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.
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.
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.
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Paul Aplin recently retired as a tax partner with A C Mole & Sons, is immediate past president of ICAEW, a former Chair of the ICAEW Tax Faculty and Tax Faculty Technical Committee and a member of CIOT Council. He is an enthusiast for using digital technology to improve business and tax administration - he filed the UK's first electronic...