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MTD for VAT and Human Rights

MTD for VAT and Human Rights

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Following the introduction of obligatory online filing of VAT Returns eight years ago, a challenge was made on the basis that mandation breached taxpayers human rights.  This was in spite of  (a) the availability of alternative arrangements via telephone and (b) taxpayers not being forced to purchase software.  It was (and still is) only necessary to log into the HMRC portal and type in nine numbers.

MTD for VAT is considerably more intrusive.  Taxpayers will be obliged to pay hundreds (possibly thousands) of pounds for software and, in the case of those not familiar with accounting software, spend countless hours getting to grips with something completely alien to them.  All this will end up with taxpayers sending precisely the same information as currently (ie: the same nine numbers).

I realise there are exemptions for the elderly and the disabled.  However - what about those not so disadvantaged?  Might their human rights be being breached?  Why should they be obliged to incur significant cost and devote valuable time in order to transmit exactly the same information to the same timescale as they currently do? 

Any lawyers out there?

Replies (35)

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ALISK
By atleastisoundknowledgable...
12th Mar 2018 12:05

Lawyers are probably on legalWeb.co.uk.

Thanks (1)
By SteveHa
12th Mar 2018 12:46

Probably not.

As an aside, I have a meeting with my MP on Saturday so that I can give him a good hiding (metaphorically speaking) for, along with the rest of them, failing to scrutinise the draft legislation before nodding it through.

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Replying to SteveHa:
paddle steamer
By DJKL
13th Mar 2018 10:13

I wrote to my MP instead . Below is a copy of the final letter that went to Ms Brock (Edinburgh North & Leith)

I have started writing to my clients , especially those likely to be first impacted by crossover years, suggesting options:

1. Change to some software and trust it will actually work when needed.

2. Change year end date so will not have an accounts year crossing with the legislation and buy a little more time.

The first of my impacted clients are those with 30 June year ends, I have no April and May ones who are vat registered. They all need to decide what they are doing pretty soon and if new software is to be embraced this will need to be ready to go before 1 July.

___________________________

Dear Ms Brock,

I note that the government's legislation re making vat digital was waived through both Houses and received assent on 28th February 2018, without debate and despite representations requested and made by the professional accountancy and tax bodies which it appears were in the main ignored . I have no idea why you were all so blase about legislation that is going to impact so many of your voters, but that was the call MPs made, so on their heads be the outcome.

www.legislation.gov.uk/uksi/2018/261/contents/made

http://www.legislation.gov.uk/uksi/2018/261/pdfs/uksiem_20180261_en.pdf

Accordingly this legislation is scheduled to now go live for vat quarters starting from 1 April 2019. As vat registered entities will likely not wish to use two different accounting systems re one year's accounts that in effect means any business with a 30 April to 28th February year end will likely need to change software to a compatible providers or adopt using compatible accounting software for the first time before their next accounts year starts, so the first of these is likely 1 May 2018, seven and a half weeks from now. As I believe no compatible commercial software is yet available, in fact I believe HMRC have yet to produce a working system for the software providers to trial their interfaces through, this is going to be a very interesting and frustrating process to observe.

I accordingly now require to write to all my impacted clients, as likely will all accountants, to advise them about the changes in the law our MPs have implemented. There is not a lot we as accountants can yet say to them re how they may comply with the legislation or the likely costs of said compliance,accordingly I am intending to give each client a note of their local MP's contact details (most of my clients are Edinburgh based) so they can contact for advice those they elected who passed such hurried, rushed and ill conceived legislation; no doubt all MPs will have ready answers.

The SNP and yourself cannot claim to be unaware of the legislation, I wrote to you and the other parties last year (as did many accountants) re the folly of the government's digital proposals and will accordingly advise all my clients that all sitting MPs are, by passing the legislation without adequate scrutiny, equally complicit in what will likely be one of the biggest disasters in the history of HMG software development.

Yours sincerely,

Thanks (6)
RLI
By lionofludesch
12th Mar 2018 18:20

Whilst I'm very much against the MTD programme and - particularly - the pace of implementation, even I think you're overstating the issue.

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Replying to lionofludesch:
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By John Stone
13th Mar 2018 08:14

Well - lets see what smallish clients get to make of it when they are finally told exactly what is expected of them. On observing the outcry I anticipate, you might just come to the conclusion that I was not overstating things. Time will tell.

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Replying to John Stone:
RLI
By lionofludesch
13th Mar 2018 08:23

"Thousands of pounds" for software is over the top, John.

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Replying to lionofludesch:
ALISK
By atleastisoundknowledgable...
13th Mar 2018 08:42

lionofludesch wrote:

"Thousands of pounds" for software is over the top, John.

John - send your small clients to me after you tell them that; I’ll include their bkpg & VAT for that quote.

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Replying to lionofludesch:
Tornado
By Tornado
13th Mar 2018 11:40

I have several clients who use bespoke software systems that they have developed over the years which work perfectly well and deal with their respective turnovers into the £millions efficiently and accurately. It will cost these clients many thousands of pounds to either transfer to commercial MTD compliant software (over a period of up to two years) or have their existing systems re-written. The latter is not an option at the moment as no one knows at the what the software will be required to do.

I certainly DO think that moving over to MTD compliant software will cost thousands of businesses, thousands of pounds, probably just to end up with an accounting system that is inferior and inappropriate to that which they currently use.

The Government are woefully ignorant about the consequences of their actions and I predict that revenue flows to the Treasury will be severely hit if they continue on the current course.

Thanks (9)
Replying to Tornado:
RLI
By lionofludesch
13th Mar 2018 11:43

Tornado wrote:

The Government are woefully ignorant about the consequences of their actions ..........

In that, we agree.

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By Tim Vane
13th Mar 2018 08:38

What an utterly pathetic whiny load of liberal snowflake tosh. Let's not insult and trivialise the concept of human rights by using it to make an utterly ridiculous and spurious argument. You sound like a spoilt teenager who suddenly finds themself without a wifi connection.

Bookkeeping is just a cost of doing business. We heard all the same basic rights arguments about SA filing and RTI and VAT online in the past from whingy outraged luddites claiming to represent the poor undertrodden masses. MTD for VAT will be implemented poorly, fixed slowly and inconvenience many. So what? Those with inadequate bookkeeping will not be rounded up, herded into a ghetto and shot. It's not a human rights issue. Get over yourself.

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Replying to Tim Vane:
Tornado
By Tornado
13th Mar 2018 15:05

You seem to be out of touch with modern views.

Just spend a few hours looking at BBC Breakfast or The One Show and it is all about minorities of all kinds and the help and support that they need.

I think it is fair and right to consider the needs of those that are not so able or privileged as us and in the past this has always been the case with changes in taxation procedures.

What we are experiencing now is the arrogance (and ignorance) of those that assume everyone is capable of doing what they can do, which is totally unacceptable. Whilst perhaps not as serious as Human Rights issues, it is wrong to force people to do something that they are incapable of doing.

The solution is simple with MTD .... bring the changes in over a period of time on a voluntary basis and then those that are less capable will be able to seek and receive the help they need.

Mandatory MTD is not quite at Human Rights level but it will still be seriously worrying and perhaps affect the health of those that are good at their chosen businesses but are mentally and/or physically incapable of dealing with the complex issues of MTD.

Sneering at such people is not acceptable these days, and I am no Snowflake.

Thanks (5)
ALISK
By atleastisoundknowledgable...
13th Mar 2018 08:44

The chocolate bars in the vending machines in my building have just gone up 5p. How do I contact the European Court of Human Rights?

Thanks (2)
Replying to atleastisoundknowledgable...:
By SteveHa
13th Mar 2018 09:53

It's the nature of vending machines. Until everyone else catches up (which they will do, eventually, after a bedding in period) you can continue to use the shop around the corner.

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By govig
13th Mar 2018 10:35

Ridicule, whilst no doubt very humorous to some, is not a reasonable debating tactic.

VAT is one matter where I think MTD is entirely reasonable but then consider an 'accidental' landlord with an income just exceeding the future requirement for MTD.

He is not at all computer literate yet has a 50 year unblemished record with UK officialdom until the most suspect new NRCGT reporting regs snared him last year with a penalty of £800 for failure to declare a property gain within 30 days of contract. This was despite SA108 arriving 6 months EARLY showing no tax due anyway.

On appeal, HMRC said the NRCGT requirements were clearly available on gov.uk (itself a simplification of tax legislation) and having no computer was no defence etc etc.

I am usually very sceptical of human rights based arguments but there may be some small degree of a point on some MTD requirements.

HMRC are getting the information adequately and the dues are being properly collected now so does this landlord, well past retirement age, have no rights? Apparently not. Is he really a pathetic whingy luddite? I can tell you, it might be inadvisable to say that in person to this particular client : )

Now taking cover from expected further ridicule....

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Replying to govig:
RLI
By lionofludesch
13th Mar 2018 11:15

The problem with starting with VAT is that, whilst for many, it is simply a case of adding up the output tax on the sales invoices and deducting the input tax on the purchases invoices, for many others, it is not quite so clear cut.

Adjustments which were easily made on the traditional fag packet will not be so straightforward in software.

Moreover, the time limit is tight at five weeks after the quarter end and I suspect that many incorrect returns will be submitted by traders who don't have a clue how to make adjustments for margin schemes, flat rates or partial exemption but who are prepared to submit any old numbers just to meet the deadline - on the grounds that it can always be corrected later.

If they can work out how to correct it.

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Replying to lionofludesch:
Tornado
By Tornado
13th Mar 2018 11:42

No need to worry about any of this, the software will deal with all these problems automatically in the time it takes to have a coffee.

Easy peasy

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Replying to Tornado:
RLI
By lionofludesch
13th Mar 2018 15:23

I'll just take a photo of my coffee with my smartphone.

Thanks (2)
paddle steamer
By DJKL
13th Mar 2018 15:16

MTD re VAT would only have legitimacy if it could reasonably be demonstrated that its implementation would result in more accurate vat reporting and increased revenue (net of costs to the economy) to HMG.
Insofar as I am aware no serious attempt has been made to demonstrate this is the case.

In addition at a time of business uncertainty, (Brexit etc) its planned implementation timetable is perverse. Tell you what, you know all the new rules re imports etc re your stock you will need to make, well can you just learn to input your records into an accounts package whilst you are at it.

If anyone watched "This Week" last Thursday they might have spotted the part of the discussion that covered the drift away by voters from the more mainstream parties of the past to more fringe elements today( the programme more concentrated on soft left) in UK and EU, the ruling "elite" , perceived to be disconnected from those they represent, being the cause of such reaction.

IMHO MTD re vat is in its own small way yet another demonstration of that total disconnect as are some of the clumsy approaches re say employment status which is actually really simple to fix- just create a distinct "contractor" type entity with its own tax rules (see Germany) rather than try to shoehorn "contractors" into existing structures.

What we have here is a "we think this should be implemented because it sounds modern but hang the consequences for those who actually have to deal with it" approach, Nanny knows best, it is good for you etc.

I suspect none (or very few) of those in the Government /HMRC etc pushing for MTD have sat in the evening, after shutting their corner shop at 9.00 p.m, .writing up their books but yet we, the elite, will tell you how we want them to be written.

I would love to set a challenge to them all, here is the software, here is your last set of accounts, here are your records, vouchers etc for the current period, now get them entered, get them squared, if you need your accountant's help that will be £100 per hour, submit that return, see how fast you work at this when you got up at 5.30 this morning and shut up shop at 9.00 p.m. this evening. Remember you need to deal with the appropriate retail scheme, remember you need to deal with the lottery money correctly, get on with it, and of course just because your business is small do remember that as a corner shop it will likely have a fair number of purchase invoices (every one I ever do is awash with paperwork- it breeds like rabbits).

Oh, and if you make mistakes we will punish you.

The trouble with the UK is that our elected representatives, if they have done anything real before becoming an MP, have mainly worked for public bodies or large companies where all these accounts things are dealt with by a niche, trained, department for same, their conception that most of my clients do the work that earns the income and then have to deal with all staff issues, HR, insurance, legal matters, accounts, tax, vat etc is sadly lacking, they are, from the OMB sector, very disconnected.

The answer to all this is really simple, as they will not listen vote the bas****s out of office at the next opportunity.

Thanks (3)
Replying to DJKL:
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By Wiganer Elaine
16th Mar 2018 11:40

"Vote the bas****s out"

Unfortunately there are NO politicians of ANY party that actually give a damn about small businesses that are simply making a half decent living.

So, who to vote for???????

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Replying to Wiganer Elaine:
paddle steamer
By DJKL
16th Mar 2018 12:27

What we need is something like "The Amazing Mrs Pritchard"

If I decide to pack up bean counting I might resurrect my behind the scenes political career (My Malcolm Tucker days) from university in the early 1980s, when some of us tried to get a friend elected as Honorary Treasurer of the EUSA. He was a sound candidate, personable, handsome etc, in with a real good shout.

We were doing great, we even stitched a deal with the Conservatives to get their votes, "Student" seemed to be giving our candidate some backing, we had flyers up round George Square, my clapped out Escort ferrying us around garnering support,and then the fateful Pollock hustings where our candidate turned up so [***]*d he fell off the stage; we lost (albeit not by very much- an honourable close second)

Frankly these days I would be more inclined not less inclined to cast my vote for a heavy drinker, heavy drinking politicians seem to do less damage.

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By Briar
14th Mar 2018 14:56

I have been in discussion with HMRC's MTD team recently as a result of my (very) poor broadband speed and no mobile signal.

Here is a copy of the latest reply:
"Thank you for your further email.

I can certainly appreciate the issues you raise. Whilst we do have lines to take in regards to Internet access, we do know, and accept, that some areas will not be serviced by high speed broadband at the moment. It may change in the future, but that remains to be seen.

The message that 95% of premises have super-fast broadband is a positive one, but not if you are in the 5% that don’t! I have relatives and friends in remote parts of Scotland who are in the exact same position. For them, and you and your clients, it is not a case of being unwilling to engage with MTD but being unable due to lack of suitable infrastructure, which is mostly out of your hands.

There are known exceptions to MTD and, by what you say about internet access in your area, you would most likely come in to that category and we would confirm ongoing arrangements with you nearer the time.

I hope this is helpful."

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Replying to Briar:
By Tim Vane
16th Mar 2018 10:38

You just made a laughable nonsense out of your own argument: there are more bytes of data in that post than in a digital VAT return submission.

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Replying to Tim Vane:
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By Briar
17th Mar 2018 16:52

But I wasn’t in my office when I replied! Instead, I was at my son’s where the broadband is fast

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By KIKISROSSIDES
16th Mar 2018 10:40

The solution surely has to be to make the whole damn MTD voluntary at the beginning and as it happened with the filing of SA returns slowly but surely most taxpayers may follow!

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By KIKISROSSIDES
16th Mar 2018 10:40

The solution surely has to be to make the whole damn MTD voluntary at the beginning and as it happened with the filing of SA returns slowly but surely most taxpayers may follow!

Thanks (0)
avatar
By KIKISROSSIDES
16th Mar 2018 10:40

The solution surely has to be to make the whole damn MTD voluntary at the beginning and as it happened with the filing of SA returns slowly but surely most taxpayers may follow!

Thanks (0)
Replying to KIKISROSSIDES:
RLI
By lionofludesch
16th Mar 2018 10:48

KIKISROSSIDES wrote:

The solution surely has to be to make the whole damn MTD voluntary at the beginning and as it happened with the filing of SA returns slowly but surely most taxpayers may follow!

Self Assessment was very different. Initially, we all filed on paper on a new return. Those of us who switched to on-line at the outset filed on HMRC software. It was only later when we moved to commercial software - and a key point was that, at that stage, we always had the familiar HMRC software to fall back on, as a safety net.

MTD is different. You're expected to choose software. If you make a bad choice, it's your fault for choosing that software - though, to some extent, the Cooke case has watered down that threat.

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Replying to lionofludesch:
paddle steamer
By DJKL
16th Mar 2018 15:31

SA was also very different as HMRC:

1. Issued really good guidance books covering the new approach and new basis of assessment.

2. Ran some really good courses.

3. Seemed to have local Technical Inspectors in place who we could phone if we got stuck working out what to do- we had their direct numbers.

SA was far more run in a spirit of engagement between the profession and HMRC. (Or maybe , given I was only in my thirties, I was more able to cope with such changes back then)

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Replying to DJKL:
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By johnjenkins
19th Mar 2018 08:56

I was involved right at the start of SA. The concept of everything in one return was right that's why it worked (well there are still a few problems). I was against the dates (still am). I thought 31st March and 30th September far better.
This MTD pile of crap serves no purpose whatsoever - in the guise of "it will reduce errors and bridge the "tax gap".

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Replying to johnjenkins:
RLI
By lionofludesch
19th Mar 2018 09:50

I was happy to move away from 1st Jan. Having a payment date on a day when there was never going to be any banking after 1973 (even earlier in Scotland) was just daft.

I don't mind 31st Jan/31st July. What I do mind is having the same payment date for two different years. Clients just can't get their heads round it - even those who've been paying tax in this way for 20 years.

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Julian Cohen
By bigugly
16th Mar 2018 11:32

"vote the bas****s out of office at the next opportunity"

The trouble with MTD is that it is not being introduced by government, but by a government agency (HMRC) which is unaccountable to the public.

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Replying to bigugly:
RLI
By lionofludesch
16th Mar 2018 11:41

bigugly wrote:

"vote the bas****s out of office at the next opportunity"

The trouble with MTD is that it is not being introduced by government, but by a government agency (HMRC) which is unaccountable to the public.

.........and tell MPs a lot of lies.

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By johnjenkins
16th Mar 2018 13:28

Right so what we really need is a religion that bans use of computers and/or internet. I've looked at a lot of religions out there and the extreme jewish one comes near as does one in New Zealand. We could call it Managing To Defy.
Typical isn't it. You could be a bright business person earning mega bucks but because of your religion you can get away with non compliance. You could be a total dunce as far as technology is concernerd yet you still have to comply. Is it little wonder the elctorate is fed up?

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Replying to johnjenkins:
paddle steamer
By DJKL
16th Mar 2018 15:34

Some of the Brethren used to have such a prohibition (firm I was with in the 90s had a few as clients) but I think they have relaxed the rules-then again maybe there is an extreme sect out there.

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Replying to DJKL:
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By johnjenkins
19th Mar 2018 08:49

Or maybe we could create one?

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