MTD beta programme: Preparing the practice and processes

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Making Tax Digital took another step forwards when Rowleys Accountants filed one of the first quarterly filing submissions in its beta programme.

By being one of the first to make a submission the Leicester-based practice is set to join the pantheon of digital tax luminaries alongside firms such as AC Mole and Sons, the accountants who filed the UK’s first ever electronic personal tax return back in 1997.

As with any beta test, there have been a few niggles along the way but after three rounds of MTD submissions, Rowleys feels fairly confident that the lessons they have learned thus far will help them adjust to the process.

AccountingWEB caught up with Mark Hook, tax director at Rowleys, to find out how they prepared for the MTD beta programme.

Why get involved?

According to Hook, Rowleys always wanted to join the pilot but never intended on joining so soon or being one of the first to make a submission.

“I took the view that whether we like MTD or loathe MTD it’s coming, and we needed to get in as soon as possible to work out what is going on so we can advise our clients as soon as possible,” said Hook.

As one of the two software vendors currently capable of filing quarterly updates required for MTD, Rowleys’ software provider IRIS had been in discussion with customers about the MTD beta programme and quarterly filing for MTD. Following an email conversation, Hook confirmed that he had a suitable client to go through the submission.

IRIS provided HMRC with a list of approved customers that wanted to take part. After asking some qualifying questions HMRC decided to take Rowleys through the initial subscription process.

The first stage was relatively stress-free. HMRC came to their offices to talk them through the next steps, while IRIS took the firm through the authorisation and verification process.

Picking a client for the pilot

When the MTD goalposts were moved above the VAT threshold, this limited the firm’s selection of eligible clients for the pilot. But at that stage one client was already on Rowley’s radar because of the amount of work it does for them – this was key to making the process less impactful on the firm.

“The client we selected we already do quarterly bookkeeping to produce their VAT returns,” said Hook. “Their VAT returns were the right period to link in with what the pilot needed to be. It was basically continuing to do the VAT returns as we had always done, and the idea was to bolt the MTD submission on - just to see how it would work.”

For the client, the process was no different: “He comes in once a quarter and throws two brown paper bags at us like he always does. He's no different than he was before.”

First submission

HMRC and IRIS listened in on the first submission, and Rowley’s provided HMRC with a copy of the computation to make sure that what came out of IRIS Personal Tax was what the Revenue was expecting.

Here’s how the process worked:

  1. Rowleys accounts department posted the client’s accounts in IRIS Accounts Production, which automatically transferred the data to IRIS Business Tax
  2. The data was then posted to IRIS Personal tax (click of one button)
  3. IRIS Personal Tax posted and assigned the posting to the relevant quarter
  4. Opening the Digital Tax Hub within IRIS Personal Tax shows the breakdown. At this point, Rowleys selected the quarter they wanted to submit
  5. The submission was shared with the client for e-approval
  6. Once all parties were happy, Rowleys clicked the ‘Update HMRC button’ and it automatically submitted the submission to HMRC
  7. HMRC returned the computation within the Personal Tax Digital Tax Hub. 

Business as usual then? Not quite. The first submission did require some human intervention.  

Because at that point there was no bridge between IRIS and Sage’s bookkeeping software, Hook had to physically re-post the quarterly data into IRIS Personal tax from a printout before they could make the submission. 

What we’ve learned

So while there have been some gremlins and error messages, Hook has so far found the process “fairly smooth”.

“I think there are still some gremlins in there but that's the point of a beta test, to identify where the gremlins are. We're going to do the fourth one fairly soon, and it is when we do the adjustments, that'll be the interesting bit for me: how do you get the four quarterly ones into a set of proper accounts.

“We've learned that it was a fairly smooth process but you need to have the information there. If we were to scale it up we'd probably find more problems, but we're selective with the client we chose. “

A key a part of the process that Rowley’s will take forward is lining up a client’s VAT quarters. “We took source records and made it electronic so we digitalised the source documents, and his VAT quarters were conterminous to the year-end,” said Hook. “If you can get your VAT quarters conterminous with your year-end it could save a lot of angst.”

Client categorisation

Before the pilot and when there was still uncertainty around the actual MTD start date, Rowleys categorised their clients.

“We started to do a bit of data mining to work out which clients would be in and where they sat within the threshold eg how many clients would be affected if the threshold was £50,000, £60,000, £70,000, or VAT limit.”

In the future, client education will be a top priority for the firm. “We can do it from a place of being able to say we've actually done this and we've seen it live”, Hook said.

“It's always easier to talk a client through a new process if you've actually done it. We can actually stand up and say we've done this and this what we've done, and this is how we did it, and this is what you'll have to do going forward.” 

About Richard Hattersley

Richard Hattersley

Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.


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19th Apr 2018 09:27

I notice that you used IRIS software to submit. Can the submission be made using HMRC free software or directly on HMRC's website without using 3rd party software? For small clients the cost of using their accountant or 3rd party software can be relatively expensive.

Thanks (0)
to David160
19th Apr 2018 10:52

There is no HMRC free software for VAT at present and, possibly, there may not be. Free software depends on software houses providing it and whilst there were a number of firms looking at doing it when MTD was going to be for SA returns, I've not yet heard of any free VAT compliant software coming available.

HMRC's website will be discontinued so businesses will have to use software and, if no free software is available, pay for it.

This is what lots of complaints have been about all along and the last HMRC cost assessment of MTD recognised that small businesses will bear an additional cost for this.

Thanks (2)
19th Apr 2018 10:48

" Hook had to physically re-post the quarterly data into IRIS Personal tax from a printout before they could make the submission. " This surely means that it was not MTDfB compliant?

Thanks (5)
to mgbacchus
19th Apr 2018 10:52

That was my thought too

Thanks (1)
19th Apr 2018 10:53

Having read this load of trouble, I am so glad I've communicated to all clients that I will wait until the last possible moment to implement anything.

MTD is a total shambles and I have a feeling the recent "Brexit" report is a first step in HMRC being able to blame further postponement of MTD on Brexit issues.

Thanks (6)
19th Apr 2018 11:29

I have to say I (being totally against mandatory MTD) found this article very interesting. I don't consider having to input figures twice and various "other" problems a smooth run. I presume a "smooth" runs means a run actually happened. Again no costs were metioned, which to many will be very important. What also struck me is the "client" was hand picked. To me the idea of a "pilot" would be to have a cross section of clients to see what works and what doesn't. It appears we are a long way off getting things up and running for April 2019.

Thanks (7)
19th Apr 2018 11:33

MTD started as something which theoretically had some point and benefit but proved very difficult and costly to implement.

As far as I can see, the reduced scope MTD has no point and is still very difficult and costly to implement.

Thanks (3)
19th Apr 2018 11:51

MTD was conceived because (we were told) it would eliminate errors.
When a concept is ill conceived it will never work. You only have to look at IR35 to see where MTD will be going.

Thanks (1)
19th Apr 2018 12:25

a small number of specifically handpicked clients is not a good pilot for several hundred 'ill fitting' clients....

As has been mentioned, the original basis for MTD has turned into a project the Revenue simply cannot afford not to introduce....even though at this point it probably hits non of the original targets it was apparently going to resolve.

Thanks (2)
19th Apr 2018 17:25

I feel it is worth clarifying that although there may only be two software providers listed on HMRC's website, that does not mean there are only two providers capable of supporting agents in taking part in the pilot and submitting quarterly updates.

Thomson Reuters submitted our first update in the latter half of last year, and more recently have submitted Q2 and Q3 (with Q4 following shortly). Thanks again to Gary and Jolene at Eazitax for their involvement! With each submission, lessons have been learnt, and improvements made. All part of the learning curve that is MTD. We are now in the process of rolling this functionality out to more of our users.

Since the early days of the pilot, we confirmed we would freely support any of our existing user of our Digita suite who wanted to take part in the pilot. As our focus was on helping these existing users, we had no initial plans on being listed as a “pilot provider” on the HMRC site, to avoid causing disappointment from approaches from 'non-users'. That said, not being on this list seems to be giving the wrong impression that despite being at the forefront of MTD since the beginning, and winning last year’s Practice Excellence award for MTD Software, our solution is not capable of submitting an update – it is. We are now working closely with HMRC to get our software listed to avoid any further confusion.

Many thanks

Mark Purdue
Product Manager – Tax Products
Thomson Reuters

Thanks (0)
to MarkP
20th Apr 2018 08:46

I applaud your enthusiasm, Mark, but even you must realise that this is not going to go "live" in April 2019. Still no word of "costs" or are the providers hoping to lose the costs in offering an Accounting software package that includes everything.

Thanks (2)
to johnjenkins
20th Apr 2018 10:13

Imagine the scenario where it DID go live in April 2019, but all the software providers took the view it wasn't going to and solutions weren't ready... Whilst you may be correct, we have to work on the assumption that go live will be April 2019.

Thanks (2)
to MarkP
20th Apr 2018 10:28

You should have been a politician Mark. Let's all blame someone else. Ultimately it's HMRC decision if it goes live.
Come on, you're involved, can you actually, in practice, see this going live in April 2019?
I've put my money where my mouth is and will be joining the "pilot" with a cross section of clients. I'm also going to do a Trump and if it doesn't do what it says on the tin I will pull out.

Thanks (1)
to johnjenkins
20th Apr 2018 11:13

The current state of the VAT pilot is that all the interaction points with HMRC are either there now, or will be very soon (next month).

The legislation is in place for MTD for VAT to apply for the first reporting period starting on or after 1 April 2019.

I would say everything is in place for VAT to start in April 2019 as planned.

However, there is still an outstanding question what HMRC projects will be deferred (if any) due to Brexit (see Some are saying (dare one say hoping) that MTD will be one of them.

My view is that VAT will go ahead in April 2019, but would question the likelihood of IT & CT happening as soon as 2020 (for IT & CT to get the green light, VAT success must be shown, and the time-frame is very tight). That said (as I mention above), we are working towards an April 2020 date for IT & CT.. until we hear otherwise.

Thanks (0)
to MarkP
20th Apr 2018 11:27

There you go Mark, "will be very soon (next month)". Nothing is as it should be.
So would I be right in thinking that the most likely scenario would be that in April 2019 VAT MTD will go ahead voluntarily rather than mandatory?

Thanks (0)
to johnjenkins
20th Apr 2018 13:08

So, just to clarify - the elements expected in May are not necessary to make a submission, they relate to functionality like viewing prior returns and previous payments.

Not going to comment on voluntary vs mandatory, as I've given my current view above

Thanks (0)
to MarkP
20th Apr 2018 13:50

Mark, I'm not having a pop, but part of MTD is to be able to view. All these things should have been sorted out last year so that when the pilot started everything should have been in place. The penalty regime is in place though. HMRC expect us to advise our clients when nothing is concrete. Business haven't been advised. So how do HMRC expect business to be ready for this fiasco.
Compared to the implementation of SA this is a .............up

Thanks (0)
to MarkP
20th Apr 2018 09:39

@mark, so are we to assume your pilot consists of a single firm of accountants submitting presumably one or two returns?

Thanks (1)
to ireallyshouldknowthisbut
20th Apr 2018 09:54

Effectively, yes. We had two firms in the original pilot, but one of the firms took no active involvement initially. When MTD for income tax was deferred, plans to extend the pilot effectively stalled. That said, now that the pilot is fully open, I am getting a large amount of interest in taking part in MTD for income tax, and also the VAT pilot

Thanks (0)
to MarkP
20th Apr 2018 11:29

Tell us more. Is this a tax product linking into an existing accounting suite or an accounting package? What size companies is it for and what does it cost?

I am aware of a number of large businesses which have had some successful pilots with fairly complex packages, but I think the concerns being expressed here is around all those smaller businesses which cannot afford expensive products and/or currently rely on spreadsheets.

It is fairly certain, I would have thought, that providers like Sage, Xero, Quickbooks etc all have solutions to roll out. But all of these, as I understand it, will be on monthly subscriptions (more cost to SMEs) and none of the currently free accounting packages look to be providing VAT MTDfB updated versions.

Thanks (0)
By Bill H
19th Apr 2018 19:13

I agree with Mgbachus that it could not have been a smooth process if it had to be posted twice! Hook must have too much time available. Better spent down the pub!
As I have commented before I am concerned about the accountancy profession rolling over to this ridiculous imposition. I have used IRIS for payroll in the past but not again as it is not user friendly. God knows what their accountancy package is like. Why hasn't HMRC publicised their plans to the general public? Simple because they are frightened it will not be accepted. The ordinary taxpayer will have to go to accountants and pay for something that will not bring more accurate recording.

Thanks (1)
to Bill H
21st Apr 2018 10:57

The accounting institutes hardly rolled over. The ICAEW has constantly opposed the mandation element of the proposals. And it was concerted objection to the original proposals that allowed the partial concession to allow spreadsheets. There have been meetings after meetings with ministers on the subject of MTD. The problems highlighted with MTD for SA meant that that was deferred even if the (less onerous) MTD for VAT appeared in its place. And this, in the face of determination by legislators to introduce MTD in some form.

My surprise is that more businesses didn't complain more vocerifously. If they didn't then maybe ministers are right that it is no big deal. It's not the view I'd take, but I guess we will only see over the next few months.

Thanks (0)
By Matrix
to mgbacchus
22nd Apr 2018 09:07

Businesses didn't respond since they have not yet been notified by HMRC about MTD at all.

I don't think ICAEW know how small practices work, they suggested that we get involved in the MTDfB pilot but how do we resource this? The above practice has not charged the client but I don't see what is in it for me to enter the pilot and I have saved lots of wasted resources by deciding not to.

Unfortunately I have had to start letting clients know in case it happens next April and it is up to them if they move software.

Thanks (0)
25th Apr 2018 13:11

"..Hook had to physically re-post the quarterly data into IRIS Personal tax from a printout before they could make the submission" ha ha ha ha. So the first MTD submission is not MTD compliant. What a joke. And this goes national in less than a year.

Thanks (0)
25th Apr 2018 13:12

"We're going to do the fourth one fairly soon, and it is when we do the adjustments, that'll be the interesting bit for me: how do you get the four quarterly ones into a set of proper accounts" So this pilot has been going for 9 months and it still isn't working.

Thanks (0)
25th Apr 2018 13:17

How many taxpayers are involved in the MTD pilot? When I met with HMRC March 2017 they told me they expected 400,000 (10% of all SA cases) to take part in the pilot. 12 months later and I recon we're down to single figures. Surely that sends a message to HMRC about MTD.

Thanks (0)
26th Apr 2018 14:52

HMRC admits that Rowleys submission is not MTD compliant. Note Q&A from today's HMRC MTD webinar:

Q: I have read a report on AccountingWeb about an agent who uses Iris, the client uses Sage. The agent has just submitted Q3. There is no digital link between Sage and Iris so the agent has to input the Sage totals into Iris manually. Surley this is not compliant with the MTD requirement for digital links. Why is HMRC continuing with the trial if after almost a year these basic requirements are not in place?
A: You are right that this would not be MTD compliant in a world where the income tax service is mandatory. It is worth bearing in mind however that MTD for income tax is not yet a mandated service and there is no governing legislation at the moment. As the income tax pilot matures, we would expect that digital links would be used to create and submit updates. and software providers do know this. It is still valuable to HMRC however to be able to test the service now.

Thanks (0)
to kevinringer
26th Apr 2018 15:44

I too listened to HMRC webinar today.
They almost didn't want to talk about "software". Merely stating it's up to "customers" and agents to sort it out themselves. It also seems that, although you can copy clients from one portal to the other, you still have to set them up in MTD separately.
I still cannot see business taking this up, although the point of non mandatory was clearly made.

Thanks (0)