I have personally filed a MTD return and a non MTD return today successfully on Xero.
I know my firm has filed at least six returns today on Xero and I have heard nothing from my clients.
The HMRC want all companies to tell them that "the company is within the charge of Corporation Tax". This has to be done with three months of happening. This is on the CT41G letter which HMRC send to all newly incorporated companies (per Companies House) which has the UTR on as well.
I didn't know about this until today as the new format of the HMRC UTR letter makes very clear.
If they don't hear from you they have always assumed the date of incorporation is your starting date. However I don't know if that has a legal basis or even that practice will carry on?
On personal tax the HMRC has had problems with unrequested tax returns and the legality of enquires and penalties. Maybe they are worried about CT?
You will get some people excited with your headline. MTD for VAT is still with us.
I have heard that the HMRC are planning to confirm in the Autumn budget that MTD for IT will start for everyone from April 21. The HMRC's plan is that the majority of taxpayers will not need to do a 2021/2022 self assessment tax return as all their income will uploaded to their Personal Tax Account.
Also as part of this rumour is that close companies will be required to report their dividends voted direct to HMRC under an API from April 2021. I would assume that this would be part of MTD for CT but this was not told to me.
The other point why I am not jumping for joy that MTD for IT has been kicked so far into the future so not too worry about it is that the software companies are spending money on MTD for IT. There is now four software companies you can use to join MTD for IT pilot (there was only 2 I think) and there are two more in testing. Also Xero announced more yesterday about what they have been doing with their Instatfile acquisition. They will be offering corporation tax, full personal tax including partnerships and trust tax. Why design a product that nobody wants.
Trying to get the non VAT registered sub contractors is going to be a nightmare to get them MTD ready. But I rather tell my client they have another year not to worry about it as the HMRC have changed their mind than having to explain to a client in February 2021 that he has one month to obtain and learn bookkeeping software and that yes us accountants have known about this change for six years. (The HMRC document "Making Tax Easier" was released in March 2015!)
Finally does anybody think HMRC are subsidising the QuickBooks TV adverts? I can't be the only one who has had non VAT clients who think they have to have QuickBooks on their phones from April because of the TV adverts.
In all major economies round the world they have some sort of sales tax. Indirect taxes are seen as less painful than direct taxes (an old Maggie trick).
In Australia it is called GST and the registration limit for trading businesses is 75,000 Aussie dollars, apart from one industry. All taxi drivers have to charge it regardless of their turnover.
Post Brexit the HMRC can invent some of their own wacky VAT rules without the permission of the EU and make our lives even more harder. In the consultation document about reducing the VAT threshold there was a suggestion of post Brexit have a lower VAT rate for businesses with turnovers below £85,000.
90% of VAT is paid by the largest 10% taxpayers. VAT take would increase as administration costs would go down. Make the VAT registration limit, £10 million.
About 10 years ago there was suggestion of an even madder idea. All businesses were to pay their staff gross through the BACS system. The BACS system would tax the payment, pay the net to the employee and the PAYE and Ee's NI to the HMRC. The Er's NI would be paid by DD. There was even a suggestion of taking it further, all payments by businesses went through BACS so they could be taxed at source!
Being a "goody two shoes" the majority of my clients will be in wave 1 but I expect will a few will need a prompting letter from HMRC after their first VAT return that should of been done under MTD but have not done so (before a new argument starts, they have box 1 with £20,000+).
A bold statement, but I think you are going to disappointed.
What they should have done at the start is having it voluntary from 1 April 2019 but with a "carrot" to entice taxpayers on the system for the first year. This could of been an extra £200 off first Vat liability would have encouraged the smaller clients onto it. The other option would have been give VAT returns under MTD seven more days to submit and pay but they were more likely penalise the non MTD submitters by moving their deadline to the end of month like the good old days.
My answers
I have personally filed a MTD return and a non MTD return today successfully on Xero.
I know my firm has filed at least six returns today on Xero and I have heard nothing from my clients.
Have you sorted the problem?
Sadly I didn't have a bet on my prediction.
The HMRC want all companies to tell them that "the company is within the charge of Corporation Tax". This has to be done with three months of happening. This is on the CT41G letter which HMRC send to all newly incorporated companies (per Companies House) which has the UTR on as well.
I didn't know about this until today as the new format of the HMRC UTR letter makes very clear.
If they don't hear from you they have always assumed the date of incorporation is your starting date. However I don't know if that has a legal basis or even that practice will carry on?
On personal tax the HMRC has had problems with unrequested tax returns and the legality of enquires and penalties. Maybe they are worried about CT?
You will get some people excited with your headline. MTD for VAT is still with us.
I have heard that the HMRC are planning to confirm in the Autumn budget that MTD for IT will start for everyone from April 21. The HMRC's plan is that the majority of taxpayers will not need to do a 2021/2022 self assessment tax return as all their income will uploaded to their Personal Tax Account.
Also as part of this rumour is that close companies will be required to report their dividends voted direct to HMRC under an API from April 2021. I would assume that this would be part of MTD for CT but this was not told to me.
The other point why I am not jumping for joy that MTD for IT has been kicked so far into the future so not too worry about it is that the software companies are spending money on MTD for IT. There is now four software companies you can use to join MTD for IT pilot (there was only 2 I think) and there are two more in testing. Also Xero announced more yesterday about what they have been doing with their Instatfile acquisition. They will be offering corporation tax, full personal tax including partnerships and trust tax. Why design a product that nobody wants.
Trying to get the non VAT registered sub contractors is going to be a nightmare to get them MTD ready. But I rather tell my client they have another year not to worry about it as the HMRC have changed their mind than having to explain to a client in February 2021 that he has one month to obtain and learn bookkeeping software and that yes us accountants have known about this change for six years. (The HMRC document "Making Tax Easier" was released in March 2015!)
Finally does anybody think HMRC are subsidising the QuickBooks TV adverts? I can't be the only one who has had non VAT clients who think they have to have QuickBooks on their phones from April because of the TV adverts.
After Gary Turner's tweet yesterday, the answer is Xero.
https://www.xero.com/uk/features-and-tools/practice-tools/xero-tax/
Did you write on their behalf.
I have a 85 year client whose bookkeeper is 75 who uses her grandson to enter the amounts online each quarter.
In all major economies round the world they have some sort of sales tax. Indirect taxes are seen as less painful than direct taxes (an old Maggie trick).
In Australia it is called GST and the registration limit for trading businesses is 75,000 Aussie dollars, apart from one industry. All taxi drivers have to charge it regardless of their turnover.
Post Brexit the HMRC can invent some of their own wacky VAT rules without the permission of the EU and make our lives even more harder. In the consultation document about reducing the VAT threshold there was a suggestion of post Brexit have a lower VAT rate for businesses with turnovers below £85,000.
90% of VAT is paid by the largest 10% taxpayers. VAT take would increase as administration costs would go down. Make the VAT registration limit, £10 million.
About 10 years ago there was suggestion of an even madder idea. All businesses were to pay their staff gross through the BACS system. The BACS system would tax the payment, pay the net to the employee and the PAYE and Ee's NI to the HMRC. The Er's NI would be paid by DD. There was even a suggestion of taking it further, all payments by businesses went through BACS so they could be taxed at source!
Totally agree with you.
Being a "goody two shoes" the majority of my clients will be in wave 1 but I expect will a few will need a prompting letter from HMRC after their first VAT return that should of been done under MTD but have not done so (before a new argument starts, they have box 1 with £20,000+).
A bold statement, but I think you are going to disappointed.
What they should have done at the start is having it voluntary from 1 April 2019 but with a "carrot" to entice taxpayers on the system for the first year. This could of been an extra £200 off first Vat liability would have encouraged the smaller clients onto it. The other option would have been give VAT returns under MTD seven more days to submit and pay but they were more likely penalise the non MTD submitters by moving their deadline to the end of month like the good old days.