14 ... EDIT: I see you've tackled the 7th one in a separate later post, but the first 6 remain.

Whether wilfully or not (I choose to believe not) you've managed to explain what I knew (but wasn't enquiring about) instead of the questions raised.

As all developers know (but most taxpayers don't need to), the mish-mash of HMRC back-end systems (that have never properly been re-designed from the ground up) require submitted data to be post-processed & potentially submitted onto multiple other systems through a variety of in-house processes. These routes and processes are poorly documented and often not fully understood even by the relevant HMRC technical staff ... which is why there are still RTI problems.

However, although that will be pertinent to your current development efforts (in determining the nature and purpose of individual endpoints), none of it is of the slightest interest to the typical agent or taxpayer.

So whilst ".. there is only one tax return is a truthful answer" may score 'correct' in a semantics competition - it does nothing to assist basic comprehension by the cohort of people who will have to comply with MTD.

If you hit a send button, then that is a submission (aka filing) - irrespective of whether it reaches one or more endpoints, or is only one part of an eventual SA-like 'return' consolidated by HMRC. In essence each 'send' is a required 'action' by the agent or taxpayer.

And that is the context in which I asked my questions - as per the first question "What are the separate submissions/filings that a taxpayer has to make at year-end?"
Not routines or endpoints (or returns eventually construct by HMRC), just the number of 'things' that a taxpayer has to send as a separate filing (after checking the data and before potentially having to adjust or correct any values later).

Judging from subsequent responses by others it looks like the same confusion still exists on this core aspect - certainly nor helped, as you say, by the way in which GOV.UK guidance fails to delineate between EOPS and whatever the official name is for what you call "finalise business income"!

Do you have the answers to any of my original questions (from the perspective of and in the language of a taxpayer's meaning of a 'filing or submission')? As I said before, there's no shame if the answer is No - that would still be useful to know.

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Replying to Hugo Fair:
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By johnhemming
09th Oct 2021 08:28

Dealing with this specifically:
>And what happens if they are filed out-of-order?
The only key order is that you do all the adjustments, allowances etc before you click the button to say it is finished.
There may be a limitation on doing business adjustments and then going back and changing a quarterly return, but
a) I don't know
b) It would be a bit silly do do that and cause quite a bit of confusion.
However, that's the only thing I can think of. I am, however, not the font of all wisdom and as with everyone else I will get things wrong from time to time. This is to the best of my knowledge.

When we have done live periodic submissions we have got them right and not had the need to do any adjustments.

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Replying to johnhemming:
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By legerman
09th Oct 2021 10:12

johnhemming wrote:

Dealing with this specifically:
>And what happens if they are filed out-of-order?
The only key order is that you do all the adjustments, allowances etc before you click the button to say it is finished.
There may be a limitation on doing business adjustments and then going back and changing a quarterly return, but
a) I don't know
b) It would be a bit silly do do that and cause quite a bit of confusion.
However, that's the only thing I can think of. I am, however, not the font of all wisdom and as with everyone else I will get things wrong from time to time. This is to the best of my knowledge.

When we have done live periodic submissions we have got them right and not had the need to do any adjustments.

Can I summarise I have this correct?

Quarterly returns. Primarily the bookkeeping entries for each quarter, showing the PL of each business/property etc on separate QR's

EOPS The total figure for all 4 quarters, which should agree with the yearly PL, separately for each business/property etc

Final declaration. Pull together the various EOPS and make all the adjustments needed and include all the other stuff that hasn't been reported on the quarterly returns. (eg Capex, accruals etc) aka as the current SA.

Presumably if an EOPS figure doesn't match up with the yearly PL you would investigate to find out why.

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Replying to legerman:
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By rmillaree
09th Oct 2021 11:30

legerman

"Can I summarise I have this correct?"

I get the impression that any other number of submisions may also need to be made - not sure if these must be done before final submision is made or if they can be done "at any reasonable later date"

perhaps johnhemmings can confirm

An example of where a completely different submisions seems to be nnecessary is when john confirms the following

"So if a taxpayer is claiming charitable donations as a deduction then that will be sent as a separate transaction."

God knows how may additional submisions may be nnecessary but i kind of suspect it sounds like it could potentially be any of the tax return boxes that would affect a tax calculation?? - if that truly is the case that there is potentilaly another (15-50 submissions necessary) its clear to me this system will not work and will be scrapped - its just a question of how stupid they are at the top here as to how long it takes for this to be scrapped - fair eough have apid data and have all of these boxes and all of this guff - but please just make it one year end submisdion.

johnhemming - spcific question in this regard how may other potential adjustmenst are there that may need to be made as individuals submssions each year on top of everything else?

Note i am very uneducated in this area at present so i may have completely got the wrong end of the stick here in that it may not be as bad and silly as i fear.

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Replying to rmillaree:
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By johnhemming
09th Oct 2021 12:36

All of this thing about "submissions" is getting the wrong end of the stick. There is one tax return. Within that tax return there are lots of individual steps whereby data goes to HMRC. Those steps are like having separate web pages where you type in additional data.

We had a discussion with HMRC last week at which they seemed to imply (I know that is a bit vague) that for annual submissions there will be an option to put them into a .gov.uk web page. That is much the same as typing them into software and submitting from that.

The technical aspect that the software is doing lots of submissions does not really matter.

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Replying to johnhemming:
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By rmillaree
09th Oct 2021 13:00

ok johnhemming
"All of this thing about "submissions" is getting the wrong end of the stick. There is one tax return. Within that tax return there are lots of individual steps whereby data goes to HMRC. Those steps are like having separate web pages where you type in additional data."

What i really need to know is are all these steps submitted as part of the final submision or a series of separate submisions that may be before or perhaps even after the "final submision"

If they are a series of separate submisions do they affect the tax caluclated in any way prior tofinal submision?

Its not so bad if its simply prepping figures with no consquence until the final eoy submisson is done thats not so bad if thatis the case - my worry is that that updating a figure would change the expected tax due at hmrc end andthere could be some consequence from that - eg if it suddenly flags up client has overpaid tax when the reality is until its done and dusted and final figure included you never know what final tax will be.

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Replying to rmillaree:
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By johnhemming
09th Oct 2021 13:11

rmillaree wrote:

Its not so bad if its simply prepping figures with no consquence until the final eoy submisson is done thats not so bad if thatis the case - my worry is that that updating a figure would change the expected tax due at hmrc end andthere could be some consequence from that - eg if it suddenly flags up client has overpaid tax when the reality is until its done and dusted and final figure included you never know what final tax will be.


That's right. Until crystallisation occurs its all part of preparing the figures. You can review the outcome and then submit changes. However, crystallisation is like submitting the return and that is the point of no return.

I don't know if you can change a previously submitted EOPS before crystallisation as I have not tried to do that. However, you are really supposed to be pretty certain before doing EOPS. On the other hand it might be possible to make changes and then do another EOPS. I am not inclined to research this for now as I don't think it matters that much.

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Replying to johnhemming:
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By cbp99
11th Oct 2021 12:16

The thing about all these separate steps is the usual way to complete a task is, where possible, to undertake the steps in a single seamless process. That is how compilation of an SA typically works. Gather all data, enter into software, check, send to client. Move on to next client's SA.
Compare baking a cake:
Get scales out - weigh out flour
Put scales away
Come back later - get scales out - weigh out sugar - go away
Come back later - measure out liquids - go away
Come back later - break eggs into bowl - go away
Etc, etc. It's simply not a sensible and efficient way to complete the task.

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Replying to cbp99:
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By johnhemming
11th Oct 2021 12:32

That's true. It would not be sensible to just do the individual steps in isolation then go away. It would be sensible to go through putting all the data in before reviewing it.

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Replying to johnhemming:
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By cbp99
11th Oct 2021 12:41

My point was that the MTD design appears to demand that the steps are broken up.

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Replying to cbp99:
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By johnhemming
11th Oct 2021 12:51

It does not require the steps to be broken up, it does require a formal consent to the EOPS values and the return as a whole (which is the submission process).

It is a bit like having a number of SAnnn forms.

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Replying to johnhemming:
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By cbp99
11th Oct 2021 12:57

The steps are broken into at least five by the quarterly submissions.

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Replying to rmillaree:
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By David Ex
09th Oct 2021 12:39

rmillaree wrote:

its just a question of how stupid they are at the top here as to how long it takes for this to be scrapped -

I think we underestimate the stupidity of MPs and civil servants at our peril. Well, maybe not stupidity but a complete detachment from, and lack of understanding of, the real world in which the average small business and taxpayer exist.

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Replying to David Ex:
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By johnhemming
09th Oct 2021 13:22

David Ex wrote:

I think we underestimate the stupidity of MPs and civil servants at our peril. Well, maybe not stupidity but a complete detachment from, and lack of understanding of, the real world in which the average small business and taxpayer exist.


I think you will have some difficulty arguing that people should be able to claim allowances say for charitable donations without telling HMRC what the amounts are.
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Replying to David Ex:
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By Justin Bryant
09th Oct 2021 17:37

Yes; but the far bigger and more relevant problem is that they overestimate their ability. See: https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

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Replying to legerman:
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By johnhemming
09th Oct 2021 12:39

That looks right to me. Save for the point that the figures in the EOPS come from HMRC and are not themselves submitted by the taxpayer.

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Replying to johnhemming:
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By legerman
10th Oct 2021 17:20

johnhemming wrote:

That looks right to me. Save for the point that the figures in the EOPS come from HMRC and are not themselves submitted by the taxpayer.

No, I got that. eg you submit 4 quarterly returns. The EOPS gives you an overall figure and you agree that is correct by confirming and submitting.

In relation to Millaree's question on donations I surmise this will be on the final declaration only?

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Replying to legerman:
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By johnhemming
11th Oct 2021 06:34

Apart from the businesses (inc property) that are declared individually once for each year there is one overall declaration that includes everything (donations, vcts, life insurance, seafarers etc etc etc)

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Replying to johnhemming:
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By johnhemming
09th Oct 2021 12:37

I thought this was answering Hugo Fair, but it seems to answer me. It should answer Hugo.

You started with "what does that mean in plain English"
So I had a go at answering that.

I will have another look at the questions:

>Forget 'endpoints' (whatever they are) :
In one sense the user does not need to worry about 'endpoints'. However, these are the mechanisms by which data gets to HMRC. I would think for tax agents it is worth having a bit of knowledge about how it is working not least to understand what is happening when things go wrong.

>* What are the separate submissions/filings that a taxpayer has to make at year-end?
This all comes down to how the MTD software is written. It is entirely possible to leave it up to the MTD software to decide what submissions are needed based upon what data there is.

Hence you can simply fill in a database akin to the SAnnn forms and leave it at that.

I think HMRC are intending to write some web pages for this anyway. How many pages there will be I don't know, but I don't think it really matters as you will only have to fill in pages where there is data to be provided.

>* In which of these do any corrections/adjustments to those already submitted >(in the Quarterlies) get included?
I would think the answer to this is obvious. If you have adjustments to say furnished holiday lettings data then you submit adjustments to furnished holiday lettings data.

>* In which of these do any other values like allowances/etc get included (in order >to equate to a full SA return and to show the basis of calculation of tax due)?
Again we are coming to the same point. A lot of this will depend upon the MTD software. I have given a link to the specification. However, you only need to provide required data.

>* In which of these are declarations (of completeness and accuracy) made? And >are separate declarations relevant to the ytd state of Quarterlies and to y/e accts?
This is a good question and I think I answered that. The EOPS is a declaration as is the final crystalisation or submission of the whole return.

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Tornado
By Tornado
09th Oct 2021 13:34

This all madness.

We already have a system under Self Assessment where a single submission can be made that declares all income, allowances, gains, and everything else and also works out the tax liability to the penny in one submission which HMRC can reconcile to.

Despite John's repeated attempts to justify the many separate and unconnected submissions that will need to be made under MTD (so that HMRC can build up a virtual Tax Return over a period of time) I completely fail to see how this is in any way better for anyone than the current Self Assessment system.

By all means spend time and money to make Self Assessment more efficient, but there is no reason at all to change the very logical principles that Self Assessment works to.

There is no point in reinventing the wheel you end up with a square one.

I don't have a problem in encouraging more people to use accounting software over a period of time, but this is entirely unconnected with the ridiculous way that 'Tax Returns' are going to be submitted in the future and should not be mandated as that will not work and will not solve the perceived problems that HMRC seem to think they have.

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Replying to Tornado:
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By johnhemming
09th Oct 2021 13:39

The self assessment submission, however, has lots of different numbers on different pages of different SA1nn forms.

If the new MTD ITSA has a number of web pages or API endpoints used for submitting data I don't really see the problem.

The main difference is you can query the HMRC server to find out what they think the tax liability is based upon your work in progress set of data.

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Replying to johnhemming:
Tornado
By Tornado
09th Oct 2021 14:11

"The main difference is you can query the HMRC server to find out what they think the tax liability is based upon your work in progress set of data."

What possible benefit would there be in looking at the HMRC server every now and then to see what their tax calculation is to date when it will clearly be based on incomplete data.

The ONLY Tax Calculation that matters is the final one when ALL relevant data has been gathered together and a calculation can be made based on all of that data. What use is an estimated tax liability based on incomplete data. The answer to that is NONE!

Completely useless to us and HMRC alike.

We can already advise clients of potential total tax liabilities for a current tax year using the 'What If' feature in many tax packages and that has the dual ability to assist clients in planning as well as giving them an idea of their tax liabilities. There is no benefit from looking at data held by HMRC as it will be nonsense information and will remain nonsense information until the very final EOPS (Self Assessment Tax Return) is made.

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Replying to johnhemming:
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By Hugo Fair
09th Oct 2021 14:26

One last attempt ... before I succumb to the blandishments of a bright blue sky!

There is no advantage to the average agent or taxpayer (unless possibly they are accounting on a cash basis) in having multiple interactions with HMRC or even just internet-based forms.
The unavoidable (if unenjoyable) task is to corral all the figures in one place / review them for accuracy and adjust where necessary / enter extra figures as the result of accrual calcs / check the provisional tax figure / adjust where necessary any earlier figures in the light of having your memory jogged / confirm the final set of figures as complete & accurate / submit the return (as a one-time action) / close the books, files, etc - and move on to someone else's accounts.
These are the basic steps involved in completing an on-line SA return - and are modelled on following the logical order of events for a human.
They are also the optimally efficient as the task can be completed in one sitting.

The key difference between this approach and the currently still ill-defined series of actions imposed on the agent or taxpayer for MTD is that the 'user' currently remains in control throughout.
When you say "you can query the HMRC server to find out what they think the tax liability is based upon your work in progress set of data" ... that is also true with the current SA online facility. But w-i-p data is just that - temporary until you confirm it by final submission (and not retained by HMRC outside that session).
So you can discard it all and re-start with a 'blank sheet' if you've got into a mess.

Whereas with MTD, all the w-i-p data is retained by HMRC ... so you have the additional complication (as I've mentioned in other posts) of having to submit adjustments to the w-i-p figures instead of just new/correct ones. More work.

It seems to me your determination to focus on endpoints in your explanations is a bit like responding to a question from a novice driver about 'how to change gears' ... by explaining the mechanisms of discrete actions taking place invisibly (cogs, syncromesh et al) - instead of explaining when and how to accomplish the task.

Basically we seem to be speaking different languages, or at least looking at the same thing but with different perspectives from different hill-tops!

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Replying to Hugo Fair:
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By johnhemming
09th Oct 2021 14:46

I did go out delivering leaflets this morning, but the sky is and was not blue. In fact it is quite grey, but at least it has not been raining.

My difficulty is that I can see that whatever system there is for submitting tax data there will be quite a few individual numbers submitted and don't think that there is much difference between a website with a number of pages (or indeed just boxes on a page) and a system which uses APIs with a number of submissions (or indeed fewer submissions, but ones containing more data).

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Replying to johnhemming:
Tornado
By Tornado
09th Oct 2021 15:29

Hello John

We have been through this many times before and it is clear that you only see things from your point of view and you will never be shaken on that.

From our point of view, however, we only make ONE submission to HMRC when a Self Assessment Tax Return is submitted each year which makes the whole process very straightforward and logical. Nothing else matters to us and I don't think you will ever be able to successfully argue that the MTD project is in any way beneficial to us, our clients, individual taxpayers or even HMRC.

Not being rude, as I know you are not deliberately being evasive, but I can now understand how HMRC have got into this (very, very, expensive) mess if they have been following advice given to them by you and your like minded colleagues. The impression I get is that MTD is trying to solve a problem that didn't exist and in my opinion, is just one big disaster waiting to happen.

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Replying to Tornado:
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By David Ex
09th Oct 2021 15:55

Tornado wrote:

From our point of view, however, we only make ONE submission to HMRC when a Self Assessment Tax Return is submitted each year which makes the whole process very straightforward and logical. Nothing else matters to us and I don't think you will ever be able to successfully argue that the MTD project is in any way beneficial to us, our clients, individual taxpayers or even HMRC.

Exactly. The clue is that the income tax is based on *annual* profits.

Tornado wrote:

The impression I get is that MTD is trying to solve a problem that didn't exist and in my opinion, is just one big disaster waiting to happen.

Yes, absolutely. Is there a practising accountant on here who feels comfortable with the idea or the execution? I don’t think so and that ought to be a big clue

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Replying to Tornado:
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By johnhemming
09th Oct 2021 16:30

If we put aside the issue of quarterly reporting and digital links the other question is whether taxpayers and their agents have direct access to HMRC's database or simply submit a set of figures that are supplied to the database.

When it comes to reconciling against data such as state benefits, employment income and CIS I would think having direct access to the data and being able to reconcile against it is more efficient than just submitting data and then having a row about any discrepancies in retrospect.

I accept that there are variations in working procedures from quarterly returns. However, otherwise there is not a lot of difference using a sequence of web pages (or api submissions) to submit data and putting the data in as one set of data in a collection of SAnnn forms.

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Replying to johnhemming:
Tornado
By Tornado
09th Oct 2021 16:46

We already have the facility to access much of the information you mention through the API that already exists for Self-Assessment. The problem is, and is the evergreen problem with HMRC, is that there is no data to fetch as HMRC have not made it available, or if they do make it available it is 6 months later than it could have been.

If these problems had been fixed instead of trying to dream up some fancy different way of doing things, then Self Assessment would be easier to use than it already is and information from the HMRC database would be available to us at the point that we actually need it which is when we are preparing the ONE and ONLY year end Tax Return based on finalised and accurate information.

I say accurate information, but HMRC failed to provide the correct SEISS data though the SA API in some cases which is just incompetence but I cannot see that doing the same thing under MTD would have been any different.

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Replying to johnhemming:
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By David Ex
09th Oct 2021 16:57

johnhemming wrote:

The main difference is you can query the HMRC server to find out what they think the tax liability is based upon your work in progress set of data.

Not ganging up on you, John, but I’m not surprised you’re not getting much support for this idea!

I’ll keep saying it but, as things stand, income tax is based on annual profits which can only be properly ascertained after the end of the period. Anyone who wants to can already estimate their liability during the year using the back of an envelope, a spreadsheet or by speaking to their accountant. If anything, looking at the tax liability based on a couple of MTD submissions part way through the year is likely to be misleading.

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Replying to David Ex:
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By johnhemming
09th Oct 2021 16:50

My problem is that I cannot see the difference between typing in a figure say for AIA into a box on the screen that is submitted to HMRC with the rest of the self assessment return and typing in a figure for AIA into a box on the screen that is submitted to HMRC when you wish to submit (which can be with the rest of the self assessment return if you really want to do that).

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Replying to johnhemming:
ALISK
By atleastisoundknowledgable...
09th Oct 2021 21:53

I think the word ‘submission’ is creating a miscommunication between us and you (I don’t mean that quite as aggressively divisive as it comes across).

Currently, we type a set of figures into software once a year.
Under MTD, we have to (if I understand it) type figures:
A) quarterly for the EPOS
B) annual adjustments for each business/property income (or multiples thereof if joint ownerships etc)

So that’s 4 sets of numbers, then click to say we agree/disagree with HMRC’s annual figures, then type in any number of adjustments (including reliefs, P&L adjs etc) then click to declare the overall figures correct.

Have I go this right?

Yes most of that is already put on a SATR, but that’s once a year, not quarterly AND once a year.

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Replying to atleastisoundknowledgable...:
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By johnhemming
10th Oct 2021 07:53

I think we agree that the word "submission" is causing difficulties. A submission is like having a web page.

I think we have been through this sufficiently. Each business needs a formal agreement of the figures for the business through EOPS.

Then finally to do the return requires crystallisation.

Technically there are lot of ways that the data gets to HMRC. It can get there through API submissions or by being entered into a web page. However, in the end for an annual figure you only have to type the number into a computer once much the same as it is now. Somehow in the background that data gets submitted to HMRC.

I am sure it would be possible to configure MTD software so it only submits data once everything is in place just as it works now. I don't see the advantage of that, but it is possible.

It is important to remember that whenever you put data into a web page and click "save" it submits that data to the server.

Hence every "post reply" on this thread is a submission to the accountingweb.co.uk server.

Sometimes (and I use this a lot) every time you type a figure into a box on a web page and move to the next box it saves that to the server through a submission.

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Replying to johnhemming:
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By rmillaree
12th Oct 2021 08:53

johnhemmings

"Sometimes (and I use this a lot) every time you type a figure into a box on a web page and move to the next box it saves that to the server through a submission."

Until hmrc update their server mid year and everything saved not submitted is lost :)

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