MTD - MPs tried their best...
Call me sad but over the bank hol weekend (I know it seems a long time ago now) I sat down with the intention to work out the impact of MTD on my practice and clients. Husband was away and there was thunder and lightning outside so it seemed as good a time as any.
I was looking to create an 'information sheet' to give to my clients when I see them to go over their accounts or send to those whom I don’t see and also to place on my website. I met Tony Margaritelli at the Acctext earlier this year and he stressed the point that time is running out ( https://www.accountingweb.co.uk/tax/hmrc-policy/mtd-accountants-are-the-...)
There has been such a lot of bombardment of information since MTD was announced that I decided to go back over the more important documents. I started with the petition, the research briefing (pack) that attending MP's of the debate on the petition were given (Number CDP-2016/0015, 22 January 2016) and viewed the committee meeting debate online where MP's questioned David Gauke (now Chief Secretary to Treasury) https://petition.parliament.uk/petitions/115895.
I was looking for the answer to the question – why – what was the real reason behind the 4 quarterly tax return submission. Because we all know that however it's dressed up that is what it will be. What is the 'end game'?? All the way through my review HMRC kept coming up with the same comments - that taxpayers had been asking for certainty in the amount of tax they pay, that taxpayers were making what they term 'errors' and 'failure to take reasonable care' and because of this the tax take was much reduced. It was all about 'how customer service can be improved' and how wonderful everything is going to be and little about the impact on staff. The impact is now well known - significant savings will be made by closing down its remaining 170 offices and transferring to 13 large, modern regional centres. If you are an HMRC employee and do not live near one of the 13 ... then 'tough'. HMRC are expecting 23 million phone calls less under MTD.
So you have to look hard to find the real reason behind MTD and I found it in the Debate pack issued to MP's before their debate on the petition:
"to simplify the payment of taxes, including whether to align payment dates and bring them closer to the point when profits arise, so that taxpayers make a single regular payment that covers all their tax affairs" and "The government is changing the tax system so that it operates much more closely to ‘real time’".
In other words, RTI on taxes which in the end will include VAT and CT. They are looking for monthly payments in a similar vein to the way payments are made to the utilities by using estimates until the final return is submitted. You can see why – they get their money spread over the year and won't have to spend so much on the DMB chasing debts.
Teresa Pearce (MP Erith & Thamesmead) went straight to the jugular in the Treasure Committee meeting on 25 March 2015 by asking George Osborne "Is that just the extension of RTI for everybody"? She never received a reply.
In the 'pack ' submissions by other bodies were quoted. Nothing from ICEAW or ACCA; CIOT were no help at all – they seem to be all for it. FSB are the ones fighting and the Business for Scotland group (never heard of them until now) were brilliantly scathing.
The viewing of the debate on Parliamentary Live was fascinating. I was pleasantly surprised as to how venomous the attending MP's were. Caroline Lucas (Brighton Pavilion) went straight to the point and asked for evidence that taxpayers weren't doing it right. Peter Kowle (Hove) in particular made a powerful and heartful speech against. Sammy Wilson (East Antrim) wanted to know what was the point? A number queried the statistics saying 'it doesn’t all stack up' and nearly everyone asked for a delay.
So MP's are well aware of the problems and presented every single point that Accweb members have made. They tried to get the scheme roll out delayed. HMRC were made aware of the upset they are causing including the fact that broadband is not available for all but nothing is going to stop MTD. There may be tinkering about the edges but the result is that there is nothing we can do. MP's tried and they got no where.
David Gauke came across as a nasty bit of work, determined to get his own way. All he did was read out what we have all been told before (all 'errors' and 'helping clients know their tax bills' etc etc – the text being the same as in the consultation documents 'certainty', 'target guidance', etc etc) and mostly ignoring questions. In his closing statement he commented that under MTD seasonal taxpayers 'may be due a tax refund during the year'. Although he said that there had been no decision made but they were thinking about monthly payments. So there we are. RTI and monthly payments by the back door.
I will be finish my review later this week by considering the consultation papers and looking at the comments made by other Accweb members to find out what they are doing.
Meanwhile – do I have enough information to tell clients? Will telling them worry them? Most don’t even know they have their 'own' digital account and an 'information sheet' is too much at this stage I think. It has been confirmed that as well as a full consultation there will be practical testing so overall it's best to wait until that has been done before saying too much. It is also for that same reason that any response to the consultation needs to be submitted as late as possible (so long as the actual submission date is not missed).
So I will be tentatively mentioning MTD to my clients - trying not to frighten them too much. See how much they know so far. I can't see what else can be done at the moment.