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Who believes quarterly updates are a good thing?

Given Jon's epic post and the comments there seem very few who agree with quarterly updates.

Didn't find your answer?

Jon's post created much response most in favour of scrapping quarterly updates yet not adverse to digital record keeping, albeit over a period of time.

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By Justin Bryant
16th Sep 2021 10:36

HMRC, software sellers, idiots, sadists, masochists, etc.

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By David Ex
16th Sep 2021 10:52

johnjenkins wrote:

Who believes quarterly updates are a good thing?

There were numerous long discussions about this last week, assuming you are referring to MTD for IT.

What aspects are you interested in that weren’t covered in those?

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Replying to David Ex:
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By johnjenkins
16th Sep 2021 11:08

I'm genuinely interested to know if anyone actually thinks quarterly updates is a good thing and if so why. This question is open to anyone including HMRC.

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Replying to johnjenkins:
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By David Ex
16th Sep 2021 11:34

johnjenkins wrote:

I'm genuinely interested to know if anyone actually thinks quarterly updates is a good thing and if so why.

Covered in detail in last week’s discussions. Have you read those?

Why are you interested - as a matter of interest?

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Replying to David Ex:
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By johnjenkins
16th Sep 2021 12:52

Peter Saxon seemed the only person who was sticking up for the project, however I felt he was supporting it because he felt he had to as it would be law.
I am devising a report on MTD - the origins-the good, the bad, and the ugly - and I feel that perhaps someone out there really believes that quarterly updates is a good thing cos we have heard plenty of adverse comments.

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By Paul Crowley
16th Sep 2021 10:54

HMRC sold this nonsense as saving time
their time?

We were told that clients would save time by not submitting tax returns. Just 5 returns instead and the constant need to check the other information HMRC recieved

And if anything wrong? HMRC not interested, tell the person that told them and get that person to resubmit
Bank interest dividends whatever

Nobody wants this rubbish
If it was good we would volunteer

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Replying to Paul Crowley:
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By johnjenkins
16th Sep 2021 11:10

So Paul, I gather you're not in favour. Given that this subject has caused quite a stir, I really want to know if anyone thinks it's a good idea and why.

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RLI
By lionofludesch
16th Sep 2021 11:19

Imho, quarterly updates are just a precursor to something more sinister.

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Replying to lionofludesch:
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By johnjenkins
16th Sep 2021 11:38

That's a foregone conclusion.

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By johnhemming
16th Sep 2021 11:22

There is, of course, a different way of looking at this question.

That is, however, whether in the long term it is better to send summary figures to HMRC every period (month/quarter) or whether HMRC should get information that leads to tax liabilities in detail in real time.

I think the latter of the options has civil liberties questions and summaries are better.

Then there is another question which is that technology does make it easier for more timely submissions to HMRC. There are advantages to this from a public policy perspective as government can pick up trends at an earlier stage. There is also an advantage to tax payers in getting more timely information as to tax liabilities (recognising there are difficulties that have been discussed).

Hence there will come a time when a more timely approach will occur. Why not now?

There is a third way of looking at it which is to say is our current system for self assessment the best of all possible worlds. If not what changes should be made?

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Replying to johnhemming:
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By johnjenkins
16th Sep 2021 11:46

John, you seem to be sitting on the fence. Why is there a need for a more timely approach than the yearly tax return which holds all information in order to work out a clients tax liability?

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Replying to johnjenkins:
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By johnhemming
16th Sep 2021 11:53

As a taxpayer I would like to have a better idea mid year as to my tax position.

As a citizen of the UK I would like the government to have a more timely understanding of the economy so they can make better decisions.

This all comes down to the question of the faff quotient of doing quarterly submissions. Having done them I don't think there is that much faff.

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Replying to johnhemming:
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By David Ex
16th Sep 2021 12:03

johnhemming wrote:

As a citizen of the UK I would like the government to have a more timely understanding of the economy so they can make better decisions.

Then why are companies not included?

And if the government is basing strategic decisions about the economy on quarterly data, which may or may not be correct, then we have bigger problems than I feared!

What helps the economy is economic activity not compiling reports for HMRC to store and likely never use.

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Replying to David Ex:
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By johnhemming
16th Sep 2021 12:13

David Ex wrote:

Then why are companies not included?


It may not seem it at times, but often government has multi year strategies. With the tax system, for example, there is trend towards getting a more timely tax system with the greater use of technology. It is not really a big bang.

Hence one would expect that there would be some movement down the route of similar updates from companies in the future.

I see MTD ITSA as being a stop on this particular bus route. You could argue you wish to get off the bus and stay where you are because this is the best of all possible worlds.

However, the OECD and governments around the world are looking for ways of getting better data so they can respond more accurately.

It does not have to switch from non-existent to perfect in one step.

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Replying to johnhemming:
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By Jo Nokes
16th Sep 2021 12:10

Whether you would get an accurate idea of your tax position depends entirely on the quality of the information provided each quarter, whether year end adjustments are material, and also whether there are other income streams to be taken into account. If you are represented, your advisor could easily give you an estimate, as we do now for any client who desires it. If you are DIY, you would need to be pretty clued in to be able to work out whether the HMIT tax projections are accurate . I do fear for the quality of these tax projections. I doubt that HMRC will be able to include other income and tax allowances, so what would be the point of them?

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Replying to Jo Nokes:
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By Paul Crowley
16th Sep 2021 12:39

Good one
HMRC projections will be codswallop
Anyone capable of putting together quarterly submissions with accruals, prepayments, and capital allowances probably does not need HMRC to advise
Other income and pension payments in the quarterly reports?
Dividends, interest and capital gains?
For those needing to put in say 5 reports each quarter, how many HMRC estimates of tax

Self-employed, partnership, rent, foreign rent, Holiday letting
The number of MTDs could be quite high for husband and wife

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Replying to johnhemming:
RLI
By lionofludesch
16th Sep 2021 12:13

johnhemming wrote:

As a taxpayer I would like to have a better idea mid year as to my tax position.

That's nice but why do require the entire self-employed population of the country to submit to this MTDfIT ? Just work it out for yourself.

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This all comes down to the question of the faff quotient of doing quarterly submissions. Having done them I don't think there is that much faff.

Well done you but you say yourself that you have an understanding of bookkeeping. What about John the Plumber, who puts his own drawings down as wages and, consequently, is expecting a huge refund of his CIS tax when, actually, he owes thousands on his non-CIS work ?

There's a huge danger in telling folk that it's all very simple.

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Replying to johnhemming:
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By Leywood
20th Sep 2021 09:44

[quote=johnhemming]

''As a taxpayer I would like to have a better idea mid year as to my tax position''.

You dont need to report figures in to HMRC to get to that position.

Nor do those figures have to be available in digital form.

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Replying to johnjenkins:
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By AdamMurphy
16th Sep 2021 13:11

John is a MTD software developer…..

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Replying to AdamMurphy:
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By johnjenkins
16th Sep 2021 13:58

All the better to get his opinion.

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Replying to johnjenkins:
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By AdamMurphy
16th Sep 2021 14:47

People who will be dealing with this working at the front end rather than software vendors are in a better place to answer

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Replying to AdamMurphy:
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By johnhemming
16th Sep 2021 14:56

I am, however, actually working with Taxpayers (a small number) making MTD ITSA submissions.

The fact that I write the software is true. I think I have a useful perspective and I try to answer questions about how it works.

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Replying to johnhemming:
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By johnjenkins
16th Sep 2021 15:10

John, I understand your position but you don't have the experience of dealing with all different types of business on a day to day basis and so your judgement will be based on those that you are dealing with and not the broader spectrum of business.
I can show you 50 clients that will have no trouble with MTD ITSA. I can also show you 50 clients that haven't got a clue and aren't interested as long as they earn a living doing what they do best. From an Accountants point of view it is the concept of quarterly updates that is wrong, considering the tax liability is and still will be based on the yearly tax computation.

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Replying to johnjenkins:
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By Paul Crowley
16th Sep 2021 19:55

Opinions from software sellers with a vested interest are probably not going to represent the general opinion of the poor wretches that will need to pay bookkeepers and software fees for no benefit

I really should be in favour as my fees will rocket upwards only limited by the hours in a day

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Replying to johnhemming:
Tornado
By Tornado
16th Sep 2021 13:01

"That is, however, whether in the long term it is better to send summary figures to HMRC every period (month/quarter) or whether HMRC should get information that leads to tax liabilities in detail in real time."

You write as if these are the only options there are when there are probably hundreds of options. I favour the one that postpones or cancels MTD altogether.

For a Government that wants to assure us that Mental Health matters, they are imposing a system on us that is very likely going to increase metal health problems for many people and for no credible reason.

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Replying to johnhemming:
By ireallyshouldknowthisbut
16th Sep 2021 14:08

@john, if you cant quickly work out your tax bill, then I suggest you ask your accountant for a quick rule of thumb method you can use.

The vast majority of clients who are interested in such things (about 25%) can work it out using simple metrics . Such as "1/3 of your turnover" or similar. Sometimes its more involved like £2000 + X% over Y or similar but such rules of thumb are usually accurate to within 5% of the tax due or so - which if i was to be bold is likely to be much higher than MTD.

Accountants have been doing this since the dawn of taxation. Its the "take a pencil to space" option rather than inventing the zero G biro.

Moreover many cloud accounting packages work it out for you, or at least purport to do so and is likely to be as good as anything HMRC come up with.

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Replying to johnhemming:
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By rmillaree
16th Sep 2021 14:48

"That is, however, whether in the long term it is better to send summary figures to HMRC every period (month/quarter) or whether HMRC should get information that leads to tax liabilities in detail in real time."

You could equally say there is a benefit to logging in and doing your car tax registration 4 times a year rtather than once - less people would be likely to move and or change details and forget to update info if that was the case . Fact is those that have a car are grown up enough to know the score and sort once a year and the general public would be in uproar if they were forced to lgin and tick yes 4 times a year - in might benefit someone somewhere doing 4 times a year but that doesnt alter the fact there is no actual real need and therefore the whole idea is stupidity personified other than for those that need means benefits.

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By zebaa
16th Sep 2021 11:57

I suppose tax could be done on a rolling monthly (like paye RTI ) or quarterly basis rather rather than the mix of periods we have now we have now. The advantage of that type of system would be earlier collection.

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Replying to zebaa:
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By David Ex
16th Sep 2021 12:02

zebaa wrote:

The advantage of that type of system would be earlier collection.

Of data or tax? If the latter, just have more payments on account. Taxpayers can then decided how much effort they want to make and interest will reduce any incentive to understate.

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Replying to zebaa:
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By Paul Crowley
16th Sep 2021 12:07

HMRC would never cope with monthly tax refunds
They seriously struggle with the CIS refunds to traders and and companies

Ye March 2020 CIS to a company took until Feb 21
All details needed were submitted each month under RTI
All ready to go on 5 April 2020, all digital submissions.
Took 10 Months
Imagine it happening once a month, not yearly

And CIS is a lot simpler than accounts or rent

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Replying to zebaa:
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By Paul Crowley
16th Sep 2021 12:12

The system already exists for companies with a high profit
Payments are quarterly

BUT did not need MTD to get that in place, just the decision that companies will start payments on account

Of couse the self employed and landlords had been doing it for many years before companies were asked to

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By johnhemming
16th Sep 2021 12:16

There is, of course, yet another way of looking at this. If we postulate that alternatively submissions remain on an annual basis, but with the digital audit trail there is not really much difference between submitting part of the data quarterly compared to submitting all of it annual. It does require that people keep their records at least every quarter rather than putting it all together in the January after the end of the tax year.

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Replying to johnhemming:
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By Paul Crowley
16th Sep 2021 12:31

Problem in this thinking is assuming the "records"are all electronic and written up quarterly
Real records for real traders and landlords consist of lots of things from different sources
Letting agents prepare annual summaries for their clients
No point at all for landlord to mess about doing anything until the annual record exists

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Replying to johnhemming:
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By johnjenkins
16th Sep 2021 13:56

I think we all recognise that the only way quarterly updates will work is if the information contained therein is accurate. Trouble is there are too many factors to consider. I'll give you just one. A deposit is paid for a van just before the quarter end and the invoice and balance paid or HP set up in next quarter. If quarterly updates were the way forward it would have been done many years ago.

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By AdamMurphy
16th Sep 2021 13:13

Another week, another person starting a new MTD thread where exactly the same opinions as before will be repeated.
Groundhog Day

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Replying to AdamMurphy:
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By johnjenkins
16th Sep 2021 13:57

Read the question.

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Replying to johnjenkins:
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By AdamMurphy
16th Sep 2021 14:45

Read the answers above and below. No different to any other on the other threads

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Replying to AdamMurphy:
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By DKB-Sheffield
16th Sep 2021 15:00

AdamMurphy wrote:

Read the answers above and below. No different to any other on the other threads

Hi Adam,

Not exactly...

Despite providing full reasons for my viewpoint, my overall response to John's question is...

Quote:
I am not completely averse to quarterly submissions if there is a verifiable need, and justified outcome!

However, in its current incarnation, with the current approach, and based on my understanding of the suggested content/ quality/ accuracy of the submissions, I don't believe the outcome will necessarily address the needs identified by HMRC.

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Replying to AdamMurphy:
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By johnjenkins
16th Sep 2021 15:00

I don't control what people post. Perhaps some are trying to make a point a bit more than others. The question is still the same. I am interested in people who think that quarterly updates is a good thing and why.

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By DKB-Sheffield
16th Sep 2021 13:54

Hi John,

Whilst I have commented previously, I do note your subtle, yet significant difference in approach.

Many of the supporters of MTD have stated...

1. How regular weekly/ monthly/ quarterly bookkeeping holds many benefits for some (but, certainly not all) clients and DIYers. Better, more timely data, less hassle at year end etc. It is fair to say this is true, and I am certain that in many situations we - as tax advisors/ accountants/ bookkeepers - try to implement this where there is a perceived benefit (although I admit, this is not something I -personally - encourage for 2-property (£12K) BTL landlords).

2. How having accurate data will enable a better understanding of tax liabilities - whether that better understanding is for the client, HMRC, HMG, BoE, ONS etc. However, again, we do know our clients and our interractions with them usually involve tax planning/ review for past, present and future tax liabities (fairly accurately).

3. How, with access to the electronic records, HMRC will be able to save time and expense on compliance checks by accessing data held on cloud and in-house servers. This may clearly be a benefit but, are we really there yet? Will it work if taxpayers are not mandated to use specific cloud software (possibly a much smaller list than we have available now - maybe 3, 4 or 5 packages). Currently the spreadsheet used the BTL DIYer, held on a laptop (that is only turned on once per month) is 'compliant' with bridging software. It is not accessible 24/7; is of non-standard format; and in granting access to HMRC, the DIYer (not tech-savvy enough to restrict access to specific files) is giving access to their entire hard drive (not just the accounting data). Are there potential data breaches? Is the DIYer having to open ports that can be hacked? Or, do HMRC already have unfettered access to everyone's server, desktop, laptop, tablet, phone, external HD, USB sticks etc.?

I see 1 as being a *by product* of MTD. It is something we endeavour to do -where relevant. It is not a BENEFIT of quarterly submissions! It is a benefit of regular bookkeeping and review. It will not benefit ALL clients/ taxpayers. It will benefit the ones who don't currently do regular bookkeeping, but perhaps should be! However, let's be clear, these are only the clients who turnover £10K to £85K (ignoring those exempt from VAT or trading primarily OOS) - many of whom have such simple affairs that the perceived benefit is minimal or non-existent!

Point 2 is an interesting arguement. Certainly, if accurate tax data is known quarterly this will benefit many. However, from previous suggestions, by others (on previous threads), the accuracy of the data may be questionable! MTD seems to be geared towards the cash-basis (in fact, John Hemming in a previous post stated his software is geared at cash-basis accounting but could be modified for accruals basis, which can only suggest HMRC's default 'accruals' method has made a complete about-turn). It is suggested that accruals, prepayments, stock (etc.) should be posted in the annual submission. For some clients, adjustments may simply be an accountancy fee. For others this will be many £K. This not only gives rise to a hugely erroneous "more accurate tax forecast" but a higher likelihood of a compliance check (not through error or omission - through following the guidance).

As for point 3. I do not see remote compliance checks as a bad thing! However, I do question HMRC's ability to access, read and understand the data. The last VAT compliance check I was involved in was remote (very simple - developer bought land so, large reclaim over about 5 invoices). With to-ing and fro-ing, emails, HMRC not understanding Sage (I appreciate it's a new package - only been around 40 years) etc. the check took 2 weeks (and around 8 hours). The compliance check I was involved in previously was onsite, much more complex, and was completed in 3 hours!

ANYWAY.. back to your actual question!

I am not completely averse to quarterly submissions if there is a verifiable need, and justified outcome! If that need is to make tax simpler, more accurate, provide HMRC with additional powers through mandatory cloud accounting, and (as is suspected by many) to allow for more regular tax payers... they are - to my mind - justified needs. Furthermore, if this incarnation is a stepping stone/ launchpad/ testing exercise to further measures (more detailed returns, quarterly tax, abolishment of "accruals basis"), we can then see where we are heading. However, as it stands; unless there is an entire reworking of tax legislation; unless returns are prepared using cash-basis (i e. a change of policy for many); unless specific cloud software becomes mandatory; and, unless a full MTD Roadmap* is given for future steps; I fail to see how this incarnation ticks all (or any) of HMRC's boxes - simpler, more accurate, more effective and more efficient!

Finally, I have been slightly misquoted on previous threads insofar as wishing to see full quarterly tax returns. What I am actually suggesting is... if quarterly accuracy of tax is a key principal of MTD, it should certainly follow that accurate figures are submitted quarterly. This is not achieved through the submission of 4 inaccurate (and highly inaccurate in some cases - with the exclusion of Stock, WIP etc.) returns followed by an accurate annual submission.

* If this is stage one in the MTD process and the further stages (at a later date) will further increase; accuracy, effuciency, simplicity,and effectiveness, it would be good to know steps 2, 3 etc. It reminds me of a trip I made from Sheffield to Edinburgh a few years ago. I was asked to go to Edinburgh by 5pm and call at York and Washington on my way. I knew where I was going, knew what I had to do on the way and could then plan my time and route accordingly. This would have been very different if I was told to go to York, at York told to go to Washington (etc.) with no idea of ultimate destination or expected time of arrival! If the plan for MTD is that - in the very extreme case - (by 2030 for example) the use of Xero (only), using a fixed chart of accounts (only), linking to a business account held with RBS (only) will be mandatory - in order to meet the aims of MTD, we know (like it or lump it) we have to put every client on Xero, get them to change banks etc. AND that it makes good sense to do that now!

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Replying to DKB-Sheffield:
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By Jo Nokes
16th Sep 2021 14:14

Once again, a brilliant summary of what is wrong with HMRC’s whole approach, and the underlying strategy. I would like to send this to the powers that be, and ask for an answer, or a rebuttal, just something so we know what they are really thinking. This is what the PB’s should be doing on our behalf, but they seem to be partners in the venture, the only criticism seemingly the idea of mandation. Well, I suppose voluntary would be ok if the benefits were real, not illusory. Thank you, DBK

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Replying to DKB-Sheffield:
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By Paul Crowley
16th Sep 2021 14:45

Superb response
Maybe VAT registered clients should be excluded from MTD as HMRC already know their main Income and expenses
They could of course choose to volunteer
But generally VAT regd people already have their own quarterly reports

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Replying to DKB-Sheffield:
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By Hugo Fair
16th Sep 2021 17:23

Wonderful wrap-up of all the salient points raised in the now infamous 400+ thread ... I'm tempted in future to send my thoughts direct to you instead of posting them individually where they seem to attract the ire of one member in particular!
I'd be happy to see the old thread go up in flames (taking the inanities and vitriol with it) ... replaced with your balanced analysis above.

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Replying to Hugo Fair:
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By Tax Dragon
16th Sep 2021 17:50

Inanities and vitriol? Sounds like a laugh - Aweb at its best. Perhaps I should make the effort to plough through it after all.

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Replying to Tax Dragon:
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By Paul Crowley
16th Sep 2021 20:07

Your opinions always welcomed

But MTD ITSA is only a problem for taxpayers, bookkeepers and run of the mill accountants who want to have a life

I have clients who are ageing (we all are) and have been doing the same thing for the last 25 years since the last serious change (self assessment)

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By bluebaron
16th Sep 2021 17:15

It's a bad thing, the biggest issue I have with MTD for Income Tax is the quarterly aspect of it. Four times as many deadlines a year, with just a month to submit it all each time. Awful.

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Replying to bluebaron:
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By Paul Crowley
16th Sep 2021 20:08

One of those quarters being JANUARY

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Replying to Paul Crowley:
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By bluebaron
17th Sep 2021 08:42

And don't forget April (Easter), July (summer holidays) and October (a Halloween horror!).

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By Tax Dragon
16th Sep 2021 17:46

The answer to the question surely depends on the type of client.

For people who actually do boss their finances on QBO or whatever, it's simply not a hardship to file quarterly. It's obviously not a necessity for them, because they're already bossing it all. But it's not a hardship, not a cost - and actually if the accountant has quarterly data instead of waiting till year end, that's good, isn't it? (Again, there's no need for the data to go to HMRC in order to be available quarterly to the accountant, but it's not a hardship to submit it.) There's no particular benefit, but no particular cost, for this type of businessfolk - nor for their accountants.

For people who boss nothing and who use their receipts as toilet paper, or whatever it was someone said somewhere on one of these threads (apologies, I haven't followed them all) - Lion's favourite sort of clueless, bottom-of-the-pile client by reference to whom he thinks all filing obligations should be set - those who will have to (and are able to) pull themselves up by the seat of their shoelaces in order to comply - there'll be a year or two of getting used to it, but how can the earlier availability of info for the accountant be a bad thing?

For those people - like the elderly relative I mentioned on another thread - for whom unaided compliance simply isn't an option, there should be a complete exemption from having to comply.

So to me it seems that it's the second category of the three identified here (of course there may be more than three) for whom there seems to be the most to gain, potentially, from quarterly filing.

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Replying to Tax Dragon:
RLI
By lionofludesch
16th Sep 2021 18:10

Tax Dragon wrote:

For people who boss nothing and who use their receipts as toilet paper, or whatever it was someone said somewhere on one of these threads (apologies, I haven't followed them all) - Lion's favourite sort of clueless, bottom-of-the-pile client by reference to whom he thinks all filing obligations should be set .......

That's not true, actually. I merely point out that it's not going to happen - especially as this is the class of client most likely to be dumped by his professional adviser. I don't blame the adviser - I've said I'd've done the same.

You may say that HMRC will just fine them. To which I would say so it's about charging penalties rather than getting folk to comply.

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