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MTD Itsa what are the problems?

Starting a new question to be clear as to what people's problems are.

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There have been quite a few question threads about this.  I would like to be clear as to what the problems are that people have with the ITSA proposals.  I have not seen anyone particularly complain about the technical specification.  

What I think the problems that people identify are

a) Having to report quarterly

b) Bringing the deadline forward from 31st Jan in the following tax year

c) Changing the Basis period to fit the tax year (strictly this is not MTD, but may happen at the same time)

Without going into those issues specifically are there other aspects of MTD ITSA that people are complaining about or is the rest OK?

 

 

 

Replies (114)

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By Matrix
02nd Sep 2021 10:39

The biggest issue is getting transactional data in a digital format from a client. And don’t mention bank feeds.

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Replying to Matrix:
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By johnhemming
02nd Sep 2021 13:38

At least two MTD providers have an automated system for chasing clients to provide the unmentionable. Why is the unmentionable unmentionable?

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Replying to johnhemming:
Stepurhan
By stepurhan
02nd Sep 2021 14:41

johnhemming wrote:

At least two MTD providers have an automated system for chasing clients to provide the unmentionable. Why is the unmentionable unmentionable?

An automated system of chasing just saves the time you spent manually chasing. There are various ways of minimising that already. so an automated chasing system is not news. That still does not mean clients will actually supply the information well in advance of the deadline.

As for the "unmentionable", surely this is the 90 day rule. Even if an accountant does all the book-keeping, they still need the client to refresh the bank feed every 90 days as a minimum. A stopped bank feed brings book-keeping grinding to a halt. Unless accountants request access to clients' online banking to allow them to do it themselves (unwise for all sorts of reasons) this is a problem that technology alone cannot solve.

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By johnhemming
03rd Sep 2021 07:11

stepurhan wrote:

An automated system of chasing just saves the time you spent manually chasing. There are various ways of minimising that already. so an automated chasing system is not news. That still does not mean clients will actually supply the information well in advance of the deadline.

As for the "unmentionable", surely this is the 90 day rule. Even if an accountant does all the book-keeping, they still need the client to refresh the bank feed every 90 days as a minimum. A stopped bank feed brings book-keeping grinding to a halt. Unless accountants request access to clients' online banking to allow them to do it themselves (unwise for all sorts of reasons) this is a problem that technology alone cannot solve.

The point about the automated chasing systems is that they will generally ensure that the bank feed authority is maintained without the accountant and/or book keeper having to do anything.

If the re-authentication system is really efficient then it will be rare that an accountant has to personally spend time chasing a client. It is possible that an accountant/bookkeeper could have as part of the contract an arrangement so that if the accountant has to chase the client to authenticate the bank feed that a small fee is charged for this as well.

This sort of issue is key to reducing the time it takes to handle that aspect of the system.

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Replying to johnhemming:
Stepurhan
By stepurhan
03rd Sep 2021 07:31

johnhemming wrote:
The point about the automated chasing systems is that they will generally ensure that the bank feed authority is maintained without the accountant and/or book keeper having to do anything.

If the re-authentication system is really efficient then it will be rare that an accountant has to personally spend time chasing a client. It is possible that an accountant/bookkeeper could have as part of the contract an arrangement so that if the accountant has to chase the client to authenticate the bank feed that a small fee is charged for this as well.

This sort of issue is key to reducing the time it takes to handle that aspect of the system.

This answer just shows the complete disconnect between software suppliers and the real world.

Clients that don't respond to current manual chasing systems won't magically start being compliant because that system is automated instead. Probably the opposite for the non-IT client that "isn't going to let a robot tell them what to do".

As for adding a "small fee" for manual chasing, please explain how this simplifies matters. You have the admin or raising a small bill which is likely to cost more than it is worth. You aggravate clients by creating the impression you bill for every little thing.

Software is not a magic wand and developers need to stop pretending it is.

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By johnhemming
03rd Sep 2021 07:55

stepurhan wrote:

As for adding a "small fee" for manual chasing, please explain how this simplifies matters. You have the admin or raising a small bill which is likely to cost more than it is worth. You aggravate clients by creating the impression you bill for every little thing.

Software is not a magic wand and developers need to stop pretending it is.

I accept that software is a tool that needs to function in the real world with real people and should serve people.

However, there are different ways of doing things and I don't think it is unreasonable to suggest some.

If an accountant or book keeper charges higher fees then it would be sensible to include pretty well everything in that, but I would suggest there is a place in the market for a service which does separate out some of the costs and where the final bill takes into account how responsive the client is from the perspective of whether they need chasing or not.

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By Matrix
03rd Sep 2021 06:29

johnhemming wrote:

At least two MTD providers have an automated system for chasing clients to provide the unmentionable. Why is the unmentionable unmentionable?

You misunderstand me. I wouldn’t know yet what to ask for as I currently prepare a P&L from different sources. I am waiting for the legislation.

The transactional data may not currently exist. That is the biggest challenge.

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Replying to Matrix:
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By johnhemming
03rd Sep 2021 07:06

Matrix wrote:

You misunderstand me. I wouldn’t know yet what to ask for as I currently prepare a P&L from different sources. I am waiting for the legislation.

The transactional data may not currently exist. That is the biggest challenge.

I accept the point that a lot depends on precisely what details are needed in the digital audit trail. I am making the assumption that it is likely to be according to the same principles as VAT.

If it were to be something else then it could be an issue. The ITSA work being done at the moment runs on the same 31st January deadline and does now have a legislative requirement for a digital audit trail. Much that we are putting in the quarterly returns soon after the end of the quarter that is not legally required.

There is IMO a good argument that enforcement for MTD ITSA should start at the 31st January point whilst the system is bedded in. In the end it is enforcement that is key because if something is mandatory, but there is no enforcement it is in essence optional.

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Replying to johnhemming:
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By Matrix
03rd Sep 2021 07:28

johnhemming wrote:

Much that we are putting in the quarterly returns soon after the end of the quarter that is not legally required.

I hope you disclose this to your customers. I would never recommend voluntarily disclosing any information to HMRC. My clients certainly won’t be doing so.

You completely misunderstand what we do for a living. You seem to want to assist HMRC. We work for our clients so have to treat HMRC as an adversary.

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By johnhemming
03rd Sep 2021 07:59

Matrix wrote:

I hope you disclose this to your customers. I would never recommend voluntarily disclosing any information to HMRC. My clients certainly won’t be doing so.


I don't personally think it is necessary to wait for the final deadline before submitting a tax return. In fact historically I have normally submitted my own SA return before 31st January and my accountants have never advised me to wait. I think my accountants are getting this right. My view is that it is a good idea to submit tax returns as soon as you are comfortable that the information is correct.

Once the market has opened I am off to the pub for breakfast so may not respond.

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By Matrix
03rd Sep 2021 09:19

Enjoy your breakfast. I would not build or market software to do anything other than the minimum legally required if I were you.

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Replying to johnhemming:
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By lionofludesch
03rd Sep 2021 07:35

johnhemming wrote:

There is IMO a good argument that enforcement for MTD ITSA should start at the 31st January point whilst the system is bedded in. In the end it is enforcement that is key because if something is mandatory, but there is no enforcement it is in essence optional.

I hope it'll be enforced better than the Companies Acts.

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By GHarr497688
02nd Sep 2021 16:46

I have to handhold clients to get data in now and all that will happen with this daft new idea is that people like me will retire and clients I deal with will go to some cheap jack accountant who pumps any old crap into a computer hoping HMRC will never look into the client. With the bank feed which I have tried and my clients have tried - they are totally confusing - NAT WEST won't even let you change the invoice number you are paying and its so easy to think the bank feed and software have thought correctly which in my experience leads to heaps and heaps of data that you cant make head nor tail off. Get Boris or Rikki to use Sage or Xero then see what they say!

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By ireallyshouldknowthisbut
02nd Sep 2021 10:46

4. Imposing digital record keeping methods on clients who are not capable of using them.
5. Imposing digital records keeping which is an unnecessary burden, eg landlords with 1 or 2 properties for whom its a 30 minute job at the moment. Annually.
6. The incredibly naïve suggestion that tax bills can be computed more accurately from low quality data filed quarterly (and presumably eventually monthly) with no accounting adjustments, vs simply looking at what happened the prior year and flexing up or down.
7. The phenomenal amount of time being wasted on this project from all sides which could be used to do something productive.
8. Overreach from government into private lives of citizens in the imposition of digital accounting
9.The only benefits of the new system are arising from better use of software - which by and large will happen anyway.
10. The overarching fact the tax return system aint broke, so it doesn't need fixing in this manner, and the method of 'fixing' is likely to create more problems than it solves.

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Replying to ireallyshouldknowthisbut:
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By lionofludesch
02nd Sep 2021 10:55

ireallyshouldknowthisbut wrote:

4. Imposing digital record keeping methods on clients who are not capable of using them.
5. Imposing digital records keeping which is an unnecessary burden, eg landlords with 1 or 2 properties for whom its a 30 minute job at the moment. Annually.
6. The incredibly naïve suggestion that tax bills can be computed more accurately from low quality data filed quarterly (and presumably eventually monthly) with no accounting adjustments, vs simply looking at what happened the prior year and flexing up or down.
7. The phenomenal amount of time being wasted on this project from all sides which could be used to do something productive.
8. Overreach from government into private lives of citizens in the imposition of digital accounting
9.The only benefits of the new system are arising from better use of software - which by and large will happen anyway.
10. The overarching fact the tax return system aint broke, so it doesn't need fixing in this manner, and the method of 'fixing' is likely to create more problems than it solves.

But apart from that ...... ?

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Replying to lionofludesch:
By ireallyshouldknowthisbut
02nd Sep 2021 11:00

Given it fails at every point to deliver its objectives, and is costing an unbelievably large amount of money, its the perfect big government IT project.

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Replying to ireallyshouldknowthisbut:
Tornado
By Tornado
02nd Sep 2021 13:16

"its the perfect big government IT project."

Well done for finding one plus point!

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Replying to ireallyshouldknowthisbut:
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By johnhemming
02nd Sep 2021 13:32

Most of this is a single point which is opposition to a digital audit trail. My reason for posting the original post is to try to distill the various arguments people have against MTD into discrete reasons.

Clearly some people don't want to have a digital audit trail.

Opposing MTD ITSA because you don't like the way HMRC have argued for it is not a criticism of MTD ITSA, but instead a criticism of HMRC's PR.

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Replying to johnhemming:
By Duggimon
02nd Sep 2021 13:42

johnhemming wrote:

Opposing MTD ITSA because you don't like the way HMRC have argued for it is not a criticism of MTD ITSA, but instead a criticism of HMRC's PR.

No, the issue there isn't that HMRC have argued for it the wrong way, it's that there is no argument for it. None of the arguments presented hold any water, they can't be HMRC's motivation for pursuing this because it they were, they would need to deliver a vastly different system to what they have specified.

MTD does not do any of the things they are arguing for and the concern therefore is why they are pursuing it anyway, what is it that they actually want the system for?

I'm opposing it because my government, whom I fund along with all of you, are spending vast quantities of our money on a system that either fails to do what it's intending to do, from the outset, or is for some purpose they are unwilling to disclose.

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Tornado
By Tornado
02nd Sep 2021 13:48

"Opposing MTD ITSA because you don't like the way HMRC have argued for it is not a criticism of MTD ITSA, but instead a criticism of HMRC's PR"

I cannot believe you have put this up as a valid statement.

I know for certain now that our minds definitely do not see things the same way.

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Replying to Tornado:
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By johnhemming
02nd Sep 2021 14:21

I am sorry,but my statement is clearly valid statement.

If someone uses invalid reasoning to justify a hypothesis it is not good cause to conclude that the hypothesis is definitely wrong. You should simply discard the invalid reasoning.

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Replying to johnhemming:
By ireallyshouldknowthisbut
02nd Sep 2021 14:03

johnhemming wrote:

Most of this is a single point which is opposition to a digital audit trail.

I don't really see how you have gotten from my points to this point.

There is an objection for "busy work" due to nanny state knowing best.
There is an objection for making things very difficult for small business
There is an objection for forcing unsuitable record keeping methods on clients

Whether its in software, excel or on paper is neither here or there. Digital is not the issues, its compulsion of one method and excluding the best method for each client that is the issue. HMRC only get totals so in any case, so the detailed audit trail is irrelevant.

Moreover if HMRC asked on enquiry for businesses to provide digital records within 30 days, that would be perfectly fine. For most clients I would have it anyway. For a simple landlord I can tweak what we hold for their pre-existing year end file and slot it into whatever format they would like for the rare occasions they want a look.

If HMRC want quarterly payments on account, they can easily have them.

if clients want to pay for better estimates of their tax bill, they can pay me for that (most can work it out for themselves)

Every potential positive outcome HMRC could want can be done quicker and easier under the current system or a slight tweak to it. That is the objection.

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Replying to ireallyshouldknowthisbut:
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By johnhemming
02nd Sep 2021 14:24

Sorry, but I see these as tangential attacks on the idea of more timely data. Which does benefit society as a whole.

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Replying to johnhemming:
By ireallyshouldknowthisbut
02nd Sep 2021 16:32

@John, all business are doing in their interactions with HMRC is trying to pay their tax bill. End of. I don't think business are very interested in providing some sort of utopian vision of 'mass data to society'. That is massively overstepping HMRC's role and very much a dystopian vision in my eyes. If everyone's data is public or semi-public, the potential for mischief is phenomenal.

Government could already mandate to cloud software suppliers to get macro data if they wanted to with no extra time or cost to the small business. Like every argument for MTD, its a very thin one and better solutions already exist.

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Replying to ireallyshouldknowthisbut:
By petersaxton
04th Sep 2021 09:13

"Every potential positive outcome HMRC could want can be done quicker and easier under the current system or a slight tweak to it. "

How would HMRC be able to get access to data easily if the taxpayers don't have the data on software provider's servers?

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By bluebaron
02nd Sep 2021 11:05

I would agree with all of the above (the quarterly reporting aspect for me is the worst), and add the ridiculously low threshold.

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By Paul Crowley
02nd Sep 2021 11:09

Low threshold is absurd

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By johnhemming
02nd Sep 2021 13:33

On thing I clearly disagree on is the threshold. I think any threshold should primarily take into account the taxpayer and their limitations rather than their income. For some taxpayers with few transactions and low income they can do MTD ITSA themselves with a very low time cost and no marginal tech costs.

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By justsotax
02nd Sep 2021 13:53

you presuppose people want to spend extra money in order to do something every 3 months they previously could do once a year, without the requirement of software to add up a couple of numbers. The Revenue wish to have a breakdown of said numbers presupposing that it will reduce errors because the software will be able to identify the cleaning products used on rental property, and those used for personal use. And of course the long term objective presumably being that people will then pay tax on any said profits sooner.

If nothing else, having to MTD takes no account of the taxpayers limitations - see the CGT declaration debacle.

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By johnhemming
02nd Sep 2021 14:02

I admit that I can see merit in the government and the Bank of England having some knowledge of how the economy is going a few months after it happens. Hence I see a good reason for quarterly reporting.

This also does give the taxpayers a good stab at how much they owe.

I also assume that the taxpayers use the HMRC website to find that they don't (particularly if their turnover is low) have to spend any more money.

Hence the idea that this is stupidly expensive and has no merit is an idea I see as being challenged by reality.

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By ireallyshouldknowthisbut
02nd Sep 2021 14:14

@john, BoE already have a lot of headline data.

I don't see how filing low quality cash based data would improve the clients understanding of their tax bill. People who run businesses tend to know in detail their figures, and how much their tax bills are going to be give or take 10% or so. Their estimates will be a lot BETTER than a computer looking narrowly at cashflow coming in/out of a business. Cashflow is a very poor indicator of profit in anything other than a simple service business.

Given tax payers are hardly crying out for better in year estimates of their tax bill - I think I would know if they are given I talk to them daily - this seems to be a very weak argument.

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Replying to ireallyshouldknowthisbut:
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By johnhemming
02nd Sep 2021 14:26

I take a view that the macroeconomy is a summation of the various microeconomies. I don't see an argument against this.

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Replying to ireallyshouldknowthisbut:
By petersaxton
04th Sep 2021 09:16

"People who run businesses tend to know in detail their figures, and how much their tax bills are going to be give or take 10% or so."

I disagree with that statement.

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Replying to johnhemming:
Tornado
By Tornado
02nd Sep 2021 14:24

"I admit that I can see merit in the government and the Bank of England having some knowledge of how the economy is going a few months after it happens. Hence I see a good reason for quarterly reporting."

I have to again question your approach to this matter. Are you seriously suggesting that the Bank of England might use the quarterly reporting figures as a guide as to how the economy is doing knowing that much of the filed information will be nonsense?

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By johnhemming
02nd Sep 2021 14:27

That is the nature of data held by goverment. Some of it is rubbish Government needs to recognise this.

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By lionofludesch
02nd Sep 2021 15:07

johnhemming] <p>I admit that I can see merit in the government and the Bank of England having some knowledge of how the economy is going a few months after it happens. Hence I see a good reason for quarterly reporting.</p> <p>[quote]</p> <p>So taxpayers are paying to supplement Government statistics. Great.<br /> [quote wrote:

This also does give the taxpayers a good stab at how much they owe.


Which could be established by much cheaper means - if the taxpayer wanted it.

Quote:

I also assume that the taxpayers use the HMRC website to find that they don't (particularly if their turnover is low) have to spend any more money.

I don't understand what you're getting at here. But it seems unlikely that taxpayers with a low turnover will be consulting the HMRC website for information about their business.

Quote:

Hence the idea that this is stupidly expensive and has no merit is an idea I see as being challenged by reality.

Reality constantly challenges you, John. Especially in relation to the small business. Relatively large businesses may not be inconvenienced a great deal by MTDfIT but I doubt whether they have much to gain. Any information they glean from it will be information which they already had.

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By Jo Nokes
02nd Sep 2021 15:26

[quote=johnhemming]
This also does give the taxpayers a good stab at how much they owe.

Many commentators here have rubbished that suggestion. I'm surprised you are repeating it here

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By justsotax
02nd Sep 2021 15:34

MTD wasn't introduced for BOE reasons....you don't need to admit anything, you merely have to look at the reasons put forward for introducing MTD and whether it achieves them.......

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By rmillaree
02nd Sep 2021 14:36

johnhemming
"On thing I clearly disagree on is the threshold. I think any threshold should primarily take into account the taxpayer and their limitations rather than their income. For some taxpayers with few transactions and low income they can do MTD ITSA themselves with a very low time cost and no marginal tech costs."

Its not about sum though is it ? its about the forced mandation for all - a little old skool builder who may have day book ledgers - will buy plant - may pay the odd personal items from their business account due to the fact that they are allowed to and will likely have VERY lumpy earnings . Why should they be forced to move heaven and earth for "Zero benefit" for anyone (ecplain the benefit if there is one please !!) - if they don't claim benefits and submit and pay their taxes on time why are hmrc making their life a complete nigtmare for nil benefit for that individual - someone in hmrc who calls taxpayers customers really has something to answer for when it comes to treating non digital compliants taxpyers like a piece of dog poo.

I take exception to hmrc if we have to beg to be granted an exemption - some clients have been forced to do email online banking and setup online gateways not because they want to but due to execptional cicumstances that is probably bad enough - but to force them to go the whole digital hog is ridiculous IMHO for zlich benefit for anyone. At least with vat and paye there was already ueseful info to digitise and submit so the the reluctance to want to comply was more due to the fact that we knew complying requirements were OTT and we knew hmrc would make complete balls up of MTD (just look at mtd direct debits).

Note i do somewhat see the logic of 3 monthly calcs where bods are claiming means tested benefits - so i am only talking about bods who are claiming such benefits.

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By stepurhan
02nd Sep 2021 14:44

johnhemming wrote:

On thing I clearly disagree on is the threshold. I think any threshold should primarily take into account the taxpayer and their limitations rather than their income. For some taxpayers with few transactions and low income they can do MTD ITSA themselves with a very low time cost and no marginal tech costs.

There may well be IT-savvy taxpayers with low income for whom MTD would be a breeze.

If you make it voluntary for those with income below a sensible threshold, those individuals can choose to use MTD. It is not a good argument for making it mandatory for those at that income level who are not so tech-savvy.

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By Justin Bryant
02nd Sep 2021 11:56

As I said early on in this debate, when penalties kick in HMRC & FTT will be overwhelmed with appeals e.g. from 90 year old Mrs Jones and her one c£10k p.a. BTL.

If anything it will result in a renaissance of the cash economy and so will lose more tax than it's supposed to save.

Clearly any software sellers are not impartial in this debate for obvious reasons. The sheer (record) number of anti-MTD sentiment thanks/likes and comments generally alone speaks volumes (even taking into account any bias).

It's the usual HMRC farce.

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By johnhemming
02nd Sep 2021 13:37

I accept that I have a conflict of interest, but that does not mean that my viewpoint is not valid or indeed objective.

I posted this not so much as a red flag to a bull, but moreso to clarify precisely what people don't like (beyond the three points I highlighted one of which (the basis period) I may also oppose.

I could see an argument to retain 31st Jan for a period of time, but I don't think it stacks up in the long term.

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By Paul Crowley
02nd Sep 2021 14:05

Why?
Companies have a year before HMRC get any report
What about people with dividends
The first 4 reports will be way adrift
It takes a tax return to decide on these tiny little jobs whether the capital allowances will be a wasted claim, as all income needs to be considered

HMRC calculations of tax to date can never be realistic
MTD ITSA is not a payroll scheme

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By Jo Nokes
02nd Sep 2021 14:59

Agreed, companies have to file at companies house after. 9 months, there’s no reason why the filing needs a year, when the tax was due after 9 months

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By NotAnAccountant2
02nd Sep 2021 14:15

johnhemming wrote:

I could see an argument to retain 31st Jan for a period of time, but I don't think it stacks up in the long term.

So I have a question for you if it doesn't stack up - how long should employers have to provide a P11D after the end of the tax year?

(I have absolutely no idea how a P11D is created or the work involved, but I've never had an employer who provides them significantly earlier than the required date. Worse, I've had employers who only provide them if there's a benefit to declare so you have to wait until July to know that there's nothing to declare. Understanding P11D is as obscure a skill as understanding tax codes. It's utterly unreasonable to expect people to get their P11D benefits right without that explicit bit of paper from their employer)

People with more complex calculations - for example a large P11D benefit who then want their accountant to work out how much charitable giving they can carry back to take advantage of the 60% tax relief in the personal allowance taper, need time to do that.

Of course, you can change the rules so that you cannot carry back charitable giving any more (maybe there are other reasons to worry about timescale but charitable giving is the one I know of) - but that's changing tax law, and the way it works, to be more convenient for the software developer. Which is also what is happening with MTD - changing the way successful small businesses work to fit in with HMRCs idea of how they should be keeping their business records. HMRC should be changing their processes to fit in with the way small businesses want to work (and I think the SEISS threads about how businesses with a non-standard year end are sometimes getting clobbered because they're getting two years income in one tax year and then none in the next[1] shows how out of touch HMRC is with people whose primary concern is actually cashflow and day to day living)

[1] This is one of the reasons I read this site. I had absolutely no idea how sole trader accounts and year ends work despite having been a sole trader myself (with an accountant) 30 years ago. I've learned something from those threads that I didn't even know I didn't know!

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By lesley.barnes
02nd Sep 2021 11:05

The threshold is much to low - over £10,000 income would cover most accountants clients. Once expenses have been added a number of these smaller clients drop out of the taxable/NI income thresholds. There is no benefit in reporting quarterly to the client or HMRC, its just adding an extra layer of costs for the client either by introducing software for the client to use or extra accountants fees.

What are the benefits to HMRC, its "customers" or the agent. The only people to benefit that I can see at the moment are the software providers.

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By Paul Crowley
02nd Sep 2021 11:13

The complete waste of time
Final report is the only one getting used
And that report is STILL not a tax return

HMRC doing NOTHING with the quarterly reports, just penalty farming

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By Open all hours
02nd Sep 2021 11:29

Compulsion and Complication.

This reply could have been sooooooo much longer.

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By Duggimon
02nd Sep 2021 11:43

The problem is the mandatory filing four times a year of figures that do not, can not and will not relate to the taxable profits of the business.

These figures can't be used to compute tax, can't be used to give businesses an idea of their liabilities, can't be used to estimate payments on account with any degree of accuracy, can't be of any use to a business, and can't advise HMRC of the business's performance to a meaningful degree.

However, it is going to be mandatory to compile and file them for every individual with trading or property income over £10,000. It will be mandatory to record everything for these people at a transactional level digitally and send this data to HMRC four times a year, despite them being useful to nobody.

For such a monumental change to the system we have, the most glaring problem I have with it right now is why are we doing it? HMRC have not been able to answer this. None of their releases, or the responses to Rebecca Bennywoth's consultation, nor your insights, John, from the perspective of a developer, have been able to provide one single concrete benefit to anybody in this whole undertaking.

I presume there is a reason because it's costing billions, but it has not been given, and I would really like to know what it is because the ones that we've been told don't stand up to even the flimsiest scrutiny.

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By cbp99
02nd Sep 2021 11:53

The fundamental problem with MTD is that HMRC have abandoned the concept of double-entry bookeeping, with its inherent balancing features which help to expose errors, in favour of a transaction basis. Obviously digital systems can keep double-entry books with less fuss than manual systems, but that is not a requirement of MTD, witness the acceptability of spreadsheets.
The original consultation "Bringing tax into the digital age" did not even mention bank reconciliation, one of the most fundamental bookkeeping controls.
The idea that meaningful accounting/tax information can be assembled and provided without such controls helps to drive the supposed ease of quarterly reporting.

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