MTD pilot day 1

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After what seems like an age (or an incredibly short space of time if you’re a software developer) HMRC has launched its MTD pilot programme.

The initial stage of the pilot tests the process of adding taxpayers to the MTD platform. The trial is aimed at taxpayers who have either a single sole trader business or a UK rental property (or both). For sole traders, the current accounting period should have started on or after 6 April 2017, although HMRC has indicated that those with a 31 March year-end can also be included.

Taxpayers with income from any other sources can’t enrol for the pilot scheme, something that I’m sure will be a disappointment to many.

The signup process itself is conducted on HMRC’s website, with users walking through a simple series of questions. These questions are:

  1. the types of income received by the taxpayer - i.e. is it from a sole trader business, a UK rental property or both
  2. whether you have income from any other sources (a “yes” answer here will mean you can’t enrol for the pilot)
  3. whether your current accounting period started before 6 April 2017 (again a wrong answer will exclude you from the pilot)
  4. the start and end dates of your current accounting period
  5. the name of your business (or your own name if no business name)
  6. whether you use cash or accrual accounting
  7. whether you accept the terms of participation

The terms of participation are fairly simple, with the user agreeing to provide the quarterly summaries and an end of period statement (all through third-party software), either themselves or via an agent. They also agree to let HMRC know if they’re unable to meet these commitments, and accept that HMRC can remove them from the pilot if they don’t remedy a prolonged failure to submit these returns.

It seems HMRC had one or two technical hitches delaying the big launch for a few hours. All participants must have a government gateway account, and this also led to some teething problems both from users and from HMRC. Taxpayers need to know their login details (something that itself may be an issue), and some users have more than one gateway account covering different taxes or no taxes at all. So it was a challenge gathering the relevant and correct information, and HMRC’s system rejected some of the gateway credentials without providing much in the way of feedback.

However we battled through and registered our first participant mid-afternoon. The ID received from HMRC’s system suggested they were third person to successfully sign up for the pilot.

So what’s next?

HMRC is starting in a cautious mode, implementing what it describes as a “controlled go live” roll out. Initially they’re working with software suppliers to register a maximum of 15 taxpayers per day for the first two weeks and, if this goes well, to then remove or increase this limit. HMRC is hoping to open the process to taxpayers more widely in mid-May, including promoting the signup link on the GOV.UK website.

The testing of quarterly submissions - what most accountants consider to be the main point of the pilot - is due to start in May. And presumably it will be July or August before the quarterly updates start trickling into HMRC’s system.

There is also a parallel process of testing the agent signup process. HMRC considers this to be less straightforward, and are visiting a small number of accountants to walk them through the enrolment process. More details will follow on this aspect of the pilot.

Replies (16)

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By anthonystorey
05th Apr 2017 17:26

So Matt Bailey is one of the people responsible for all this. Shame on you.

Thanks (5)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
06th Apr 2017 10:16

Sorry. anthony, but that is not a reasonable comment to make and goes against our community rules to impugn the reputation of a fellow professional.

You are making the mistake of shooting the messager here and should be mature enough to see that one software house on its own NOT responsible for MTD. Neither is the tax software industry as a whole responsible.

Some of them will no doubt benefit from the initiative and they are naturally supportive of something that will sell more software. That's because they run businesses that are based on automating compliance processes and they would fall in line with any requirement set out in law.

From my perspective, a lot of the software houses you're so cheesed off with have put a lot of effort into trying to get HMRC to see sense about its timetable and approach to MTD, and some of those robust conversations are continuing.

So when discussing MTD or anything else on AccountingWEB, please approach the subject rationally and maintain your professional decorum when posting comments.

As the global editor of AccountingWEB, I'd like to thank Matt for this blog and hope that he's not put off by any misdirected animosity. His insights about working within the pilot project offer us a unique perspective on MTD as the system evolves.

So please keep coming back if you want to find out more about the practical obstacles businesses and accountants are likely to encounter when they adopt digital record-keeping and quarterly reporting.

Thanks (14)
Locutus of Borg
By Locutus
06th Apr 2017 13:04

I agree with John.

Whether we like it or not (and I certainly don't) MTD is a reality that we are all going to have to face.

I would like to know that the software companies have tested their systems with real cases before the MTD nightmare hits for the rest of us.

The reality is that HMRC are also likely to listen far more to problems that are exposed in these trials (and I think there will be many) than any number of public consultations, House of Lords committees or letters from MPs.

Thanks (4)
Tornado
By Tornado
06th Apr 2017 16:00

6) whether you use cash or accrual accounting

Is there any further definition of what this means? Many of my clients use Cash Accounting for VAT purposes so at its simplest level there is a Cash Book with receipts and payments, but final Accounts are prepared on an income and expenditure basis.

I assume that the software will deal happily with both circumstances but what would be the answer to that particular question.

Thanks (4)
Replying to Tornado:
Morph
By kevinringer
06th Apr 2017 16:11

Good point

Thanks (0)
Tornado
By Tornado
06th Apr 2017 16:26

Hello Matt

Please keep your blogs coming.

I feel your approach is honest and down to earth and the GBooks integrated software seems a better bet than the IRIS software I am trying to use at the moment. (Would you believe that I will have to wait until the end of May before I can prepare and submit a 2017 SA100 Tax Return with IRIS/PTP OpenTax!).

As AWEB readers will know, I am very much against many aspects of MTD, particularly the mandatory requirements, but I don't have a particular problem with the basic principle. In my mind the final legislation will be very different to the proposals, and if the Government can be persuaded to be more pragmatic about the way MTD is rolled out, then I am sure that we can end up with a tax administration system that will be workable in one way or another for everyone.

Your progress with the Pilot will be interesting, just don't ask me to take part! I have done my fair share of beta testing of accounting software when my firm were helping with the development of CSM Auditman way back in 1981 although the software was somewhat simpler then.

Thanks (3)
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By Digit Dabbler
07th Apr 2017 11:44

I can't imagine dealing with HMRC is any easier for software developers than it is for accountants, especially after the fiasco of the 2017 tax returns. More than happy to hide at home and let you do the head banging Matt. Just keep us posted .............: and let us know if you need a contribution towards padded headgear.

Thanks (1)
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By addw
08th Apr 2017 15:53

I have finally understood that the government push to MTD (Making Tax Digital) is actually about making everyone use an accounting program. The way that they will enforce it is by mandating a quarterly return that will have to be done electronically.

I run a business with a small number of invoices and expenses, so I do not run an accounts package (I tried Sage some 25 years ago and found it a pain), I don't want to sign up for some cloud based something (obvious security, lack of control & cost reasons), I don't have any Microsoft machines (no point and horrible security reasons) ...

So: is anyone aware of any open source software that I can run on a Linux box ?

Thanks (0)
Replying to addw:
Locutus of Borg
By Locutus
10th Apr 2017 14:02

@addw

I think MTD will pose a lot of challenges for you.

Firstly the market for any accounting software for Linux software is low, since software developers focus on Windows and to a lesser extent MacOS.

Secondly, open-source (i.e. free) products will also be limited, since there is little incentive for software developers to develop it.

In spite of your reservations of cloud software, I suspect that will be your only viable option when using a Linux machine.

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Replying to Locutus:
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By addw
10th Apr 2017 14:19

Well, I mentioned this to a couple of friends (Linux consultants) who immediately agreed to join me on doing something.

Probably best done by writing a MTD plugin/... that could then be used by the various Open Source accounts packages that already exist.

Why ? What one said: ''I would certainly be interested in helping with this, for the benefit of others and my own self-interest.''

Thanks (0)
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By kjevans
10th Apr 2017 12:07

Sounds as though the system isn't yet ready for a pilot.

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Replying to kjevans:
Tornado
By Tornado
10th Apr 2017 12:16

No response from Matt for a few days.

I think he is very brave to be involving his company with this Pilot and hopefully we will all benefit from his experiences.

Thanks (1)
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By PLM1
10th Apr 2017 13:39

Never mind the pilot - how can I find out about the GBook integrated software to do my own trial run before I have to produce MTD (as a below £83,000 rental income property owner) compliant submissions starting April 6, 2019.

PLM

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By Brian Ogilvie
10th Apr 2017 14:26

Matt/John
Could you please advise me of the weblink for signing up for the pilot scheme - I cannot seem to find this on HMRC's website
Thanks

Thanks (0)
Replying to Brian Ogilvie:
matt_bailey
By Matt Bailey
10th Apr 2017 14:32

Hi Brian, the link won't be there yet. HMRC is planning to add a link in mid-May and open up the trial at that point.

Thanks (1)
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By Gimlet2008
20th Apr 2017 12:09

Is there any possibility that this could all be put into"cold storage" as suggested by the Select Committee. Apologies if I have got that wrong, but I'm worried about getting clients all anxious and then they scrap it as they realise nobody is geared up. Don't mind one way or the other but a bit wary about the plug being pulled. Might this still be possible ? I was going to hold off until September on that basis.

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