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MTD for income tax and landlords

Can anyone summarise in simple terms what will have to be done for MTD please?

Didn't find your answer?

Ok, so MTD for corp tax is a few years off but for sole traders, partners & landlords and I assume Director's income MTD is just round the corner.  

For sole traders I assume client will submit through software either accurate (adjusted for cut-off) or "as it comes" figures. Is the latter allowed? With YE ajustments made for the final submission?

What happens with landlords and there income? is this to be entered per propery or addregated?  

We all know it will fail big time but any feedback would be helpful.  I am just trying to think of how it will apply to every situation as some situations are more complex than others, I am sorry it the subject has been covered elsewhere. It is quite a worry.

 

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By David Ex
01st Jul 2021 16:50
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Replying to David Ex:
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By steve 12321
01st Jul 2021 16:51

Is this all they have so far? I saw this earlier. I see they have a section on penalties.

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Replying to steve 12321:
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By David Ex
01st Jul 2021 17:07

steve 12321 wrote:

Is this all they have so far?

Well if there is more and they aren’t publishing/linking to it on their MTD site then they really are having a laugh

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By johnhemming
01st Jul 2021 16:56

As far as Landlords are concerned there are aggregate figures on a quarterly basis submitted for Furnished Holiday lettings and other property separately for the UK and other grouped jurisdictions.

Digital links are required to individual transactions, but data is not submitted by property (although it is submitted by category of transaction and type of property FHL/nFHL by Jurisdiction category)

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By steve 12321
01st Jul 2021 17:11

this is going to be very difficult to comply with - there is no way it can work.

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Replying to steve 12321:
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By frankfx
01st Jul 2021 17:26

steve 12321 wrote:

this is going to be very difficult to comply with - there is no way it can work.

The First Lord of the Treasury will soon become involved.

An oven ready turkey is winging it's way from Northern Ireland , following protocols.

The covid 19 jab has been a success.

Why not MTD income tax for the great British public?

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Replying to frankfx:
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By steve 12321
01st Jul 2021 17:35

I am planning my exit before too much longer - I know clients need to be looked after, but I don't think I can do that and they need to be ready. It's a real worry. I hope I can be ready to support myself financially. What a mess. Who are these idiots who spout this ideology/ unworkable nonsense? Just ask for more money sooner and leave it be. I am so surprised there is not a big uproar about this. It is just not needed

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By bluebaron
02nd Jul 2021 09:06

That's just how I feel. I'm looking to just concentrate on limited companies in a couple of years time. I certainly don't want all this MTD hassle with my sole trader clients.

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Replying to steve 12321:
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By Richard Cliff
02nd Jul 2021 10:19

steve 12321 wrote:

Just ask for more money sooner and leave it be.

My views completely. It is all about cash flow, so why not have everybody paying their tax up front monthly.
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Replying to Richard Cliff:
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By steve 12321
02nd Jul 2021 10:36

"They" are not too bright and think they know best!

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Replying to steve 12321:
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By the_fishmonger
02nd Jul 2021 11:09

steve 12321 wrote:

...Who are these idiots who spout this ideology/ unworkable nonsense?...

We live in a world run by the illiterati.

They have been taught models that only work in a perfect world without human imperfection and, due to our UK education pushing them to pass exams at all costs and a lack of real world experience, they are unable to think around an issue when those irrational mannerisms come up.

That, in part, was why our response to covid was not as sharp as UK plc of yesteryear.

Criminals succeed exactly because many of them have grown up with a lesser formal education (through twagging, etc) and learnt to duck, dive and be devious in the process. Some make it across into legit business and adapt those principles learned

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Replying to the_fishmonger:
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By moneymanager
05th Jul 2021 15:55

"They have been taught models that only work in a perfect world without human imperfection"

The Practice and Theory of Bolshevism
by Bertrand Russell

"The Practice and Theory of Bolshevism, first published in 1920, is Bertrand Russell's critique of the Communist system he witnessed in the Soviet Union.

Russell, a proponent of Communist ideals, believed that the future happiness of humanity depended upon restructuring the way production and business was run. The Bolsheviks, however, pursued their goals with an iron fist rather than with a free and idealistic hope that nurtured the individual. Russell was also staunchly opposed to the way that Bolshevism saw itself as a religion, with practices and beliefs that could brook no doubt. This, he determined, was no better than the Catholic Church, which he opposed."

I have been calling the present global situation that for at least the last eighteen/twentyfour months. Just today some popular press headlines report university lectures being urged to issue "trigger warnings" for such as hetrosexuality and pregnancy; "A squat grey building of only thirty four stories" and Huxley's dystopian world of recreational sex, glass bottled births and "lies are truth" of not a brave new world but one of absolute resignation and cowardice.

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Replying to steve 12321:
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By Homeworker
05th Jul 2021 10:00

Me too. As a small business ourselves there is no way we can cope with chasing and preparing quarterly returns for landlords as well as businesses, while simultaneously having to prepare the accounts and returns for the previous tax year. Since the vast majority of landlords will have no experience at all of using software, other than exel, I reckon 90% of them will continue to send information in the same format as they have done for years and just expect us to convert it to MTD format. How on earth is that supposed to make the figures more accurate?
I am already in the process of passing clients on to someone else, so that he has time to prepare for this. I am retiring!

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Replying to Homeworker:
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By steve 12321
05th Jul 2021 10:37

It is such a shame the profession will lose people with good experience because this pointless move to MTD.

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By bluebaron
05th Jul 2021 13:41

Yes, exactly. The media go on about a shortage of NHS workers, but there will soon be a shortage of accountants, just when we are needed all the more..!

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Replying to steve 12321:
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By the_fishmonger
05th Jul 2021 13:52

We're just the latest profession/industry to see the mass loss of experience. The pattern is followed time and again - some clueless wit decides that the way we've learnt stuff [giving blood, tears & sweat] since the sector began is not good enough. They want to change it "because"*.

All the people near enough early retirement jump to avoid an early grave trying to deal with the new order.

There's no way to stop it all now and I'm not near enough to jump (except off a cliff¬!). BMI too high to be a train driver on £60k basic as well, as I suspect many accountants would be.

* most likely because they don't/can't understand the why

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RLI
By lionofludesch
01st Jul 2021 17:44

All you need to do is apply for exemption on the grounds that this is unworkable in the taxpayer's circumstances.

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Replying to lionofludesch:
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By steve 12321
01st Jul 2021 17:35

if only....

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Replying to steve 12321:
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By lionofludesch
01st Jul 2021 17:46

Well, one fella on this forum (not me) has claimed spectacular success with that plan of action.

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Replying to lionofludesch:
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By steve 12321
01st Jul 2021 17:53

hoping for success?

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By lionofludesch
01st Jul 2021 18:03

Me ?

No. I have no clients. I bailed out and left it all to you fellas.

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By ireallyshouldknowthisbut
01st Jul 2021 18:10

We have a lot of landlords

My only solution is to build a massive spreadsheet during the year, populate it with quarterly numbers (rents dont change that much) and spam that into whatever systems we can use easily.
Then in the period 5 we junk the trash numbers and do it properly and update the numbers for the following period.

I cant see any other rational way of doing it. trying to get data every quarter for my clients in the window of 1st July to 30th July is just not feasible with 'real' data, most of that wont hit until what, 2nd or 3rd week of the month at best. it seems a fools errand to try given the data is not going to be used for anything, so why bother!

More widely you will need separate submissions for each group of ownership.
So if you have a landlord with a property with his Mrs at 25%, one on his own, one on her own and the one she has with her brother from her parent's estate, that's 2 for him, 3 for her, so 5 returns * 4 times a year = 20 pointless submissions.

Even funnier this is to the 5th of the month. Because all cloud software runs to the 5th of course. Of course it does.

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Replying to ireallyshouldknowthisbut:
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By steve 12321
01st Jul 2021 18:51

exactly - unworkable!

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Replying to ireallyshouldknowthisbut:
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By Richard Cliff
02nd Jul 2021 10:26

[quote=ireallyshouldknowthisbut]

We have a lot of landlords

My only solution is to build a massive spreadsheet during the year, populate it with quarterly numbers (rents dont change that much) and spam that into whatever systems we can use easily.
Then in the period 5 we junk the trash numbers and do it properly and update the numbers for the following period.

I cant see any other rational way of doing it.

This will be the way it is dealt with by all small practices. These businesses cannot afford their bills to be quadrupled by their accountants and we accountants don't want to be working 24/7 has the HMRC's tax collectors.

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Replying to Richard Cliff:
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By Cathy Milligan
05th Jul 2021 10:24

Exactly.
Otherwise we OMBs will not be able to comply (or do I mean cope?)
Where are we supposed to magic the extra time from?
I work a full 5 days a week as it is - often more if necessary some quarters.
Clients who are actually "interested" in their own bookkeeping etc may be open to the changes but so many do not give a hoot, not interested and just see the annual stuff as a necessary evil.
I am considering - previous year numbers divided by 4 for the first 4 submissions followed by the actual job for the 5th - is this so wrong?

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By Laurence52
01st Jul 2021 18:12

M and X are in a business partnership.
M and his wife S let 3 residential properties jointly.
S is also self-employed (no connection with M and X's business).
M lets another residential property with his sister and his parents - 1/4 share each.
M's parents let a number of residential properties as well.

That's a factual scenario, I haven't made it up. 3 firms of accountants deal with the tax returns at present.

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Replying to Laurence52:
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By steve 12321
01st Jul 2021 18:52

just one situation to show how stupid this all is

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By lionofludesch
01st Jul 2021 18:38

When I started in this game, nearly every farmer had a 5th April year end, which was presumably a hangover from the withdrawal of farming from taxation under Schedule B. I'm not sure when that happened but, by the time I started, Schedule B was applicable only to woodlands. It was definitely Schedule B in the 1930s.

It's not germane to the thread. I just mention it in passing as a point of historical interest.

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Replying to lionofludesch:
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By steve 12321
01st Jul 2021 18:53

I am not feeling any better but I get your point - things change

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
02nd Jul 2021 10:47

A legacy so far as property rental income is concerned are those clients whose accounts are still prepared on a rent receivable basis, rather than using the 2017-18 and onward default cash basis.

Just a further variable for MTD. Have others switched (or plan to switch) such (sub £150k) landlord clients to a cash basis?

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Replying to I'msorryIhaven'taclue:
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By lionofludesch
02nd Jul 2021 15:38

I'msorryIhaven'taclue wrote:

A legacy so far as property rental income is concerned are those clients whose accounts are still prepared on a rent receivable basis, rather than using the 2017-18 and onward default cash basis.

Just a further variable for MTD. Have others switched (or plan to switch) such (sub £150k) landlord clients to a cash basis?

As cash basis is the default, I suspect a good number have already done so.

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By mbee1
02nd Jul 2021 08:24

The answer is the success of the vaccine rollout. That's the answer to everything according to PMQ's this last Wednesday.

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By I'msorryIhaven'taclue
02nd Jul 2021 10:51

Don't forget speed!

Matty Stopcock was only in the room 10 seconds before getting his hands on Mrs Coladangelo's derriere.

And that's about the right speed to move in a pandemic!

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By bernard michael
02nd Jul 2021 09:41

Client provides rubbish,we submit rubbish HMRC gather rubbish.

The year end return will not be checked to the quarterly returns

This is really all about ultimately collecting Income Tax quarterly,which will be based on the quarterly returns (my guess is staring 2026)

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By LAC47
05th Jul 2021 10:16

As soon as we can apply for 'digital exclusion' as a reason for exemption for MTD ITSA the better. All of my clients with property income are in their 70's and haven't a clue as to how to operate any type of software...most don't even have a smartphone. Digital Exclusion is the only salvation we have left...

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Replying to LAC47:
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By I'msorryIhaven'taclue
05th Jul 2021 11:12

Not to worry, all us old wrinklies will start dropping like flies the minute Boris does away with face-masks. The ultimate form of salvation!

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Replying to LAC47:
paddle steamer
By DJKL
05th Jul 2021 15:38

And then we have those like my mother in law, a couple of years the wrong side of 90, who mastered her new tablet and Zoom in order that she could keep in touch with my wife/kids etc during Covid; it is amazing what people can master when they have no choice.

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By bernard michael
05th Jul 2021 10:31

Does rank stupidity count towards MTD exemption ?? I've several clients who would qualify if it does

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By bernard michael
05th Jul 2021 10:37

I've raised this before but if accountants can't cope with the extra work caused by MTD and consequently disengage a quantity of clients who will pick up the slack and act for them ??

Do I hear a cry of MDTP ?? That won't work - there aren't enough of them either

Up goes the Black Economy

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Replying to bernard michael:
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By steve 12321
05th Jul 2021 10:43

I don't know what will happen in practice but it certainly does not seem positive. Maybe there are firms who will fill the gap, but I cannot see how without a massive cost increase.

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Replying to steve 12321:
paddle steamer
By DJKL
05th Jul 2021 16:02

If I was a letting agent/ manager and twenty years younger I might see MTD as an opportunity to expand my service offering, given rents received/costs are already captured via my client account/ client accounting it would not be beyond the wit of man to persuade one's software provider to create an agent's submission interface and offer a tax submission service add on to augment the commissions on rents received and letting fees already earned.

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By DMBAcc
05th Jul 2021 14:47

I have just read the VAT MTD rules for exemption and one of the latter paragraphs talks about being currently supported by a third party who then ceases to support them i.e. an accountant like me. I was wondering if each client claims exemption in not being able to use accounting software then perhaps they could submit their own tax return with my help if and when needed on the current system? Can anyone see flaws in this stance?

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Replying to DMBAcc:
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By bernard michael
05th Jul 2021 14:57

DMBAcc wrote:

I have just read the VAT MTD rules for exemption and one of the latter paragraphs talks about being currently supported by a third party who then ceases to support them i.e. an accountant like me. I was wondering if each client claims exemption in not being able to use accounting software then perhaps they could submit their own tax return with my help if and when needed on the current system? Can anyone see flaws in this stance?


Yes the client understanding it
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Replying to DMBAcc:
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By Hugo Fair
05th Jul 2021 14:59

What, other than "with my help if and when needed" not being consistent with the claimed justification for exemption that "a third party (has) ceased to support them i.e. an accountant like me"?

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By steve 12321
05th Jul 2021 15:08

Who remembers "tax doesn't have to be complicated!" by HMRC!!! I wish they could bring that back and go by what it says! What is OTS all about? I wonder if they have a view on MTD?

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Replying to steve 12321:
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By lionofludesch
05th Jul 2021 15:15

steve 12321 wrote:

Who remembers "tax doesn't have to be complicated!" by HMRC!!!

Not me.

I remember 'tax doesn't have to be taxing' though. Fella called Hector kept saying it.

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Replying to lionofludesch:
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By steve 12321
05th Jul 2021 16:39

opps !

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Replying to lionofludesch:
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By steve 12321
06th Jul 2021 12:21

I wonder how much that stupid advertising nonsense cost the tax payers. No where near the cost of the MTD ITSA farce.

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By North East Accountant
05th Jul 2021 17:06

The answer to your question is no-one outside HMRC has a clue, and probably HMRC don't yet either.

Joint Properties - no idea.

Also, just think for a minute about every single HMRC return. If there is an error you amend the original return (VAT if small I know).

Back in the 2016 consultation it was file 4 returns and if there is an error on any of them, then you'd be amending the original transaction therefore you file an amended return for that period.

Now one day HMRC will want every transaction so the year end adjustment return is for stock, depreciation etc not correcting an error in the original return.

This will need amending on the return that had the error.......now imagine the number of returns.

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