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.
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.
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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...