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Still confused about MTD IT - do we need to bother

Response from HMRC

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Following the many replies/rants re MTD IT I wrote to the Treasury with my concerns and received the following information in a reply from HMRC.

I am not inviting more rants but this is HMRC view in brief.

1) Our aim is that MTD IT makes life easier for tax agents.

2)We expect most businesses (themselves) will be able to operate MTD for income tax.

3) There are exemptions for those who cannot comply eg remoteness of location, access to broadband, personal circumstances - deatils of these wil be published before 2023.

4) There is no expectation that agents will operate MTD on behalf of clients if the clients are exempt.

5) For most businesses MDT for income tax will simply mean they need to keep digital records and submit 4 light touch quarterly updates.

6) Spreadsheets are OK with bridging software.

7) We believe that a month from the end of the quarter is long enough for submission of quarterly update.

So HMRC think that clients can do it themselves within the time limit. I think most accountants think differently but lets not go there.

Obviously there is money to be made here because I dont think clients can deal with this and they dont want to.

They dont want to photo receipts or use software yet!

I am not sure I want to get involved (more) with clients bookkeeping and although extra money is nice I have enough on!

I think my role is to warn my clients that they need to do this themselves and to put everything through one bank and either upload themselves or sent their figures to me to upload for a fee.

I have no doubt my clients will want help and I will help if I have time but I dont think there is enough time.

Is anyone thinking they should just prepare clients for this but let the client do it themselves?

 

 

 

 

Replies (114)

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By Jo Nokes
13th Sep 2021 13:21

I’m inclined to agree with you, since I don’t want to deal with any more bookkeeping than I currently do. My clients are going to have to do it themselves, on the whole. What is puzzling me is how we are going to pull it all together to deal with the EOY return. If clients are using various software products, how are we going to produce final figures, including accruals etc. I do not want to give up using VT, so some kind of import routine will be needed. Still, 18 months to go, all will be clear, won’t it?

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Red Leader
By Red Leader
13th Sep 2021 13:33

You and I may not want to deal with these quarterly submissions. However you can be sure that the national "contractor" type accounting firms will offer this service.

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By bluebaron
13th Sep 2021 13:46

What planet are HMRC on?! Most of my self-assessment clients would not be able to do the digital bookkeeping themselves, and it would be dangerous for them to try and attempt to do so. I am informing clients now as to what is coming along re MTD, and regrettably will be recommending alternative accountancy firms who can handle all the stress and hassle of it.

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By ireallyshouldknowthisbut
13th Sep 2021 14:19

meh its an semi-automatic reply from the "fob off" word document they cut and paste in from. Some poor sap probably does two dozen of these a day.

'light touch quarterly updates' my ar$e.

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
13th Sep 2021 16:31

If a light touch, once per quarter, updates yer ar$e ... then what's the result of a more regular submission?

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By GHarr497688
13th Sep 2021 14:53

1. Clients don't understand tax or accounting principles and are not computer savy so MTD will be more difficult.
2. Not one of my very small clients will have a clue what to do with spreadsheets or filings or tax.
3. Exemptions should be available for all my clients however for MTD VAT it took protracted and painful exchange with HMRC to get even one exemption - all agreed in the end.
4.MTD for ITSA would not be possible unless I undertook all processes.
5. Digital records for many are difficult to understand - prone to error - evidence can be supplie and VERY costly .
6. Spreadsheets from my clients contain errors and have to be checked manually - many older client don't even understand the term bridging software.
7. One month from the quarter end date is insufficient if the client hasn't let the Accountant have the records - even then the Accountant need one member of staff per clients and light touch updates are meaningless anyway.

Conclusion: HMRC are bringing in a system that will increase errors for older vulnerable clients , the system will take more time to produce inaccurate data at extra cost and if you want exemption this will only be given once you have spent hours of time convincing us of the reasons why MTD should not apply . In addition it is likely that Accountants will be needed for many to understand the system and make it work for HMRC. HMRC will not receive any fresh data or change it's systems in anyway.

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By Southwestbeancounter
13th Sep 2021 14:53

Thanks for posting this Lordburnside.

It just goes to prove just how out of touch HMRC are............

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By Leywood
13th Sep 2021 17:08

Whichever idiot wrote this has been sitting in front of a lamp shone in their eyes whilst they watch quickbooks and sage 'boss it' adverts all day for a month.

I particularly like (1), shows what a bunch of twerps they really are.

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By Open all hours
13th Sep 2021 21:35

If clients wanted to be bookkeepers they would have become bookkeepers. What is it that HMRC find so hard to understand about that? Many did actually hate maths at school, it was not a joke to them, it was what they thought and what they still think - leave it for the nerd and maybe copy his answers. Just hope there are no follow up questions. Clients do not want to spend evenings trying to comply with MTD and the novelty of photographing receipts will wear off soon enough.
The biggest challenge in life? Trying to get HMRC to listen to the beat of the real world - nobody wants or needs their super expensive over hyped MTD programme.
By all means buy all the software which is cost effective and helpful but it will be neither of those things if it not used properly and accurately.
There is nothing ‘light touch’ about accurate helpful management accounts. There is no one so ‘out of touch’ as those who continue to argue in favour of MTD

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Replying to Open all hours:
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By draccserv
16th Sep 2021 10:31

I have for years tolerated clients who "don't do paperwork". They throw most of their receipts away, the receipts they keep they apparently use as "toilet paper". They don't want to pay business bank charges, so use one account for everything.
A January 31 deadline means get the bag to the accountant in January.
No more, the worm is going to turn!
I will be telling those clients to either shape up or ship out.

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Replying to draccserv:
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By lionofludesch
16th Sep 2021 10:54

draccserv wrote:

I will be telling those clients to either shape up or ship out.

Yes, well, I expect that that is what I would've done.

But looking at it from a wider viewpoint, where are all these exited clients going to go ? They're unlikely to be able to do the job themselves as they're the dregs at the bottom of the barrel. I doubt if there's enough capacity in the bookkeeping market to service what they want at a price they can afford to pay.

Nobody's really come up with a plan. I suspect a lot of folk will just drop into the black economy. Is that what HMRC intended ? I don't know but I'm guessing not.

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By DKB-Sheffield
14th Sep 2021 00:59

Strangely, I'd be more in favour of MTD if:
- it wasn't a 'light touch',
- it wasn't something simple enough for 'most businesses (themselves) will be able to operate', and
- where there was an expectation that agents will be involved!

Any suggestion that 4 unreconciled, unbalanced, client-submitted quarterly updates will give a more accurate understanding of the client's tax position for HMRC OR the client (in most cases) is somewhat ill-advised. In many cases, the only accurate submission will be the annual declaration. Indeed, in many cases, the quarterly updates will be so far from the mark, and so highly inccurate that, rather than "help" the client/ HMRC/ HMG/ BoE, they will actually, hinder those same stakeholders.

I'd seriously question how making 4 additional submissions - no matter how 'soft', and no matter how little review is carried out - will possibly make 'life easier for tax agents'! Maybe for some this is 'the same' or 'marginally more complex' but, "easier"? How many agents (I don't mean Deloitte, BDO etc.) have they actually asked?!

As for the term 'light touch' I don't know what this actually means?! The submissions are compulsory (exemptions excepted). The implementation of future filing penalties has not been ruled out (surely a case of when, not if). The submissions are stored in an individuals tax account which can only suggest they can be referred to in future reviews/ compliance checks. Indeed, apart from the fact the submissions contain less data than the SATR, I see nothing soft about them (although I will admit hard copies of the submissions are not required - perhaps that's what they mean???).

As previously stated in this thread... clients are not bookkeepers and they do not want to be. In return, most of us are not builders, mechanics, hairdressers... and we don't want to be either! Teaching/ telling a client to be (must be) a bookkeeper when they don't want to do it is not going make them do it. They'll ignore it, leave it and then pass it to us when they're in a mess! Likewise, my mechanic tells me to check my oil levels regularly (which I don't). When the car breaks down, I pass my s**t to them to fix!

I'd expand the above comment to include tax in general. Clients don't understand it and in many cases, neither do we! Take AWeb as an example... dozens of posts per week asking about VAT this, CGT that, CA the other...! We're all professionals with some level of tax training and knowledge of the system (some more than others) yet, we're having to ask questions! Any suggestion that clients can acquire years of training and research, or do everything perfectly - simply by purchasing a software license/ subscription is unrealistic. Unless tax legislation is SIGNIFICANTLY simplified by April 2023 (reduced to a single plain-English handbook for example) clients will not have the expertise to operate MTDITSA EFFECTIVELY themselves.

I realise there are many who support MTD wholeheartedly. I realise that in some cases practices provide daily bookkeeping services and that such a provision may be beneficial to a client. I further realise that many fly the flag for cloud accounting software - even suggesting it will be the only way to comply with MTD in the near future. I also realise some clients are more able to cope with a move to electronic document storage/ cloud bookkeeping than others (not just due to ability, age etc... but also to motivation, other priorities, fear of the unknown etc...). This post is certainly not aimed at another cloud software debate (!!!).

However, asking the question...

WHAT IS MTD?
1. Is it cloud accounting software?
2 Is it cloud document storage?
3. Is it daily bookkeeping?

(I do not believe the above are (yet) requirements)

4. Is it a quarterly tax return?
5. Is it assessed on the same basis as the SATR?
6. Does it simplify tax?

(Again, I believe MTD alone, does not provide the above)

7. Is it accurate quarterly submissions?
8. Is it an accurate forecast of tax liabilty for clients?
9. Is it an accurate forecast of tax liabilty for HMRC?

(With a 'soft touch' update, no Capital Allowances, no balance sheet adjustments, and let's be honest - many thousands of fudged/ estimated submissions - I don't honestly believe MTD satifies these conditions)!

10. Is it as HMRC suggest...

Quote:
Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
?

(I'd actually question all 3 of the above bullet points. Is a system that takes a single (accurate) annual return and replaces it with 4 quarterly updates (inaccurate for most businesses due to omission of adjustments, CAs etc.) AND an (accurate) annual declaration more effective and efficient? This is not to mention the fact that MTD makes no inroads into making UK tax legislation ANY EASIER so, HOW can it be 'easier for taxpayers to get their tax right'?!

Finally, and in summary...

If HMRC announced that the annual SATR were to be replaced by quarterly 'MTD' SATRs and quarterly tax payments (prepared to the same level, and with the same level of detail as the current SATR), I'd (still) be against MTD BUT, I would at least understand the reasoning, the aim, and would accept that there was a fully justified explanation for the change. As it stands, and under the current plans (estimates, soft touch, no CAs, ignorance of other income etc.), MTD seems to fulfil little purpose, or provide little value to the agent, the client, or ultimately HMRC, HMG or BoE!

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Replying to DKB-Sheffield:
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By Southwestbeancounter
14th Sep 2021 03:14

Wow DKB!

What a superbly well-argued, well-written post. Personally I can agree with every statement you’ve made.

I think that’s the best AW response this year so far - I just wish I’d written it!

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Replying to Southwestbeancounter:
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By Jo Nokes
14th Sep 2021 08:21

Me, too. A brilliant summary of what is wrong with MTD. I want to copy that to anyone who could conceivably affect the plans to introduce this project

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Replying to DKB-Sheffield:
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By johnhemming
14th Sep 2021 06:24

Trying to answer the questions:

>WHAT IS MTD?
>1. Is it cloud accounting software?
>2 Is it cloud document storage?
>3. Is it daily bookkeeping?

>(I do not believe the above are (yet) requirements)
I agree with you on this that the above are not requirements. There are, however, good reasons why SaaS via the net/cloud is more cost effective. That comes from the fact that providing a good SaaS service is a lot easier for the providers. Particularly in terms of support. For example at times you can spot that someone is having difficulties. I have actually phoned a few people I saw having difficulties to assist. That really cannot work without SaaS.

>4. Is it a quarterly tax return?
No although there are quarterly submissions relating to an annual return.

>5. Is it assessed on the same basis as the SATR?
Yes.

>6. Does it simplify tax?
It means that less effort is needed to do things properly. Some things like reconciling data conflicts between data held centrally and data held by the taxpayer are not that practical without the MTD APIs.

>7. Is it accurate quarterly submissions?
We have discussed this and there is agreement I think that for some taxpayers the quarterly submissions will be without accruals and hence not an accurate indication of the precise tax payable for the quarter. However, from a broader perspective it will be possible to see trends.

>8. Is it an accurate forecast of tax liabilty for clients?
This is Q7. It can be depending upon what data the taxpayer puts in. It can be used to provide an accurate forecast as well.

>9. Is it an accurate forecast of tax liabilty for HMRC?
What it will do is give an idea of economic trends which enable macroeconomic forecasts to be more reliable. As it stands the Treasury don't have that much reliable information. This will be more reliable even if not perfect.

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Replying to johnhemming:
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By Jo Nokes
14th Sep 2021 08:33

6 does it simplify tax.
How on earth does it simplify tax, John. I really don’t think your responses are convincing in any way

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Replying to Jo Nokes:
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By johnhemming
14th Sep 2021 10:41

The process of reconciling CIS between HMRC records and those of the taxpayer is always going to be a complex one. IMO only some form of computer to computer link can to this in an efficient manner.

In that it makes getting things right easier it is simpler.

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Replying to johnhemming:
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By lionofludesch
14th Sep 2021 17:17

johnhemming wrote:

The process of reconciling CIS between HMRC records and those of the taxpayer is always going to be a complex one.

It's not complex at all. HMRC just need to provide a statement of the data they hold. If they want to be a bank, they should act like one.

Seriously, they should've been doing this for the last 46 years.

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Replying to lionofludesch:
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By johnhemming
14th Sep 2021 19:45

I wasn't aware that CIS had been handled like this for 46 years.

However, as part of MTD ITSA the CIS reconciliation process is handled in a manner which does not require HMRC to print anything, post anything, respond to any emails or answer any phone calls.

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Replying to lionofludesch:
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By johnhemming
14th Sep 2021 19:45

I wasn't aware that CIS had been handled like this for 46 years.

However, as part of MTD ITSA the CIS reconciliation process is handled in a manner which does not require HMRC to print anything, post anything, respond to any emails or answer any phone calls.

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Replying to johnhemming:
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By spilly
14th Sep 2021 22:03

They barely do any of that anyway!

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Replying to johnhemming:
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By lionofludesch
14th Sep 2021 22:34

johnhemming wrote:

I wasn't aware that CIS had been handled like this for 46 years.

However, as part of MTD ITSA the CIS reconciliation process is handled in a manner which does not require HMRC to print anything, post anything, respond to any emails or answer any phone calls.

They've never provided a statement as a matter of course. Grudgingly, maybe, if you asked. The downside of that is that your contractor could have given you an SC60 but not paid the tax over. The fraud then doesn't come to light until maybe a year later, when the subcontractor claims repayment.

Why don't HMRC care about that ?

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Replying to DKB-Sheffield:
By Charlie Carne
16th Sep 2021 15:26

DKB-Sheffield wrote:

Any suggestion that 4 unreconciled, unbalanced, client-submitted quarterly updates will give a more accurate understanding of the client's tax position for HMRC OR the client (in most cases) is somewhat ill-advised.

I agree with much of what you wrote. It will be complicated for taxpayers who are not used to keeping records on a regular basis or who can't use a phone app, let alone a computer, so we need to find a way to get them onto MTD in some way. As a start, linking their business bank account to software (or using an MTD-compliant bank account like CountingUp) will probably achieve most of what HMRC require for the initial phase of MTD.

But I would highlight one area that seems to have got most of the profession utterly confused. The purpose of quarterly submissions is NOT to provide HMRC with an estimate of the tax position. The requirement to submit four times a year is solely to demonstrate that the taxpayer is using a digital system throughout the year. It does not matter a jot if the data is garbage because no one is examining the data. It's about demonstrating compliance with the requirement to record data digitally throughout the year. If MTD-compliant software can submit something (anything) to HMRC four times a year, this is demonstrated (albeit only to a basic extent).

We can then use the so-called "light touch" to file quarterly, as there is no need (unlike MTD for VAT) to check the data. So long as there is some data that appears to record at the very least the bank transactions (which we won't even need to reconcile until the final, year-end submission, as at present), we can click the 'submit' button.

I suspect that later phases of MTD (some years down the line) will require more accuracy for each quarterly submission, but that will be easier to achieve if (and I accept that it's a big 'if'), by then, everyone is recording their data digitally. To get to that stage (over many years) requires some initial baby steps, the first of which is to encourage use of digital data.

I am not an evangelist for MTD, nor am I delusional (an accusation levelled at me from previous posts on AWEB). I fully understand that many taxpayers will not be compliant in the early stages and will find it extremely hard to be so. HMRC are going to have to be lenient in their exceptions and I agree with most of you that HMRC are totally delusional if they think that this will be easy. But I have clients who currently keep lousy records, use their personal bank account as their business account and produce rubbish for me as late as mid-January every year. I am using MTD as a very big stick with which to beat them into some form of submission, by getting them to open a business bank account which I will link to QBO. Once that is done, I will click the 'submit' button every quarter on whatever data has been sucked into QBO from their bank and they will thus be compliant. If they use CountingUp (and I suspect that Starling and the others will soon offer MTD compliance, as well), we won't even need to link the bank to other software. Come April or May each year, I can then start to examine their year-end data in more detail and ask the sort of questions nice and early that I am currently only able to ask in late January.

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Replying to charliecarne:
RLI
By lionofludesch
16th Sep 2021 15:37

charliecarne wrote:

DKB-Sheffield wrote:

Any suggestion that 4 unreconciled, unbalanced, client-submitted quarterly updates will give a more accurate understanding of the client's tax position for HMRC OR the client (in most cases) is somewhat ill-advised.

I agree with much of what you wrote. It will be complicated for taxpayers who are not used to keeping records on a regular basis or who can't use a phone app, let alone a computer, so we need to find a way to get them onto MTD in some way. As a start, linking their business bank account to software (or using an MTD-compliant bank account like CountingUp) will probably achieve most of what HMRC require for the initial phase of MTD.

But I would highlight one area that seems to have got most of the profession utterly confused. The purpose of quarterly submissions is NOT to provide HMRC with an estimate of the tax position. The requirement to submit four times a year is solely to demonstrate that the taxpayer is using a digital system throughout the year. It does not matter a jot if the data is garbage because no one is examining the data. It's about demonstrating compliance with the requirement to record data digitally throughout the year. If MTD-compliant software can submit something (anything) to HMRC four times a year, this is demonstrated (albeit only to a basic extent).

Well, that might be fine for a couple of years, but it's a dangerous game that you'd be playing, imho.

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Replying to lionofludesch:
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By bernard michael
16th Sep 2021 15:51

lionofludesch wrote:

charliecarne wrote:

DKB-Sheffield wrote:

Any suggestion that 4 unreconciled, unbalanced, client-submitted quarterly updates will give a more accurate understanding of the client's tax position for HMRC OR the client (in most cases) is somewhat ill-advised.

I agree with much of what you wrote. It will be complicated for taxpayers who are not used to keeping records on a regular basis or who can't use a phone app, let alone a computer, so we need to find a way to get them onto MTD in some way. As a start, linking their business bank account to software (or using an MTD-compliant bank account like CountingUp) will probably achieve most of what HMRC require for the initial phase of MTD.

But I would highlight one area that seems to have got most of the profession utterly confused. The purpose of quarterly submissions is NOT to provide HMRC with an estimate of the tax position. The requirement to submit four times a year is solely to demonstrate that the taxpayer is using a digital system throughout the year. It does not matter a jot if the data is garbage because no one is examining the data. It's about demonstrating compliance with the requirement to record data digitally throughout the year. If MTD-compliant software can submit something (anything) to HMRC four times a year, this is demonstrated (albeit only to a basic extent).

Well, that might be fine for a couple of years, but it's a dangerous game that you'd be playing, imho.


If what you say is correct regarding digital submission why does HMRC want it done ??
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Replying to bernard michael:
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By lionofludesch
16th Sep 2021 16:39

bernard michael wrote:

If what you say is correct regarding digital submission why does HMRC want it done??

What I say ?

In what way ?

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Replying to lionofludesch:
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By bernard michael
16th Sep 2021 16:54

lionofludesch wrote:

bernard michael wrote:
If what you say is correct regarding digital submission why does HMRC want it done??

What I say ?

In what way ?


If I may quote you
The requirement to submit four times a year is solely to demonstrate that the taxpayer is using a digital system throughout the year
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Replying to bernard michael:
RLI
By lionofludesch
16th Sep 2021 18:02

bernard michael wrote:

If I may quote you
The requirement to submit four times a year is solely to demonstrate that the taxpayer is using a digital system throughout the year

You may not.

I didn't post that.

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Replying to lionofludesch:
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By bernard michael
17th Sep 2021 09:21

lionofludesch wrote:

bernard michael wrote:
If I may quote you
The requirement to submit four times a year is solely to demonstrate that the taxpayer is using a digital system throughout the year

You may not.

I didn't post that.

Sorry Lion it was Charlie Crane. I din't scroll far enough back

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Replying to charliecarne:
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By Jo Nokes
16th Sep 2021 18:23

That isn’t exactly how HMRC publicised this project, Charlie

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By Tax Dragon
14th Sep 2021 07:15

Roll forward to 2050. All current Awebbers and their clients have retired. The generation then operating 99% of businesses grew up posting their lives online. How would you feel if unincorporated business was, at that time, subject to a form of RTI? Each time the business bought or sold something, which transaction has almost certainly happened electronically, the business owner records the transaction with HMRC.

Now of course, if accounts rules stay as they are now, the information posted during the year won't be anything like enough to draw up the accounts. If tax rules stay as they are, a whole load of work will need to he done before the tax liability can be established. The only differences from today's world are that the transactions happen electronically and are pinged to HMRC in real time.

Would you have an objection to this?

Now I know what I've described isn't MTD. It's beyond MTD. It may be the end goal. What's wrong with it?

Let's go one step further. Every transaction (personal or business) gets pinged. (I can imagine that banks might have to provide the information anyway, so in fact it's just telling HMRC what they already know... a new definition of double entry! ;-)... hm, please ignore that joke.) Now, I personally might have concerns with this personal RTI world on a civil liberties front, but that's not an issue that anyone has raised (that I've noticed) in any of the MTD threads. All (or nearly all) the concerns have been about extra work, costs, and incompetence. Do you still have those concerns for generation 2050?

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Replying to Tax Dragon:
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By johnhemming
14th Sep 2021 07:23

This sort of thing happens for VAT in other European Countries. I personally prefer the MTD system where the tax authority only gets summaries. I do think there is a civil liberties aspect if the government automatically gets all the transactions that occur (particularly in real time).

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Replying to johnhemming:
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By Tax Dragon
14th Sep 2021 08:54

So to keep our civil liberties, we need to summarise the information - or exclude personal matters from the pings (businesses per se not having civil liberties). Is that such a hardship?

My question is really, come 2050, will people look back at this debate and wonder what all the fuss was about?

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Replying to Tax Dragon:
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By Tax Dragon
14th Sep 2021 09:03

And my second question is... clearly things cannot stand still. What would people do instead of MTD? DKB seems to prefer quarterly accounting. That seems like a lot of unnecessary work to me, but at least it's a suggestion. Most people just moan and aren't suggesting what should be done instead.

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Replying to Tax Dragon:
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By lordburnside
14th Sep 2021 09:18

Maybe quarterly tax returns are the answer if they gave us 6 months to send them in.

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Replying to Tax Dragon:
By Paul D Utherone
14th Sep 2021 16:25

Tax Dragon wrote:

My question is really, come 2050, will people look back at this debate and wonder what all the fuss was about?

They might if HMRC systems have actually been updated to actually work in real time.

I recall the trepidation of the introduction of SA, and we all survived that, but HMRC systems are such a dreadful antiquated mish mash requiring overnight updates and 24/48 hours to catch up that forcing change of basis & MTD ITSA through seems destined to be a complete disaster.

The numbered replies from the Treasury in the OP seem to have been drafted with rose tinted spectacles on and a total lack of real world experience of clients, and how things are from this side of the fence

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Replying to Tax Dragon:
By petersaxton
14th Sep 2021 10:08

It's not realistic to send all the data for all transactions to HMRC. It makes more sense for individual software suppliers to have the data and HMRC access that data if required.

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Replying to petersaxton:
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By Tax Dragon
14th Sep 2021 11:01

Ok, so the ping goes to a software company for the data to be stored (under regulated conditions, obvs) and HMRC can access it at will. From our end, that looks no different to what I'm suggesting.

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Replying to Tax Dragon:
By petersaxton
14th Sep 2021 18:42

It may not look any different to somebody not involved but it is a lot different. HMRC will not be collecting a massive amount of data. They will just look at the data they have chosen to look at.

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Replying to Tax Dragon:
paddle steamer
By DJKL
14th Sep 2021 10:19

The big difference will be the entries, the sales invoice I issue will likely automatically (subject to approval by party receiving) also be input as a purchase invoice for the party it was issued to, their software will collect the data transmitted by the seller , so sender will have:

Dr Debtors
Cr Sale
Cr vat

purchaser will have (if vat registered)

Dr Purchase (with appropriate nominal)
Dr vat
Cr Creditor

All worship the Universal Ledger

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By bluebaron
14th Sep 2021 09:19

In 2050 there probably won't be any accountants, either robots will be doing the work, or the clients themselves.

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Replying to bluebaron:
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By Tax Dragon
14th Sep 2021 09:58

The work will still need doing, whoever (or whatever) it is does the work. My point is that you can see, I suspect, why HMRC is keen to have more raw data more quickly. My 2050 Making Tax Ping model is a world away. But I imagine that's what HMRC would love. And I personally would have no objection to them having it (restricted to business transactions only, for civil liberties reasons).

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Replying to bluebaron:
By petersaxton
14th Sep 2021 18:47

There's always going to be a need for people who understand accounting. Robots will not understand accounting. Clients will not understand accounting. HMRC will not understand accounting.

I remember years ago when QuickBooks desktop was very popular. Hardly any HMRC people who went to do inspections had heard of it. If it wasn't Sage being used they didnt have a clue.

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By bernard michael
14th Sep 2021 09:49

If as I suspect the ultimate reason for MTD is to enable quarterly tax payments why not base them on the existing annual returns system for POA ??

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Replying to bernard michael:
By Charlie Carne
16th Sep 2021 15:36

If HMRC move to quarterly tax payments, it WILL be based on prior year SATR, as there is absolutely no requirement within the current MTD rules for the submitted data to be accurate or to contain any accounting adjustments whatsoever until the final year-end submission. The purpose of MTD (at least for now) is not to receive accurate accounting information early, but to get businesses to track their data digitally; that's all it's doing for now. I'm not suggesting that this is easy for everyone, but that is the entirety of the scope for now and it has nothing to do with collecting tax early (which may also be another ambition of HMRC, but not due to MTD).

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Replying to charliecarne:
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By bernard michael
16th Sep 2021 16:18

charliecarne wrote:

If HMRC move to quarterly tax payments, it WILL be based on prior year SATR, as there is absolutely no requirement within the current MTD rules for the submitted data to be accurate or to contain any accounting adjustments whatsoever until the final year-end submission. The purpose of MTD (at least for now) is not to receive accurate accounting information early, but to get businesses to track their data digitally; that's all it's doing for now. I'm not suggesting that this is easy for everyone, but that is the entirety of the scope for now and it has nothing to do with collecting tax early (which may also be another ambition of HMRC, but not due to MTD).


How long do you think HMRC will resist the temptation to use MTD information to assess quarterly tax payments
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By petersaxton
14th Sep 2021 10:13

The idea that clients can prepare bookkeeping throughout the year and then accountants come in at the year end to do the final submission is ridiculous. Some clients could do most of the bookkeeping with a small amount of help from the accountant but I would think most clients would need a lot of help to begin with. HMRC are not being sensible.

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Replying to petersaxton:
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By Tax Dragon
14th Sep 2021 10:31

Objectively, it's more sensible to do your bookkeeping in real time than it is to sit down at year end with a boxful of receipts and to try to reconstruct your year from those bits of paper and your memory.

A lot of people my age manage their finances with an app on their phones, pay with their phones, live on their phones. Tracking your income and outgoings - and that's all I'm talking about here - isn't that hard. Skill and judgment needed to turn the raw data into accounts, but that's what accountants are for.

The embarrassing thing as I see it is that it's HMRC suggesting these steps forward, and that the steps haven't already been made by the accounting profession itself.

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Replying to Tax Dragon:
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By Jo Nokes
14th Sep 2021 11:19

There's a big difference between real time tracking and doing it at the end of the year from a pile of receipts. One extreme to the other. What is still puzzling me is how we as agents will make adjustments to the data that clients have uploaded (assuming they did this themselves). I take it the data is effectively four quarterly totals, not a cumulative total each time (as RTI), and that this will be found in the taxpayers personal tax account. How do we deal with this, make adjustments, and put together into the EYO, along with other income?

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Replying to Jo Nokes:
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By Tax Dragon
14th Sep 2021 11:40

Those are probably questions for @johnhemming.

What I'm really wondering (because I'm too lazy to read the near 400-post thread that probably answers this) is whether people are opposed to MTD conceptually (and whatever HMRC did would meet hostility), or whether they agree that it's a good idea in principle and simply wish that HMRC had done a better job with the implementation.

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