Value Added Tax Regulations 1995 32B states:
"(1) The requirements imposed by regulation 32A do not apply to a person—
(c)for whom the Commissioners are satisfied that it is not reasonably practicable to make a return using a compatible software return system for reasons of disability, age, remoteness of location or any other reason”
Disability, age and remoteness of location is reasonably clear, but what about “any other reason”? It’s there in law so it can be used, but what does it over in practice?
HMRC's stance has been that if the client has a digital device, they should be able to comply with MTD. But we all know there is a huge gulf between a client being able to post on Facebook, and being able to (accurately and completely) maintain their digital accounting records. If the client is young, lives in a well-connected location but is incapable of learning, is that enough to meet the “any other reason” criteria above? I know they could claim on grounds of disability if they’d been diagnosed with a learning condition, but I’m talking about your average self-employed worker.
What about a client that is working every available hour? If they don’t have the time, would that meet the “any other reason” criteria?
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Any other issues would include religous matters, eg Plymouth Brethren
It's not that because that is covered by 32B(1)(a):
"(a)who the Commissioners are satisfied is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications!
I have an ACCA PC and HMRC Agent IDs, so are clearly recognised as practicing by the Commissioners.
As a UK practice accountant, I deal with HMRC and regularly say “oh my dear god” and pray that things will work.
As a UK practicing accountant, I believe that HMRC’s is electronic systems and communications are inept.
My clients might not be exempt, but I reckon I am.
If your belief is strong enough, maybe you could establish a splinter group of the Plymouth Brethren (a bit like those variants in the Life of Brian) ... whose beliefs are solely incompatible regarding the use of electronic communications with HMRC?
"whom the Commissioners are satisfied that it is not reasonably practicable to make a return using a compatible software return system for reasons of disability, age, remoteness of location or any other reason"
I think you could be falling into the common trap of trying to isolate a phrase from it's constituent paragraph - despite the meaning of the phrase thereby losing its logical dependency.
* the "any other reason" part is subservient to the phrase "not reasonably practicable to make a return using a compatible software return system" ... so the 'other reason' will need to prevent that 'reasonably practical' qualifier.
Of course there's still lots of wriggle room ... (how is 'reasonably' measured?) ... whilst the get-out-of-jail card (for HMRC) remains that the whole set of conditions are dependent on the Commissioners being "satisfied"!
So we're back to judgement calls (at least until there's any cases) of what can be seen as reasonably preventing use of software & system to make a return.
IMHO your example of a client "incapable of learning" might meet the exemption criteria - but probably only with some form of medical certificate (not just 'got better things to do with my life').
And 'not having the time' certainly fails - if only on the basis that it is a personal choice how to use your time and if some of it is consumed in unenjoyable (but legally necessary) delivery of your liabilities ... then that's life!
I doubt any of my clients would medically qualify as having learning difficulties, but that doesn't mean they're capable of handling their own MTD ITSA. MTD ITSA requires self-employed to be their own bookkeepers. Most businesses taking on bookkeepers would require either (1) experience or (2) minimum of 5 GCSEs. Because there are no prompts and nudges or intelligence in the software, I would argue that users need some accountancy and tax knowledge to operate MTD ITSA correctly. I'd say AAT Level 2. Online collages recommend a minimum of 5 GCSEs for AAT. So what about all those self-employed with less than 5 GCSEs? If they're ruled out as bookkeepers etc, how can they expected to comply with MTD ITSA?
I don't disagree with any of those points ... but was simply addressing the question you posted ("What does MTD exclusion “any other reason” cover?")
Despite the apparent idiocy of those intent on forcing through MTD ITSA (and all your valid concerns), I don't believe you've uncovered a novel route to exemption based simply on the illogicality of expecting any sensible data to be submitted.
Nice try, but in the main we're going to have to wait either for changes to the rules or the eventual collapse of the system ... although waiting for Godot might be quicker.
Just been speaking to a client. His wife went away and he was left to fend for himself having never had to cook ever. He was left with a boil-in-the-bag fish for his evening meal. Instructions on the box are clear: boil for 20 minutes. Clear enough? Not for my client. He put it in the kettle: bag burst, kettle broken. What a mess. HMRC reckons this client can handle his own MTD. He doesn't have a learning difficulty but IT and bookkeeping are as alien to him as cooking.
Britain has up to eight million adults who are functionally illiterate. Illiteracy is not a disability or a medical condition but would qualify under any other reason.
