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MTD: called me old fashioned

What are your thoughts in this....

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I run a small business and don't usually get too involved in basic work. Today I completed an analysed cash book and balanced a bank. I forgot how fast I was at doing this and cause I know my stuff I was accurate. I would say maybe quicker and more accurate than if I had used Sage or Xero. I also was able to check my business as I went a long as it made me think of what I had spent and the manual process of looking at the documents made me think about lots of things. I felt much more achievment than if I had compute number crunched. I think it might be because I am older. I then thought of the tax bills , I extracted a few figures an in 5 minutes I extracted a Profit & Loss, worked a CT liabilty and felt very acheived. The point I wanted to ask that if these procedure and method suit me why should a Government force me to mess all my figues up with meaningless computer garbage ? All is this the reason for the Exemption process ? Your thoughts.

Replies (26)

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By David Ex
08th Jan 2022 13:13

Because HMRC and the Treasury are clueless about how businesses - especially small ones - operate. They've created MTD which has no known benefits - apart from creating business for software providers.

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Replying to David Ex:
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By RFL H
10th Jan 2022 09:40

+1 and the HMRC bod in charge confirmed HMRC were "close" to the software providers.

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By Paul Crowley
08th Jan 2022 13:30

Nobody involved in HMRC or politics has ever got involved at that level and do not believe such methods can actually be done correctly
And if it can be done, people will cheat is their thought process

It has not occurred to them that people using computers are more likely to cheat

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Replying to Paul Crowley:
RLI
By lionofludesch
08th Jan 2022 17:36

Paul Crowley wrote:

It has not occurred to them that people using computers are more likely to cheat

And not necessarily deliberately.

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Replying to lionofludesch:
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By Paul Crowley
08th Jan 2022 19:39

+1
Analyse Amazon just once as tools and all wife's cookbooks become "tools". That is how clever computer software is.
HMRC really ought to be trusting Humans, not AI

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Replying to Paul Crowley:
ALISK
By atleastisoundknowledgable...
09th Jan 2022 11:26

Paul Crowley wrote:

Analyse Amazon just once as tools and all wife's cookbooks become "tools". That is how clever computer software is.

At least your more likely to let more through the books though. Accidentally of course. ;)

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By I'msorryIhaven'taclue
08th Jan 2022 22:40

Not too many years ago (20 or more, perhaps) we'd attach (to a company tax return, and its accompaniments) a letter (to HMRC) letting the Inspector know the extent of our involvement: "We have verified the cash book, and vouched both the sales and purchase ledger entries for the year." That sort of thing; I'm sure you get the idea.

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By D V Fields
09th Jan 2022 09:34

Not old fashioned - just sensible. You’re using your system to produce meaningful accounts that help you make informed decisions. You do it not because there is a legal requirement but because it would be foolish not to!
Digitalisation isn’t necessarily bad; it is just that most of the ‘online’ offerings thus far are no better and sometimes worse than manual systems and are geared towards “compliance” rather than “understanding”. Choose wisely.
Dave

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By tom123
09th Jan 2022 12:21

I am 50 years old, and have never done any accountancy or payroll work in any other form than with software.

My worst nightmare would be some kind of cathedral book with illegible biro entries in them.

However, compulsion towards computers feels wrong (a bit)

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Replying to tom123:
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By Hugo Fair
09th Jan 2022 13:00

Agree with your conclusion (although my history does go far back enough to not be able to tick your first sentence)!

But MTD is more than mere compulsion "towards computers" ... it determines (or at least will when they finally publish any specification) how/when/why you record what - ahead of actually submitting any output. And it is this that feels like a step too far in a 'free society', as well as running counter to the concept that a business should be able to determine it's own procedures driven predominantly by its own needs.

If you take Payroll as an example. No-one complains too vociferously about the need to make RTI returns - or the consequence that the file formats are defined and require software to submit them. Well, some people do - but not too many or too loudly. But the clamour would be deafening if HMRC set in stone how you are allowed to recruit staff .. and the methodology & format in which you recorded all pre-employment checks .. and the digital record chain for leave requests (and their refusal/acceptance or subsequent adjustment) ... and [you can see where I'm going].

So ... being forced to use software for MTD can be a pain (as well as an unfair cost on those with near marginal earnings), BUT it's the being told *how* to run your business that feels a bit more than 'wrong'.
Not only do many of the requirements not add to the efficiency of operating the business, but often will do the opposite (because the specified method doesn't deliver what the business needs and therefore both methods have to be used)!

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Replying to Hugo Fair:
RLI
By lionofludesch
09th Jan 2022 13:17

Hugo Fair wrote:

Agree with your conclusion (although my history does go far back enough to not be able to tick your first sentence)!

But MTD is more than mere compulsion "towards computers" ... it determines (or at least will when they finally publish any specification) how/when/why you record what - ahead of actually submitting any output. And it is this that feels like a step too far in a 'free society', as well as running counter to the concept that a business should be able to determine it's own procedures driven predominantly by its own needs.

If you take Payroll as an example. No-one complains too vociferously about the need to make RTI returns - or the consequence that the file formats are defined and require software to submit them. Well, some people do - but not too many or too loudly. But the clamour would be deafening if HMRC set in stone how you are allowed to recruit staff .. and the methodology & format in which you recorded all pre-employment checks .. and the digital record chain for leave requests (and their refusal/acceptance or subsequent adjustment) ... and [you can see where I'm going].

So ... being forced to use software for MTD can be a pain (as well as an unfair cost on those with near marginal earnings), BUT it's the being told *how* to run your business that feels a bit more than 'wrong'.
Not only do many of the requirements not add to the efficiency of operating the business, but often will do the opposite (because the specified method doesn't deliver what the business needs and therefore both methods have to be used)!

Most people were using payroll software anyway. The concerns about RTI were on the potential penalties and cost for the microbusiness. Both have largely not come to pass. Education might have been an issue but the use of payroll bureaux was already widespread.

MTD is different. A much smaller proportion of businesses are not yet using software. Accountancy practices will become involved in either extra work or extra educational work. There'll be a lot of this. It's not clear what the source of that extra capacity will be. Moreover, there'll be significant bunching of work and certain times of the year which the Government have exacerbated by insisting on returns for four specific dates, instead of allowing twelve smaller peaks. It's very clear from the infamous Parliamentary meeting that HMRC haven't thought this through at all and that is likely to be the reason for the plan's failure - unless significant relaxations are made.

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Replying to lionofludesch:
Tornado
By Tornado
09th Jan 2022 16:15

I have just prepared some Rental Accounts for a person who has gross rental income of about £83,000 and has been receiving rent payments of up to 6 months in advance during the year to 5th April 2021. MTD would effectively require quarterly submissions based on monies received and paid whereas the proper way to prepare Rental Accounts for Taxation and myriad other purpose is to use the Income/Expenditure Accruals/Prepayments method, particularly when assessing income for borrowing purposes. This equally applies to any Trading or other business activities.

Perhaps the biggest LIE told about MTD was that it will help people to know what their tax liability will be as they go along. For the reasons I have given above and for so many other obvious reasons, MTD will never be able to fulfil this aim but instead it will churn out misleading figures on a daily basis that no one will look at or be interested in, least of all HMRC.

There is only one true measure for calculating individual tax liabilities and that is the current Self Assessment Tax Return.

MTD for ITSA achieves nothing better and is surely destined for the bin.

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Replying to Hugo Fair:
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By JacquiMBurns
03rd Feb 2022 13:31

Surely MTD is merely a step along the way for HMRC to cross check that a VAT reclaim on an invoice in one company can be checked against the VAT payment on the invoice from the supplier so that they are not paying out until they have got it in! Eventually they will be insisting that VAT registration numbers of suppliers & customers are entered on the software. I already enter supplier numbers as I set them up in anticipation as the workload to do this on command will be horrendous or am I being cynical? But, when we had a massive invoice from a supplier which we reclaimed but 'unfortunately' the supplier had not yet put through the invoice more than 6 months after it was dated. Oops!

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Replying to JacquiMBurns:
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By Hugo Fair
03rd Feb 2022 21:29

Cynical, yes ... but also showing way more creative/logical thinking than anything emanating from HMRC - or at least way in advance of their technical prowess. This is the organisation that can't get it's own systems to talk to each other, after all!

And if they ever get to the point where your thought is a practical option, they'll be up against 1) legislation and 2) righteous anger from most VAT registered businesses.
If you think it's bad being an unpaid tax collector, just imagine finding your cashflow impacted by something wholly outside your control (the quarter in which your customers & suppliers happen to account for VAT)!

Thanks (1)
Replying to tom123:
paddle steamer
By DJKL
10th Jan 2022 15:26

So, a Scottish Cashbook is out of the question? (Don't worry, by the 1980s few I came across were keeping them correctly anyway)

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By bernard michael
10th Jan 2022 10:16

When considering the efficacy (or not) of MTD it shouldn't be forgotten what the next step will be ie quarterly tax payments based on the MTD figures
That is what this nonsense is all about

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Replying to bernard michael:
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By justsotax
10th Jan 2022 11:26

and always has been....I suspect many in this community reached that very conclusion some years ago (if not immediately after the original announcement).

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By David Ex
10th Jan 2022 10:41

An interesting article in the Times today by the head of the National Audit Office.

In summary: ‘Ministers and officials are spending billions of pounds on projects that are never properly evaluated ….

… too often the government has not learnt from its failures and has “little information” on “what difference is made by the billions of pounds being spent”.’

So MTD is just another example. In this case, of course, much of the expenditure will fall on taxpayers and advisers.

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Replying to David Ex:
Tornado
By Tornado
10th Jan 2022 10:57

As far as I can see, HMRC have had 2,000 million pounds at least to spend on MTD and what have we got so far?

MTD for VAT has essentially just resulted in a different way to submit nine data boxes to HMRC and then we have ....................... well what do we have for all those millions of pounds.

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Replying to Tornado:
RLI
By lionofludesch
10th Jan 2022 11:12

Tornado wrote:

As far as I can see, HMRC have had 2,000 million pounds at least to spend on MTD and what have we got so far?

[chuckle]

If they're going to rely on taxpayers training themselves to use software which is far too complicated, it'll never work as they intended.

True - there'll be a level of business size where software is genuinely of use and business owners would voluntarily have used it at some point or other but HMRC are asking for that far too down the scale.

I had clients who started in business 25 years ago; they set up Sage but only for the sales at first until they got used to it. It did a great job tracking who owed them money. But the purchases and expenses side of the business always looked a bit too complicated. Sales are (pretty much) always sales but payments can be lots of things. Two years ago, they retired and ceased trading. The payments side of the business was still recorded in a red Collins analysis book.

You can't make people know stuff.

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Replying to Tornado:
By kenny achampong
10th Jan 2022 16:21

Does anybody actually know what that the budgeted costs of MTD are meant to be, and how much of that is going to be paid to 'contractors' ? It does seem to look like becoming one of those very expensive government projects that is very, very profitable for the 'lucky' few. Since it serves no useful purpose, there must be some other reason they are persisting with it. I wonder how many pub landlords are sharing the promised 'plentiful rewards' on offer.

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Replying to kenny achampong:
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By lionofludesch
10th Jan 2022 16:36

kenny achampong wrote:

Does anybody actually know what that the budgeted costs of MTD are meant to be?

Probably about 30% of costs to date.

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Replying to lionofludesch:
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By Hugo Fair
10th Jan 2022 16:52

Do you think there's a typo in the junior Civil Servant induction guide?
Maybe it says "Budget = minimum expenditure" (instead of maximum).
There's no doubt that some are on a 'performance bonus' - however obliquely.

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By Catherine Newman
10th Jan 2022 13:54

People don't know how to treat loans in software. Loan repayments are shown as expenses. This introduces errors. Clients get their loan interest statements once a year. I put the repayments in initially and when they get their statements show the correct breakdown.

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Replying to Catherine Newman:
RLI
By lionofludesch
10th Jan 2022 15:05

Catherine Newman wrote:

People don't know how to treat loans in software. Loan repayments are shown as expenses. This introduces errors.

No, that can't be right. Errors are not possible with software. It's Official Government Policy.

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Replying to lionofludesch:
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By Hugo Fair
10th Jan 2022 15:49

I'm not sure about that ... I thought the mantra was "Errors are not possible with *our* software" - so the fault must lie in 3rd-party software.
Except that the software vendors (who've learned it's pointless to declare faults within HMRC software) therefore blame any problem on 'user errors'.
So the taxpayer (not privy to any of those nuances), whilst knowing it to not be her/his fault, passes the frustration further down the chain ... and kicks the dog.
And the dog who was blissfully asleep (in the middle of a dream about catching cats) wakes up and bites the nearing potential donor of the kick.
Why is why the taxpayer is now being sued by the postman ... and still hasn't sorted the tax return to HMRC's satisfaction!

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