“ MTD aims to help tackle the part of the tax gap caused by error and failure to take reasonable care, by removing opportunities to make certain types of mistakes in preparing and submitting tax returns. It does not change businesses’ tax liability or payment obligations, but reduces scope for error, and allows for better customer interaction and guidance through digital prompts and nudges. This in turn contributes to a reduction in the tax gap, supporting public services and levelling the playing field for businesses. The projected gains to the Exchequer resulting from MTD reflect the reduced scope for error.”
Altogether now, oh no it doesn’t! (Is it panto season yet?)
Because of course errors are always in the taxpayer’s favour!!
Yup, they still have that blind spot (because they think that all taxpayers are on the ball regarding reliefs but sloppy when it comes to income). Although there's a tiny smidgen of truth in there, any mathematician could disabuse them quickly.
But it's their belief that software "guidance through digital prompts and nudges" will contribute to a reduction in the tax gap that I find mind-blowing. They should spend an evening down the pub (now that they're open again) observing groups of unrepresented taxpayers playing 'how do I reduce my tax bill'.
All you need is an on-line device and access to your SA return ... with infinite (and unsaved) iterations as they plug in different numbers and do re-calc after re-calc!
I'm not suggesting that this is law-abiding or representative of Aweb members, but I know several local establishments where this is a popular past-time - as an alternative to merely asking MDTP for 'ideas'. And MTD will encourage further take-up of this behaviour (by those who don't simply drop out of the tax system).
Per impact statement:
"Businesses, self-employed people and landlords will be required:
to operate MTD from 6 April 2024 in relation to their trading and property income chargeable to Income Tax and Class 4 NICs if their gross income from these income sources for a tax year exceeds £10,000"
This suggests that landlords must be liable to pay Class 4 NIC if it is to apply to them!
Perhaps more importantly it suggests that EITHER the taxpayer has to estimate their combined income streams for the forthcoming year on day one of the year - OR that combined revenues from a previous completed tax year will be used to determine mandation (in which case I foresee a number of slightly delayed invoices in the year prior to the start of MTD)!
Surprising how average costs can be as low as £35 a year when you include businesses who already have software in the equation.
Free software can help the smaller taxpayers as well.
They obviously have very cheap accountants!
Hmm, "These changes will apply to businesses, self-employed individuals and landlords who have profits chargeable to Income Tax and pay Class 4 National Insurance contributions (NICs)."
They need to make their minds up. It either applies to landlords, in which case the final statement is wrong, or it doesn't, and so the final statement is correct.
The SI is clearer on this.