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MTD and other issues

What HMRC apparently actually believe!

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In sheer frustration at HMRC total incompetence on a range of matters/clients I wrote to my local MP prior to the delay announced for MTD-ITSA. Within 16 days (unbelievable I know) I have received a response from HMRC 's director for MTD. I would like to share some of his comments/thoughts/views with you all.

With regard to removing the Agent's helpline during the first lockdown his comments were:

"We recognise that due to high volumes of calls to our helplines in the last year, some people have had to wait too long to get through. We are taking action to improve this, with the aim of bringing our service back to our usual delivery standards.

We have trained Customer Service Advisors to work from home, increased our operating hours on many of our phone lines, and offered quieter opportunities to get in touch by phone before 10am and after 4pm. We have also been using our resources flexibly to maintain our telephony service, moving staff in from other business areas."

So it is good to know that 18 months later HMRC are taking some action. Did anyone find that ringing before 10am or after 4pm met with any greater sucess than ringing between those times? Personally I tried ringing HMRC at 0800 on several occasions to be told that due to the volume of calls, they couldn't answer my call and to try ringing back some other time, at which point the line went dead! I don't think I am the only one who experienced this.

"We are also continually improving our digital services, so customers and agents can get the advice they need without having to call us. We offer a webchat service across many service lines, and a range of digital services are available through the Personal Tax Account, Business Tax Account and Agent Service Account to better able people to self-serve.
That is why MTD is so important. It is the first phase of our move towards a modern, digital tax service, fit for the 21st century. It supports businesses through digitalisation and provides a digital service that many have come to expect in their everyday lives. MTD helps businesses reduce common errors in their tax affairs and allows for better customer interaction and guidance through digital prompts and nudges."

Are any of HMRC services currently fit for the 21st century?

"There is a growing body of evidence, from research and insights from businesses already operating MTD for VAT, that shows these businesses see a range of benefits. These include an integrated approach to business administration and tax and spending less time on administration."

"Making quarterly updates under MTD for Income Tax is not the same as making quarterly tax returns. Software used by businesses to keep digital records will use those records to automatically create a simple summary of business income and expenditure. For most businesses and landlords, MTD for Income Tax will simply mean that they need to keep digital records, submit four light-touch quarterly updates during the year, making any necessary adjustments through their end of period statement, as they would do currently through their annual tax return."

So there it is, four light touches are all that is required. I really don't know what all the fuss is about!

How far removed from reality are these people? I have suggestetd to this HMRC director that he posts a questionnaire/query on this forum and then he can see the response from people who actually have to deal with HMRC for a living on a daily basis. He might be shocked!! Any suggestions?

Replies (15)

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RLI
By lionofludesch
14th Oct 2021 12:01

The quarterly updates are light touch. I wouldn't have a problem with them.

It is the requirement to keep digital records for tiny businesses, plus the threat of penalties for failing to meet tight deadlines and the additional costs, which are not. Solve those issues and you've cracked MTD.

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Replying to lionofludesch:
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By David Ex
14th Oct 2021 13:28

lionofludesch wrote:
<:p>The quarterly updates are light touch. I wouldn't have a problem with them.

I wouldn’t if there was some good reason for doing them - but no-one’s come up with anything that convinces me.

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By David Ex
14th Oct 2021 13:06

Ben Alligin wrote:

How far removed from reality are these people?

Very. They’ve decided it’s a great idea based on the world they inhabit which is different from the real one small businesses operate in.

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Replying to David Ex:
Tornado
By Tornado
14th Oct 2021 13:46

David Ex wrote:

Ben Alligin wrote:

How far removed from reality are these people?

Very. They’ve decided it’s a great idea based on the world they inhabit which is different from the real one small businesses operate in.

They are so far removed from reality that they have not yet realised that this is not going to work!

How about answering letters at least acknowledging them, that would be even more impressive than the fantasy benefits of MTD.

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Replying to David Ex:
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By the_fishmonger
18th Oct 2021 10:21

David Ex wrote:

Ben Alligin wrote:

How far removed from reality are these people?

Very. They’ve decided it’s a great idea based on the world they inhabit which is different from the real one small businesses operate in.

The world inhabited by our the people who dream these things up is determined by models they were taught. There are now 3 layers in most departments where this is how they've grown through the education system.

The education system has leaned towards ensuring that everyone try to reinvent the wheel because the "that's what we've always done" view is evil and has to be expunged at all costs. TWWAD isn't always wrong though, there'll have been some hard earned learning in there too!

The oldest layer refused to listen to the experienced hands above them when they started, then the second and third tranches and now they've lost all inherent knowledge hey could use to make things work.

Smart Motorways are absolutely safe...in models. Humans are chaotic and cannot be trusted to follow the model. Q.E.D.

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AS
By AS
14th Oct 2021 13:43

"We are taking action to improve this, with the aim of bringing our service back to our usual delivery standards."

The usual delivery standards were terrible. Why not set a goal of exceptional standards?

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Replying to AS:
RLI
By lionofludesch
14th Oct 2021 14:04

AS wrote:

"We are taking action to improve this, with the aim of bringing our service back to our usual delivery standards."

The usual delivery standards were terrible. Why not set a goal of exceptional standards?

They were exceptional. Few were that bad.

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By legerman
14th Oct 2021 14:34

Ben Alligin wrote:

So it is good to know that 18 months later HMRC are taking some action. Did anyone find that ringing before 10am or after 4pm met with any greater sucess than ringing between those times?

I found it worked around 8 am, but getting through at the end of the day was nigh impossible. It didn't really bother me though. Phone on loudspeaker and carried on working.

Ben Alligin wrote:

. MTD helps businesses reduce common errors in their tax affairs and allows for better customer interaction and guidance through digital prompts and nudges."

If they truly believe that then they are living in cloud cuckoo land. I only ever had one VAT client who handwrote the books and I simply redid them, correcting VAT errors along the way. The old saying is GIGO (I prefer SISO) and digitalisation won't correct that. If someone codes wages with vat it will only be picked up by an accountant review, MTD VAT hasn't altered that

Ben Alligin wrote:

"There is a growing body of evidence, from research and insights from businesses already operating MTD for VAT, that shows these businesses see a range of benefits. These include an integrated approach to business administration and tax and spending less time on administration."

Again poppycock. VAT MTD has made absolutely no difference to the time spent, other than slightly speeding up the time in actually submitting the VAT return.
[/quote]

Ben Alligin wrote:

"Making quarterly updates under MTD for Income Tax is not the same as making quarterly tax returns. Software used by businesses to keep digital records will use those records to automatically create a simple summary of business income and expenditure. For most businesses and landlords, MTD for Income Tax will simply mean that they need to keep digital records, submit four light-touch quarterly updates during the year, making any necessary adjustments through their end of period statement, as they would do currently through their annual tax return."

Well they obviously don't understand their own MTD then. From my understanding, the EOPS is simply the 4 quarterly returns added together, with a submit button if you agree. The final declaration is where you make the adjustments.

Ben Alligin wrote:

How far removed from reality are these people? I have suggestetd to this HMRC director that he posts a questionnaire/query on this forum and then he can see the response from people who actually have to deal with HMRC for a living on a daily basis. He might be shocked!! Any suggestions?

Yes, raise the starting turnover point to the VAT level, and slowly reduce over 5 years.. Even if they started at (say) 50k would be better. Plunging virtually everyone in from day 1 is going to be a logistics nightmare. Bringing it in gradually means it can be better monitored and tweaked accordingly.

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Replying to legerman:
RLI
By lionofludesch
14th Oct 2021 14:47

legerman wrote:

Ben Alligin wrote:

"Making quarterly updates under MTD for Income Tax is not the same as making quarterly tax returns. Software used by businesses to keep digital records will use those records to automatically create a simple summary of business income and expenditure. For most businesses and landlords, MTD for Income Tax will simply mean that they need to keep digital records, submit four light-touch quarterly updates during the year, making any necessary adjustments through their end of period statement, as they would do currently through their annual tax return."

Well they obviously don't understand their own MTD then. From my understanding, the EOPS is simply the 4 quarterly returns added together, with a submit button if you agree. The final declaration is where you make the adjustments.

One of us doesn't.

I don't agree with that. It's possible to throw a few journals and adjustments for stock, prepayments and accruals into your quarterly returns, in which case you'd be right.

I would've seen that as unnecessary work, though. I'd've just been doing that on an annual basis, through the EOPS. Along with correcting all the errors the trader has made during the course of the year during which he's been let loose on accounting software.

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Replying to lionofludesch:
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By legerman
14th Oct 2021 16:11

lionofludesch wrote:

legerman wrote:

Well they obviously don't understand their own MTD then. From my understanding, the EOPS is simply the 4 quarterly returns added together, with a submit button if you agree. The final declaration is where you make the adjustments.

One of us doesn't.

I don't agree with that. It's possible to throw a few journals and adjustments for stock, prepayments and accruals into your quarterly returns, in which case you'd be right.

I would've seen that as unnecessary work, though. I'd've just been doing that on an annual basis, through the EOPS. Along with correcting all the errors the trader has made during the course of the year during which he's been let loose on accounting software.

Have I misunderstood what EOPS does? My understanding, when reading John Hemmings comments on another thread, is that the EOPS is simply a year end statement of the figures from the 4 quarterly submissions, which you either accept, or restate if wrong. Any accrual adjustments etc are made on the final declaration.

I agree that you accruals etc can be included in the quarterly submissions, but like you think it's unnecessary, and, speaking personally, will be done on the final return. I see the quarterly submissions akin to what I see on bookkeeping pl sheet once all the income and expenses have been entered.

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Replying to legerman:
RLI
By lionofludesch
14th Oct 2021 16:45

legerman wrote:

lionofludesch wrote:

legerman wrote:

Well they obviously don't understand their own MTD then. From my understanding, the EOPS is simply the 4 quarterly returns added together, with a submit button if you agree. The final declaration is where you make the adjustments.

One of us doesn't.

I don't agree with that. It's possible to throw a few journals and adjustments for stock, prepayments and accruals into your quarterly returns, in which case you'd be right.

I would've seen that as unnecessary work, though. I'd've just been doing that on an annual basis, through the EOPS. Along with correcting all the errors the trader has made during the course of the year during which he's been let loose on accounting software.

Have I misunderstood what EOPS does? My understanding, when reading John Hemmings comments on another thread, is that the EOPS is simply a year end statement of the figures from the 4 quarterly submissions, which you either accept, or restate if wrong. Any accrual adjustments etc are made on the final declaration.

I agree that you accruals etc can be included in the quarterly submissions, but like you think it's unnecessary, and, speaking personally, will be done on the final return. I see the quarterly submissions akin to what I see on bookkeeping pl sheet once all the income and expenses have been entered.

It could be me who's got it wrong. Who knows ? Because it's not been explained very well, so far as I've seen.

What's the EOPS for then ? Is that where you enter your dividends and interest and suchlike ?

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Replying to lionofludesch:
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By legerman
14th Oct 2021 18:14

lionofludesch wrote:

What's the EOPS for then ? Is that where you enter your dividends and interest and suchlike ?

No, that's the final declaration. EOPS, as far as I can establish, is a statement detailing the full year transactions, based on the individual quarterly submissions. In my mind it will be exactly what a PL statement looks like. If the figures agree, press submit.

If you have done adjustments during the year (eg you may have done accruals quarterly) then the EOPS will reflect that. If you have more than one trade and/or property income, then there will be an EOPS for each one.

The final declaration (again as far as I can establish) is the same as the SA form (obviously it won't be in the same format) we submit now, with the benefit of having certain fields populated. I'm assuming this will be employment and/or pensions, savings interest and the like.

Open to correction on any of the above.

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Replying to legerman:
RLI
By lionofludesch
14th Oct 2021 18:22

legerman wrote:

Open to correction on any of the above.

Ach - it'll probably change next week anyway.

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Replying to legerman:
Tornado
By Tornado
14th Oct 2021 15:00

"Yes, raise the starting turnover point to the VAT level, and slowly reduce over 5 years."

I am 95% certain that there will be a last minute backing-off to save face and the quickest and easiest way to do this would be to raise the starting limit to £85,000. Any other limit would still cause problems and not allow that 'get out of jail free' opportunity.

As to whether this will result in a lowering of the limit over 5 years, I am not so sure, and think it may stay static indefinitely.

None of this, however, changes the ludicrous way in which MTD for ITSA is proposed to operate so those that have been bullied by HMRC to use software technology for record keeping without success, will have already needlessly spent much time and money on a system that they will not be required to use.

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By ireallyshouldknowthisbut
14th Oct 2021 14:45

its a generic "cut'n'paste" reply from Conservative Party HQ crib sheet aimed at fobbing you off.

At best they count the number of similar enquiries to gauge reactions.

They best course of action I find is to respond on their specific points which may force a proper reply and/or response from your MP but only rarely does so.

Very occasionally you can get direct comms with your MP as opposed to the 'fob off' team, but normally needs some tennacity along the lines of " I asked this, got a fobb off, then I asked this and got another fobb off, with no concerns addressed, is anyone there actually want a vote next time?"

it may also help to frame it how the MP's think - it political.. Ie "this is a huge vote loser amongst natural tory voters" is a good 'in'. Ie make it about the MP's majority, not about you. That tends to get their notice.

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