Making Tax Digital moves up a gear
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Rebecca Cave is now retired from 35 years in the tax world, including eight years as AccountingWEB's consulting tax editor.
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I am really beginning to enjoy MTD now as it is clearly doomed to failure, but I no longer care. It will be impossible to comply with the myriad of nonsensical rules, so why try?
I would say the MTD is now much more entertaining than Brexit and I look forward to the daily episodes of each. Who needs Coronation Street or Eastenders when we have MTD and Brexit?
Who's going to know whether you've transferred data from one thingamabob to another using digital means. I say just do whatever's easiest and don't worry about it. HMRC are going to be too busy clearing up the mess to check whether everyone's complying with the letter of the law.
Well quite
They can allow or disallow things until they are blue in the face, but the key is if you pay the right amount of VAT at the right time.
That is the point of HMRC. To collect taxes that are legally due. Process matters little and is soon forgotten about.
Anyone doing really detailed tagging of stat accounts? Or do you bosh through anything that files?
The waters are really muddied now and it is difficult to see where we are going, but I think the necessity for a digital link or flow of data through an accounting system is mainly to do with MTD as an ultimate extension of MTD for VAT.
Whilst there is the need for some absurd digital link between a spreadsheet and an API for VAT, eventually HMRC will be trying to force us into using software that reports every transaction in an accounting system, and this is where the spreadsheet will fail as the spreadsheets that businesses of all sizes and Accountants of all sizes use are not designed to do this.
We get over MTD for VAT and then the old problem comes back as the solution we found for MTD for VAT is wholly inadequate for MTD.
The whole situation is appalling and absurd and HMRC are just fighting fires when they should be re-thinking the whole MTD project.
To the site moderators, can we have a poll please?
Which is the bigger shambles?
A. Brexit
B. MTD
Tough one to call that. A bit like asking if you'd prefer to die by firing squad or hanging.
Brexit - no doubt about it because there are some aspects of MTD that could work if introduced voluntarily over a period of time.
I hate agreeing with anyone but you got it right Kevin.
Whatever plan we come up with the EU will not like or agree to. So, as I said right from the start, let's stop wasting time and just come out with "no deal".
Ok "what about all our business ties, Northern Ireland, trade etc. etc." I hear the remainers cry. They will all get sorted but on mutual terms (because they have to be).
Back to the plot.
I do actually feel that HMRC (with their watered down approach) realise that it is going to take a lot longer to convince small business to play ball. We now know that the link to each transaction will not be available till 2020.
I'm really not sure of the legality of HMRC being able to have access to every transaction without opening an investigation. I will look into that further - unless anybody already has the answer.
Section 6 'Agents will not necessarily have access to all of your source data so, for example, they may not always be able to make corrections to your digital records. In these circumstances your agent will need to advise you of any corrections required to those digital records.'
This means agents don't have to maintain a digital link to the original data. Notice there's no reference to spreadsheets so this applies to any records.
But does this contradict 3.2.1.1 talking about the soft landing 'The one exception to this is where data is transferred, following preparation of the information required for the VAT Return, to another product (for example, a bridging product) that is API-enabled solely for the purpose of submitting the 9 Box VAT Return data to HMRC. The transfer of data to this product must be digital.'
Surely HMRC are going to communicate with businesses affected.
The easy way will be to send them all a letter in Sept/Oct 2018 with a sterner follow up letter, Jan/Feb 2019. Nice and simple.
That's not se*y enough for HMRC so we will probably end up with TV and radio adverts, costing a fortune, instead.
HMRC has said it WILL NOT write to all affected businesses to tel them about thier MTD obligations. I believe this was confirmed in the CIOT webinar: https://www.tax.org.uk/policy-and-technical/making-tax-digital
They really are washing their hands of all responsibility aren't they?
This will come back to bite them on the [***].
Correction: I have jsut been told that HMRC WILL be writing to businesses who they believe will be affected by MTD for VAT. HMRC are just deciding on the right time to do this.
I would say that the "right time" is ASAP!!!
At last HMRC are going to do something. I hope HMRC will liaise with the Institutes about the wording of the letter because HMRC's version will be 'this is wonderful' whereas the institutes are well aware from member feedback of the enormity of the requirement to digitise transactions.
That's when the smelly stuff will hit the fan.
HMRC are probably putting it off until they've actually got something to work with, because clients are going to want a demo.
I look forward to the deluge of correspondence from clients asking what on earth it is talking about! So far, every client that I have proactively raised it with has not heard of it.
The alternative, of course, is that the client files it in 'don't understand therefore will ignore' and continue in the blissful assumption that, given that HMRC are introducing it, the HMRC portal will continue to be an adequate way of filing. I have yet to find a client who doesn't ask me 'why' on that one!
Yes Brexit is probably a bigger shambles as the choice will probably boil down to betting the house with the No Deal escaped lunatics or begging our way back to the EU.
But HMRC are embarked on their stupidest scheme of the past 10 or 15 years. And when you consider how many really daft things, like the pasty tax, have come out of HMRC Towers in that period, this is one hell of a car crash we are heading for.
So HMRC have moved their MTD up a gear from 1st to 2nd (although some might say we have moved from 1st to reverse judging by the amount of back-tracking that has been going on).
Still a lot of gears to go until we get anywhere near a decent speed and not that much time to adequately test out if it works properly. Does MTD still need extensive repairs?
One thing is for sure, HMRC are unlikely to get any speeding tickets in the foreseeable future with their MTD, but might get stopped for a breath test due to the wild wandering all over the road with their ever changing route plans. More likely, I think, is that they will be stopped for using a mobile phone whilst moving in their MTD, as they are so obsessed with the damn things.
Perhaps it would be safer for all of us if HMRC was simply instructed to take their MTD to the nearest scrap yard and look for another simpler, more reliable model. MTD may have cost 1200 million pounds but hey, it is far too complicated to be reliable and is not safe, and that is THE most important point.
So I use an ancient desktop version of quickbooks, is no way that I can see of transferring the data out. Am I correct in thinking that during the softlanding period I can prepare the return in quickbooks and then type this in a spreadsheet and transfer across to hmrc via an application such as liquid vat filer?
Yes, it’s that simple. Liquid vat filer also supports both excel and csv files. More information here https://vat.liquidaccounts.com/
Click on the “how it works” link to download our user guide doc.
Also feel free to contact the team at [email protected]
"businesses will need to start keeping digital records and then submit VAT Returns via functional compatible software for return periods starting on or after 1 April 2019."
I have a client who's Annual Accounting year ends 28 Feb 2019. Does anyone know if that means they'll not have to comply with MDTfV until their VAT Annual Accounting period starting 1 March 2020?
VAT has nothing to do with year ends, although you can get your returns to coincide with your year end. If your already registered and turning over £85k your returns periods are the same. If you are nearing vat threshold then the normal 12 month running total applies.
Thanks John for your reply. I should have been clearer - this particular client uses VAT Annual Accounting with both VAT & Accounts year-end of 28 Feb. Hence first VAT period starting after 1 April 2019 will be 1 March 2020.
We can probably not yet answer this - but I wonder if they will therefore escape their need to comply with MTDfV for another 11 months?
From 1st April 2019 all registered business with a turnover of over £85K will have to go on MTD as the normal gateway will be shut for them. So whenever your first VAT return is submitted, regardless of what scheme, it will come under MTD, unless exempt.
I telephoned the VAT helpline, on 0300 200 3701, today to try to find out more about Agent Services Accounts and how the £85,000 limit will be policed. I was initially told that somebody from the MTD team would telephone me in two days' time. I was surprised to receive a call 10 minutes later.
I know some people have commented about reviewing a client’s VAT history since 1973 to see if they had EVER (as this is what the VAT Notice says) exceeded the VAT threshold.
I was told that the £85,000 limit will be decided by the last four VAT returns before the introduction of MTD. If a client has turnover over this amount then access to the VAT filing service on their Government Gateway account will automatically be revoked on 1 April 2018. That appears to be quite clear.
There has been lots of discussion on this thread and others regarding the new Agent Services Account. I think it is now well understood that all agents will need to set up a new Government Gateway account for MTD purposes and that this portal will be used to deal with submissions through compatible software.
I have very easily created my own new Agent Services Account and are linked it to my old Government Gateway account. The latter, for clarity, is where we have and will continue to access our clients non MTD tax details.
I asked the question why my clients had not been pulled through to the new Agent Services Account. I was told that unless I had agreed to take part in the beta pilot that nothing would be shown even though the two accounts are linked. I was told that in a few months' time that some VAT registered clients would appear in the new Agent Services Account.
As mentioned above, I was further told that once we reach 1 April 2019 that have all VAT registered businesses who have a turnover of £85,000 in the previous 12 months (for VAT returns) will automatically be revoked from the normal agent filing service and introduced into the new MTD new Agent Services Account.
I don't see how they can revoke all those with a turnover over £85k from the normal gateway because there are some that can't use MTD for a number of reasons. I'm thinking just the digital side not the internet side.
I note JohnJenkins comments. However, unless you can apply for and receive an exemption then you must file with VAT MTD for VAT returns after 1 April 2019.
Maybe, if your client has religious issues, poor internet or other disabilities e.g. age then they can turn back on the old Gateway for them.
Without an approved exemption there will be no filing through the 'old' Gateway. If there was I'd continue to use it for all my clients!
"Maybe, if your client has religious issues, poor internet or other disabilities e.g. age then they can turn back on the old Gateway for them."
I am not sure that Age is a disability, but it might be worth a try.
Although HMRC seem confident about blocking most people's access to the usual Government Gateway portal from 1st April 2019, in practice, I think this is bound to cause widespread confusion and a dramatic decrease in funds flowing into the Treasury as business of all sizes struggle with the new rules and software that does not work properly & HMRC systems that do not work properly.
It makes no sense for HMRC to deliberately create a situation that not only suppresses much needed tax income, but will also involve countless HMRC staff in trying to sort the mess out and dealing with countless appeals.
This sort of situation is completely unnecessary and I think HMRC will have no choice but to concede to common sense before we get to April and make MTD for VAT optional rather than mandatory
It certainly sounds drastic to me and I unlike a lot of small businesses am aware of the change. I am just waiting to see what product I am forced to buy (my current records are impeccable and kept on paper - unhackable too.....) and then it would be sensible if we could use two systems in parallel for a year or so whilst things bed down surely rather than come 31 May (I think my first filing date after April) there being immediate problems and inability to file or pay.
Also they have not written to us VAT payers yet as far as I can see and it is getting very close. Even if it just involved me having to train myself in something like excel (given I have zero time for that kind of stuff anyway and hate it) that is cutting it very fine and even if they want time to assess and accept applications for exemptions (which I doubt would apply to me anyway) and investigate if the exemption if rightly applied for etc there is still not that much time between now and then.