MTD: Create your client communication plan
Richard Sergeant looks at how you can create a communication plan to make sure clients are aware of what is going to change for them in the run-up to the Making Tax Digital for income tax self assessment deadline. This article is the sixth in our Countdown to Making Tax Digital series in collaboration with Sage.
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Through ‘general communication’ and ‘regular updates’ we have gone from telling clients that they can choose their own MTD reporting period (2016) to now herding them together at 31 March whether they like it or not.
We have sent weekly emails to clients since circa 2012 so the communication side has been easy and is not new to our clients but we are grateful for the absurdity of MTD which has allowed us to add circus style humour on a regular basis.
Please don’t preach that quarterly updates as currently proposed are suitable for any form of tax advice. Valuations, Capital Allowances, seasonal variations will make nonsense of any cash based figures.
How much better it would have been for HMRC to have thought things through properly, and listened hard when told truths which they offhandedly rejected, instead of blundering on as they still seem intent on doing.
Given that "some details are still to be clarified" (winner of the Understatement of the Year award) and the suggestion that "General communication to all your clients is going to be essential" - how about sending the clients something like:
As far as we can tell the government, and HMRC in particular, think you're really stupid - although it's of course possible that it's us who are stupid for not understanding their message. You decide!
You may remember the massive campaigns to persuade every householder to move to 'smart' meters for their electricity & gas. The main messages were that the migration would be simple (and wouldn't cost you anything) + you'd actually save money (by understanding what you were using).
Wind forward 10 years and what has happened?
1. All the original meters were specific to your then current supplier, so you either couldn't then change supplier or it would cost you the proverbial couple of limbs to do so.
2. The cost of supply and installation had all been underwritten by the government (aka taxpayers) - and had to be written-off before an even bigger fund was allocated to repeat the exercise (with pan-supplier meters that no-one wants because they were bitten last time).
3. It didn't take long for most people to notice that (shock/horror) their consumption of electricity increased whenever they switched on an electrical device - and the larger & power-hungry the device, the worse the consumption - but that the meter wasn't necessary to understand this.
4. Also a number of 'failures' have been identified (such as smart meters that don't work as they can't get a signal) - which was a surprise, despite forecasts that this would happen.
So why are we rambling on (a bit like a government communications effort) about smart meters, when we usually talk to you about exciting things like taxation?
Well the short answer (and the long answer would take too much of your and my allotted number of years to expound upon) is ... that there's something supposed to be coming your way called MTD for ITSA. Snappy isn't it? Making Tax Digital for Income Tax Self Assessment.
It's origins in near pre-history were as part of George Osborne's famous "death of the tax return" pronouncement, but it has evolved (or rather been transformed like Frankenstein's monster by injudicious quantities of lightning strikes) into something that now looks like nothing else on this planet.
We don't know exactly what it involves (as HMRC haven't yet made up their collective mind on that point), but it will require most of you that currently complete a SATR to spend extra money on software AND to make a choice between entering data on a daily basis or paying us to do this for you.
You may be surprised to hear (HMRC certainly were) that we're currently reviewing our price-list ... and as with those letters from the Banks that start with "Good news ...", it will be for us.
In case you're wondering, HMRC have from time to time announced that this will accrue benefits to you but so far none of those claims have stood up to scrutiny. Maybe there's a hidden agenda that will deliver the country's finances to some higher plane - but if so it is currently unannounced (probably yet to be defined), which brings us back to the Smart meters.
Apparently these are meant to be able to inform, in real-time, the power generators about rapid changes in demand - so that they can switch supplies via alternative routes and whatever else they need to do in order to maintain services.
Highly laudable (assuming it's true), so why wasn't this the message when they were trying to encourage maximum uptake?
Apparently because the Spads (look it up) thought you and I were too stupid to understand this and could only be motivated by personal greed (even when based on a lie and so not being achieved).
If you now have a feeling of déjà vu, you've reached the same point as us. Happy Christmas.
I've been taking the p*ss out of this on my budget newsletter for the past 6 or 7 years, and noting the back peddling and moving backwards in time dates each time.
That's about as far as I am going to take it this March, and in October/November next year.
Short section stating what date its been put back to this time.
Many of my clients have retired since the initial announcement, many others business come to a natural end, others moved on. not sure why I would put time and effort in now for a cohort of clients who might or might not apply, and the reality is will be put back yet again. HMRC dont have the resources to check what we file, even if we do end up doing this at some point, so MTU seems to be the optimum solution to get through the first 5+ years of this and I imagine it will go like other systems before it. A forgotten backwater and weird anomaly like iXBRL which no-one gives 2 hoots about.
Sixth of Seven in the series . And still no mention of, or reference to , applications for an Exemption from Making Tax Digital.
So far we have seen the enormous amount of benefit and ooodles of dosh that Software companies can expect to make from these articles. And clearly , from these same articles , there's no benefit to the general taxpaying public.
Hopefully the last in the series will reflect HMRC's customers where it's not reasonable or practical due to age , disability , location or any other reason to accommodate this farce - and what they should be doing about it.