Is MTD dead?

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The MTD (Income tax) pilot has been ongoing for 14 months. HMRC has just published its updated list of MTD (Income tax) suppliers. It has taken a full 14 months to double the number of approved suppliers from 2 to 4! There were 28 initially involved with MTD so what has happened to the other 24? Why aren't the well-known suppliers on the list eg Sage, QuickBooks, Xero etc? Gary Turner MD of Xero commented yesterday on that HMRC said "last month added that any remaining HMRC resources and focus on this part was being pulled altogether". Is MTD (Income tax) dead?

If MTD (Income tax) is dead, where is the list of MTD (VAT) suppliers? Gary Turner again "There is not yet a list of MTDfb (VAT) compliant software providers since the HMRC API side - and therefore the software supplier side - is not yet finished." We're 2 months into a 12 month trial and HMRC haven't even made the APIs available to the software industry. It has really turned into a trial, of patience.

If MTD (Income tax) is dead, why is HMRC continuing with HMRC (VAT)? George Osborne's original announcement was all to do with the Self Assessment Tax Return, not VAT. HMRC already receive VAT returns digitally, mainly via GOV.UK. MTD (VAT) will merely replace one method of digital delivery with another so won't save any HMRC resources. HMRC say that they want software used for filing to reduce errors, but in February HMRC changed the Gateway so that users of older software could no longer file through their software and have to resort to GOV.UK. HMRC's actions in February defeats HMRC's arguments for MTD (VAT). Come on HMRC, you have no credible reason to continue with any aspect of MTD so stop wasting resources, cancel MTD and get on with fixing you numerous IT problems.

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16th May 2018 14:56

Great post, Kevin, and I totally agree.
The only reason HMRC are carrying on with VAT is because if (when) they get it completely wrong it won't be too much of a job getting back to normal.
I have no doubt that MTD for the non vat registered is dead and buried and will not raise it's ugly head again.

Thanks (3)
By Tornado
to johnjenkins
16th May 2018 15:58

"The only reason HMRC are carrying on with VAT is because if (when) they get it completely wrong it won't be too much of a job getting back to normal."

I am not too sure about that. Forcing a massive change in the way VAT transactions are recorded, reported and paid for by everyone affected at the same time, is huge risk.

With apparently only 1 in 7 businesses submitting VAT Returns directly from Accounting Software at the moment, there are obviously 6 out of 7 using the Government Portal. VAT information is currently gathered by those businesses in a huge variety of ways, depending on the way they maintain their records, and then easily submitted to HMRC using the familiar procedure.

Just because businesses use many different methods of maintaining their records does not mean that any of those methods does not produce the correct results. On the contrary, years of using such methods would generally ensure that they work correctly.

The madcap idea of expecting all those businesses (6 out of 7) to scrap everything they do now, choose software, install that software, train staff, fully test and implement the new software, all between now and next April just shows up HMRC for the fools that they are.

The predictable result will be that tens of thousands (perhaps hundreds of thousand) of Businesses will be in limbo with traditional systems dumped and new systems not working properly with the result that not only will VAT revenues dry up as business struggles to work out what VAT is due and how to submit Returns, businesses will start to fail at an unprecedented rate due to the chaos and confusion caused by the rushed changes.

There will be no way back at this stage.

Much better to make MTD for VAT voluntary from April 2019 and announce this NOW and give at least a 5 year lead in time before any sort of mandatory element is involved, and then Accountants like myself can properly assist our clients in a more planned and sensible way to move towards more digital accounting.

Why is this Government so obsessed with MTD when such an obsession will clearly severely damage tens of thousands of businesses in the UK for no rational reason.

What is the real motivation to keep forging ahead, regardless with this clearly unworkable project?

Thanks (3)
to Tornado
16th May 2018 16:13

MTD was the showpiece of the GO administration. No more tax returns etc. To admit HMRC have wasted loads of dosh on MTD rather than developed Agent strategy wouldn't be in their remit.
Bridging software might help, but I have always felt that for the SME, MTD could never work. Mainly because the concept of giving HMRC 1/4 or less updates so that a tax liability could be worked out quicker and errors would be less, just doesn't stack up.
My point about VAT is that if HMRC don't shut off the portal then if it all goes [***] up then they can revert back to old portal.

Thanks (2)
By spuddle
18th May 2018 12:15

I believe accountants have shown that they are highly adaptive and progressive when it comes to keeping up with digital facilities and processes and in driving them forward. I cannot see any advantage to clients or to HMRC in the proposals that are causing unnecessary disruption and uncertainty when we have many other things to cope with. The process is so far down the line that it would be a highly embarrassing admission of the government's and HMRC's failure in planning and implementation to stop it now - but MTD for VAT should be shelved. I'm open to be persuaded otherwise but I haven't yet seen anything at all to do that.....

Thanks (1)
By Tornado
to spuddle
18th May 2018 12:49

"I believe accountants have shown that they are highly adaptive and progressive when it comes to keeping up with digital facilities and processes and in driving them forward"

As one of the first Accountancy firms in the UK to prepare Accounts for my clients on a (personal) computer in 1981 (yes ... 37 years ago!) I know that it took at least a decade or more for the idea to start catching on with other firms.

The same with emails. I was corresponding with some clients by email in the year 2000 and accessing their accounting records remotely a couple of years later.

I am not so sure that all Accountants are that quick to adopt new technology and this is often for very good reasons. Despite my 37 years experience of 'computerised accounting' many of my clients are unable to adapt or understand what is involved and quite a few ask to correspond with them by post./

I can see that younger Accountancy Firms are likely to only take on technically savvy clients and reject anyone who does not fit into their criteria but those are rejected still require more help and assistance and there are plenty of Accountants like myself that will go out of our way to help them.

The most upsetting aspect of the Government's MTD proposals is that despite putting themselves across as a caring Government, they are pursuing a policy that cares nothing for those that need the extra help.

I would go so far as to describe the Government approach as showing strong signs of Psychopathic behaviour,

"traditionally defined as a personality disorder characterized by persistent antisocial behaviour, impaired empathy and remorse, and bold, disinhibited, and egotistical traits" (Wikipedia)

The simple answer is to make MTD for VAT voluntary for at least 5 years and give us in the profession a proper opportunity to help everyone to get involved.

Isn't INCLUSIVITY the proper approach in these modern times?

Thanks (1)
to spuddle
21st May 2018 09:21

The original intention of MTD (as Mr Gauke told us in Parliament) was to eliminate errors, allow the customer to be aware of their tax liability earlier and do away with the tax return giving the UK the most up to date tax system in the world (that last bit was from GO). Well I've gone through the whole thing with a fine toothcomb and yes it's great that HMRC have PAYE and other details all to hand (didn't they anyway) but the accounts side of things leave me totally gobsmacked. There is nothing in MTD that will make things easier or eliminate errors. All it will do, eventually will allow HMRC to have access to every transaction a business makes (they can now with an investigation). I still cannot see it working.

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