Former Tax & IT Partner AC Mole & Sons
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MTD: Get access right for agents

Paul Aplin is supportive of the government’s ten-year strategy for MTD, which acknowledges the central role of agents. But lessons must be learned from the implementation of RTI.

3rd Sep 2020
Former Tax & IT Partner AC Mole & Sons
Columnist
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HMRC
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The Great Debate on MTD hosted by AccountingWEB on 3 August prompted some great questions, one of which provided the perfect framework to sum up the discussion. The comments during the follow-up debate on 24 August provided equally pertinent food for thought.

There was clear concern that very small businesses were the least able to cope and had the least – if anything - to gain. I understand that concern and it is why I have always believed that mandation is the wrong approach for the smallest businesses. But I also believe that digital technology can help to deliver better record keeping and that, combined with its acknowledgement of the essential role that agents play, is why I am broadly supportive of the government’s ten-year strategy for MTD published on 21 July.

Looking back at RTI

The low point in digitalisation (for me at least) was when RTI was launched with different views of the same data for HMRC’s employers’ helpline, for their debt management service and for employers themselves (while agents could see nothing at all). That caused frustration for clients, exasperation for the agents trying to help them and created many unnecessarily calls to HMRC’s helpline.

If a common view of the RTI data had been designed in from the start the experience would have been better for everyone.

Inclusivity and cooperation  

Understanding the needs of all stakeholders and ensuring that those needs are catered for is essential. That understanding will only come from a dialogue between businesses, representative bodies, software developers and HMRC. I am therefore pleased to see the government saying explicitly that a key part of the vision is a single digital account for all taxpayers, bringing together data across different taxes where “agents will be able to see and do what their clients can, and designing in agent access from the outset”.

One digital account 

A single digital account - holding all of the information HMRC holds about the individual’s tax liability and how it is calculated - has the potential to transform taxpayers’ experience of the tax system. Currently, the personal tax account (PTA) is pre-populated with information obtained through the PAYE system, but it has the potential to be pre-populated with far more: self-employment information and property income from MTD (from 2023), interest and dividends for example. Yes, I did say dividends.

The more information that can be prepopulated into the PTA, the more genuinely useful the account is to the individual taxpayer. It can be done: Denmark has been pre-populating tax return data since 1988. All of the information should, and must, be visible to the agent where one is acting. Change can’t be achieved overnight, but it could certainly be achieved over the ten years covered by the plan. We should be ambitious.

We should also be realistic. Software is not a magic wand and we have all seen woeful digital records as well as woeful manual records. We know that some people will struggle and after 40 years in general practice, I completely accept that there are oddities, technicalities and practicalities that digital technology can’t yet crack: but it cracks a lot more than it did 40 (or even five) years ago. Bank feeds and apps that capture images of invoices and categorise them may not yet be perfect, but they are developing fast. There is real momentum in the marketplace.

Change can happen quickly

MTD has been a significant driver of change, but this year we have seen another. Covid-19 has impacted most businesses and accountancy practices. For many, it has shown the value of cloud accounting to offer a real-time, digital service irrespective of constraints on physical contact. It has also shown that digital systems can be used by the government to offer support to businesses.

The most striking example was CJRS, which was designed and launched in record time. The main problem with SEISS was that agents could not use it on behalf of clients, which takes me back to the need for the agents to be acknowledged as playing a vital role and given the necessary digital access and functionality.   

Two-pronged approach

A comment made towards the end of the debate was that we were taking a high-level rather than a practical view. We need to do both.

At a high level, we must ensure that vital elements (such as agent access) are built-in at every stage and that we articulate what businesses need from digitalisation as clearly as HMRC articulates what it requires.

Yes, we do need to cover the detail, particularly with the software developers, so that accuracy and functionality (including prompts and nudges to correct errors) continue to improve. If we do that and if the government delivers on the promise of the incremental, consultative approach set out in the strategy document, we have a chance to harness the power of digital technology for the benefit of businesses, individual taxpayers and agents as well as for HMRC. It is an opportunity we should seize.

Replies (8)

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By SXGuy
03rd Sep 2020 18:25

I agree with everything you've said, but the key point in all of this for me, is the cost to the tax payer.
As I've said many times, for a small practise. Who perhaps sees most clients twice a year to prepare their TR, to now have to chase said clients every 3 months for the information, will most likely require an additional employee with the sole purpose of doing the chasing, you then have a scenario where you may allocate x amount of time each year on each client to having to find time for all clients every quarter.
To me that translates to more fees, and for the client who's turnover is just above 10k, I'd like to see any accountant successfully explain the benefit (and cost) of MTD.

It was never a big leap when MTD came in for vat, because quarterly submissions were being done anyway, yes perhaps for some the move from paper records to digital may have been a big step but on the whole, most adapted quite easily with minimal cost. But MTD for income tax, is not the same and it will indeed raise client fees significantly in my opinion, and I'm not quite sure a 10k turnover client is prepared to pay the price.

Increase the threshold to a more realistic turnover, and I think more would be willing to accept it.

Thanks (8)
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By memyself-eye
03rd Sep 2020 18:56

Inclusivity...change can happen, two pronged....
Jeez.... what a load of tosh. Public sector talk straight out of Orwell's 1984

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By Open all hours
04th Sep 2020 08:33

Re High Level / Practical view.

The latter must take priority. If MTD for the masses is not practical, all the jargon and theory that HMRC are capable of generating will be rendered worthless.

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By Abax
04th Sep 2020 10:37

If Agents are supposed to be a key part of MTD, why do HMRC refuse to issue CGT forms to agents and instead insist the tax payer applies for the forms fills out the forms themselves?

We have had two instances of this in the past couple of months. It has been particularly difficult given that the new regulations require the CGT return is completed and tax paid within 30 days of the sale of a CGT asset.

One wonders if this is a matter of entrapment?

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By AWeb72
04th Sep 2020 10:57

I'd rather they polish existing systems before moving onto their next scheme. There was a time I could view clients' PAYE payments. Now its removed since they have a new system and I get a message i have too many clients!! I'm only a one man practice

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By SXGuy
04th Sep 2020 12:17

Following on from my first post, would it not make more sense, to roll this out to vat registered businesses first, they have quarterly submissions already, you could remove tax returns and add a 5 submission for all the adjustments needed.

Over a number of years gradually include businesses under the registration threshold but have a big enough turnover to cope with the added cost, until a time when the systems are all smoothly operated, everyone has a clearer idea of the process and only then scale it to include those with minimal turnover.

It makes no sense what so ever re my first post to include anyone with a turnover as low as 10k.

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Replying to SXGuy:
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By Open all hours
04th Sep 2020 12:22

Agree, but what you propose is eminently sensible. It therefore stands virtually no chance of being followed up.

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By Mayfield56
10th Sep 2020 07:17

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