Former Tax & IT Partner AC Mole & Sons
Columnist
Share this content

MTD: Let’s get it right this time

Paul Aplin sets down some aspirations for the next phase of Making Tax Digital in response to a question from this week’s Great Debate with Rebecca Benneyworth.

6th Aug 2020
Former Tax & IT Partner AC Mole & Sons
Columnist
Share this content
The Great Debate with Rebecca Benneyworth: How do we get ready for the next phase of MTD?

Towards the end of the Great Debate on the next phase of MTD, one of the viewers commented, “Bank feeds have the potential to be wonderful. Currently they’re too unreliable. Can we have that sorted before we go any further?”

There are some big issues tied up in those three sentences. The first is the phrase “have the potential”. With Making Tax Digital, I think we’ve got to look at the potential of software to do all kinds of things that can help us and help our clients.

A better experience

For example, when MTD was first announced, we were told prompts and nudges would be built into software that would head off common errors at the point of recording the transaction. We need to go back to HMRC and the software companies and say, “Hang on, that was five and a half years ago. Where are the prompts? Where are the nudges? Where are the things within the software that will actually make the experience better and will make our clients and many of our colleagues think, ‘Yeah, actually, there’s something in this that is of real benefit to us, not just to HMRC.’”

You say that currently bank feeds are too unreliable. That’s another lesson we can learn from how MTD has gone so far. It’s got to be a three-way open conversation between the professional bodies, agents, HMRC and software developers. We should be more willing to talk to each other about where the potential is and how to capture it so that our clients, the taxpayers, see some benefit and so do we as tax agents.

At the moment, the driving force of MTD is all about the need for tax information in a certain format. It should be more about the information businesses need for accurate record-keeping, which we all know can help agents deliver a better service for clients, with reliable tax information coming out at the end of the process.

But I’m going to have to disagree with the question on the third point of getting data feeds sorted before going any further. I’m sorry, but I don’t think we can, because the world is changing so rapidly. We can’t just push the pause button and look at one aspect, because other aspects will be moving on regardless.

Coping with rapid change

Covid-19 was a prime example of that. We saw how rapidly HMRC got the CJRS digital functionality out of the blocks. That was quite an achievement to design something that basically reversed the flow of tax data from real time information. But they struggled to include agents in the Self-Employment Income Support Scheme, partly because they had to do a big data cleanse.

If they had quarterly reporting data, HMRC wouldn’t have had to stop with data for SEISS at April 2019. They would have had much more up-to-date data. Having a combined view of how we all use this technology could have delivered something much better for our clients, and was a process in which we as accountants could have played an important supporting role.

For five and a half years, the conversation has been around costs and burdens. Those things still have to be on our radar and some people will really struggle with digital.

While not losing track of those hurdles, I’d like everyone involved in the next five years of Making Tax Digital to really focus what we can do collectively to realise the potential of digital tax technology for all stakeholders.

Paul Aplin will be back with Rebecca Benneyworth and Lee Farrington from HMRC to pick up the conversation about MTD in AccountingWEB Live's next Great Debate, at 9am on Monday 21 August. Come along to get your own personal MTD briefing from the people who know what's going on.

Replies (7)

Please login or register to join the discussion.

Tornado
By Tornado
06th Aug 2020 22:43

Some of us have not learned any lessons from the MTD experience. Look back through hundreds/thousands of posts on Accounting Web, and the current situation was predicted and inevitable and we knew exactly what would happen. It was never really the concept of Making Tax Digital that was the problem, just the way that it was being introduced.

It will take years to sort this mess out now when with a properly planned introduction over a period of time we could have been well advanced with a modern digital system that has a clear roadmap and destination and has been properly designed for all of the people that will be using it.

It is too late for pathetic excuses, but a more sensible approach to the project in the future might get some support, but not yet. There are some considerable problems that business has to deal with first and many will tell you where to stick your MTD at the moment!

Thanks (8)
Replying to Tornado:
avatar
By DMBAcc
07th Aug 2020 12:09

Hi Tornado. Can you tell me if ANYWHERE there has been an acknowledgement of my predicament (I dare say I am not alone). I have 60 clients of which 40 wouldn't even know how to turn a computer on leave alone use a commercial accountancy package (how many HMRC staff know how to use one ? yet they are insisting we have to). Also many of my clients in Cornwall are dependent on the holiday season. The current tax system works brilliantly for them. I don't pester them between April and October and they send me their accounts in November and I have 3 months to do the lot. Simple. When in August would one of these clients have time to do any accounting? They go to bed at midnight having sorted their guests. They are up at 5 am to prepare breakfasts then clean rooms and order provisions etc etc and take more bookings. Has ANYONE at HMRC even given a passing thought to the people who generate the money in order to pay their salaries? Even my local 6 tory MPs can't be bothered with small and micro businesses in Cornwall. I really despair. Why can't we get some REAL dialogue with the decision makers. Why do they and their political masters discount the small businesses. Are they trying to drive us out of business? What have we done to incur such overwhelming wrath from them?

Thanks (4)
Replying to DMBAcc:
Tornado
By Tornado
07th Aug 2020 14:55

I agree with everything you say and one of the key problems with MTD so far is that it is based on types of tax instead of types and sizes of businesses. Logic says that larger businesses with more funds and resources should have been brought into MTD first and then over a period of 5 to 10 years, other businesses could have followed with exemptions for those that could not adapt for various reasons. What we got was a compliance led plan instead of a plan for prosperity.

There might be some hope however (not). When I went for my first post-lockdown haircut, the hairdresser proudly showed me his new phone app that records his sales. Very impressive and all categorised into types weeks and months. When I asked him how he records his cash sales and tips, he went a bit quiet and said that the app only records his card sales. In contrast to my hairdresser clients who I insist do a paper receipt for EVERY sale, the digital version looks a bit flawed. Still, that's progress. Software is the answer to everything isn't it!

Thanks (3)
avatar
By johnhemming
07th Aug 2020 16:06

Open Banking has the potential to improve the operation of bank feeds.

Thanks (0)
avatar
By johnjenkins
24th Aug 2020 10:04

I certainly welcome the delay in bring the full package of MTD to the fore.
As I and many others see it there are two really big problems that have to be overcome that I feel can't be. The first is the difference between "high tech" and "low tech". This is a major problem and I'm pretty sure it's not just restricted to the UK. It will take at least 20 years for the difference that is here now to be eroded. However by then technology would have advanced so far that there will be another techno void. This is caused by technology advancing so fast that ordinary folk can't keep up.The second is making small business to quarterly updates. I have never come across anything more absurd than this. Quite frankly I cannot see this working or even coming close to those business with turnover under £50K. Hopefully HMRC will eventually see that this will never work.

Thanks (3)
Replying to johnjenkins:
avatar
By DMBAcc
24th Aug 2020 10:20

That is my hope (prayer) too John. Leave the small businesses as they are to cope with all the other challenges in life especially in this Covid climate. I already have anecdotal evidence that small businesses will go "under the radar". I have even heard bartering mentioned. The spirit of Cornwall hasn't changed much from the early days of smuggling and all things anti-establishment.

Thanks (1)
Replying to DMBAcc:
avatar
By johnjenkins
24th Aug 2020 11:26

I shall be flitting between Plymouth and Penzance this weekend so I'll let you know what the "high tech" new world smugglers up getting up to.

Thanks (1)