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MTD for VAT - HMRC more determined

Attitude seems to have become more aggressive

Listened to the latest HMRC MTD for VAT webinar yesterday.

I asked what would happen if client refuses to follow the rules and carries on filing using the old portal. I have listened to the previous ones and similar questions have been asked and the answer generally has been, there will be help and support etc, soft approach to penalties etc. Basically a caring and cuddly answer. Yesterday the answer if a client has tried to do something (whatever that means) then yes there will a soft approach but if they have done nothing then there is no excuse. Of course this was a verbal answer rather than a much easier written answer on the screen. (Did they say "ignorance of the law is no excuse", is my memory playing tricks on me, any other listeners remember this point).

During the presentation, the speaker explained the various exemptions include the old, disabled, remote case. They commented that the HMRC are not expecting many to be exempted because of this and if they are already submitting using the old portal they cope with MTD for VAT! I certainly have a clear case that completely contradicts that statement. The HMRC said more information on the exemption is being released very soon ....

The attitude seems to be now that as the HMRC is ready, everybody is expected to be ready.

 

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23rd Jan 2019 19:09

Yawn.

Anybody have a different topic?

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23rd Jan 2019 20:00

pathetic

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23rd Jan 2019 20:21

I will file this titbit from HMRC in the same directory as "our deal to leave the EU will be the easiest negotiation in history" from the Brexit TV debates.

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to mr. mischief
23rd Jan 2019 21:42

In Theresa May's defense, she was told all she had to do was install an app on her phone, scan the Withdrawal Agreement, and then it would be instantly accepted by the House.

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By Tornado
to lincolnartist
24th Jan 2019 07:54

The mistake here was that she requires bridging software as well and this Brexit app is still in the pilot stage.

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to lincolnartist
24th Jan 2019 09:12

She should have got John the Plumber to help her.

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By SXGuy
to lincolnartist
24th Jan 2019 17:53

Sadly she had an iPhone and was unable to use nfc technology so has been told to leave the country through failure to aquire settlement status.

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By Tornado
24th Jan 2019 07:56

What HMRC want is entirely different to what HMRC will get.

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24th Jan 2019 09:11

I tend to find people get shriller and crosser just around the time they realise what they said would happen as a result of a change, is not the result of the change, but they are pressing on regardless with that change, as the change has been decided and cannot be undecided.

The shrillness will increase if it can be undecided once is is demonstrated that the fact on which the original decision was made, have been demonstrated to have been incorrect.

The firmest denials of u-turn are right before it happens.

Now if only if i could think of a contemporary parallel.....

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24th Jan 2019 09:13

@David, HMRC have virtually no powers of sanction even if business do nothing.

I imagine many will just carry on regardless for some time, especially if unrepresented. So long as the portal works, the big red warning is a "meh".

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to ireallyshouldknowthisbut
24th Jan 2019 10:11

Sorry they have all the powers they need and they now seem keen to use them.

All they can't do is fine in the first year for not having a digital link between two pieces of software. They can fine for not submitting using the correct method. Per the ICAEW "HMRC currently has the power to charge a penalty of up to £400 for filing a VAT return other than electronically without the prior agreement of HMRC (VAT regulations 1995 reg. 25A)"

There is noting in the legislation stopping the HMRC to turn off the old VAT portal as soon as they know a taxpayers is not complying with the MTD law which is reported VAT on outputs of over £20,000. Then the HMRC and the businesses can get in the world of estimated assessments etc.

MTD for VAT is not going to reduce the tax gap but is going to give the HMRC so many easy opportunities to raise penalties. As is constantly confirmed at tax tribunals, ignorance of the law is no excuse.

If I was cynic I would say that it is in the interest of the HMRC to not shout about this too loudly. £400 x 1/2 million each quarter soon pays this shambles.

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to david.bransbury
24th Jan 2019 12:35

@David, they have to give a warning for all such penalties.

Ie a letter to the tax payer, specifically saying the £400 is applied.

how can they do that with the data they have? They simple don't know.

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to ireallyshouldknowthisbut
24th Jan 2019 14:00

I expect that the HMRC robots will use the amounts in Box 1.

If on the return for June 2019, box 1 says £20,000 then the business will get strongly worded letter saying if they don't set up their MTD account before their next return is due they will be fined £400 etc.

If on the return for June 2019, box 1 says £4,000 it will be a reminder that businesses with VATable turnover of over £86,000 have to follow the MTD rules and that if they later discover that the rules have not been followed they MAY charge a penalty etc.

As you correctly say the VAT returns do not give an exact amount for VATable turnover. But it will always be equal to or more than five times Box 1.

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to david.bransbury
24th Jan 2019 14:20

I dont think id be too fussed about a few stroppy letters. We already have the big daft warning in red everytime you file on the current portal which you read once, then ignore.

The question is IF formal penalty warnings go out, THEN you might consider action, IF the cost of compliance is lower than the fine.

but how does this tie into the 'soft launch'? And light touch for penalties? How will HMRC know who has tried to comply, but hasn't managed to? And who is just riding it out until they have to waste time and money on this? They wont.

The point of this is to just ride it out and hope the whole thing folds before its enforced. The penny is going to drop at some point that no more revenue is coming in, and HMRC are in the business of collecting revenue.

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to ireallyshouldknowthisbut
24th Jan 2019 14:30

"but how does this tie into the 'soft launch'? And light touch for penalties?"

That is exactly what I said originally, the HMRC are no longer saying this anymore. I am expecting them to show no mercy from the start.

Good luck to everybody.

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24th Jan 2019 12:34

When it comes to it and they find that many taxpayers who file their own returns or have no agent are needing help and have not even put records on a computer or are unable to understand a digital link or who`s accounting system cant cope with the change what will happen then ? What's happened to all these letters they are suppose to be sending out and how dare HMRC direct clients to Accountants , some years ago HMRC told clients to call down with their books and they didnt need an Accountant. Just spent two hours as I could not file a vat return to HMRC and I thought it was a fault in the MTD system after two hours talking to three different people at HMRC it was caused simply because HMRC had put a stop on the VAT portal as a conflict in address arose. Would you not think that the portal might say something along the lines "the vat portal is suspended as a result of conflicting information". Interestingly when I rang the MTD helpline and mobile no one answers.

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By Tornado
24th Jan 2019 15:02

1) I am still 100% sure that MTD for VAT will not be mandatory as from 1st April 2019.

2) The more fines that HMRC try to impose, the more appeals will be generated, appeals which they will not be able to deal with. They will, therefore, have to take a pragmatic approach to any sort of penalty system otherwise HMRC will go into meltdown and be signed-off as insane.

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to Tornado
24th Jan 2019 16:15

As far as I can see they are in melt down. A new system such as MTD and their staff ignore email , sigh loudly to request if you do get through or make you feel like giving up . Just used the MLR portal and that is useless. Ive spent all day either trying to understand MLRportal , MTD . Every person I talk too is sick of this unchecked data HMRC insist upon and do nothing with .

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05th Feb 2019 08:58

There is now further evidence of HMRC views on MTD. They have responded to the House Of Lords committee.

https://www.parliament.uk/documents/lords-committees/economic-affairs/Go...

They have rejected any delay to MTD for VAT.

On the other recommendations, they have partially accepted but with the response that 2020 is a suitable delay for the introduction of the other parts of MTD.

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to david.bransbury
05th Feb 2019 12:29

Not a surprising response from the government. From HMRC's point of view they can be gentle with enforcement about mandation without delaying mandation.

ITSA (and I have written a lot of code for this) is a much more complex shift from the current approach with quarterly returns and the like. I have not yet seen the specifications for corporation tax. They have some code on github
https://github.com/hmrc/corporation-tax-frontend
But I have not looked at it and I don't think it is the MTD json stuff.

If I were HMRC I would aim to bed down the agency MTD APIs as part of the VAT implementation. This has the potential of doing a really good job for agents, but that depends substantially in the API implementation in code.

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