Unusual to see common sense from HMRC.
I'm not sure I follow their reasonong in prefering individual invoices to totals off statements:
"In HMRC’s view, it is best practice to record digitally the individual supplies as this means less risk of invoices either being missed completely or being entered twice - once as an invoice, and once as part of the statement"
Isn't there less scope for omissions in entering twelve statement totals rather than an unspecified number of individual invoices each month - or are they hoping for underclaimed input tax?
MTD for VAT is one thing but I guess that people (as predicted) think Brexit is a more important matter.
What idiot thought it was a good idea to introduce MTD for VAT at the same time as a national event as big as Brexit is taking place.
In order to keep the VAT monies flowing in, the Government need to make MTD for VAT voluntary as from 1st April 2019 otherwise the VAT monies flow will dry up as people struggle to submit Returns and make payments.
The fun will realy start when HMRC divert all their available programmers to sorting out the customs/border systems (NAO were predicting it was likely 6 out of 8 systems wouldn't be ready on time) so nobody can sort out the problems that will become apparant once MTD starts for real.
Unless I'm missing something anyone with a VAT quarter of March 2019 who signs up now will have to file the January to March return using MTD when it doesn't become compulsory until their June return, so why would they want to sign up now?
They need to keep digital records from 1st April, but they don't need to register until later.
Given the comments from the House of Lords amongst others and the majority of business that up until now have decided they were better off without computerised accounting, it shouldn't be a surprise most businesses are not signing up before they have to.
Bridging software won't work with manual records!
To me the biggest problems with the whole MTD project are HMRC's apparant lack of honesty and the way the whole project has been run.
Jim Harra, Moneybox on Radio 4 - we are doing this because it is good for businesses and taxpayers; Less than a week later he tells the parlimentary committee - we are doing this to collect more tax. They also tell us that MTD will remove 80 obligations and therefore make things easier - then they refuse to tell anyone what any of these obligations are.
A bit like brexit, it is all being done behind the scenes until the last minute, with MTD for VAT becoming compulsory in April, shouldn't we be past the pilot stage by now? and why are HMRC only now telling taxpayers that some of them are going to have to make major changes to their accounting systems part way through their accounting year?
Then there is the legislation - a statutory instrument, unfortunatly passed by parliament without scrutiny, that allows HMRC to change the rules on how records are kept by issuing a note - so no one can challenge them if they decide to alter the rules.
I've yet to see a computerised bookkeeping system where the quality of record keeping is better than the manual system it replaced, yes you can put on more entries quicker, with less staff and pull off reports faster, but that just means it takes less effort to make a mess.
Given the poor state of HMRC's own bookkeeping (try sorting out how they allocate payments to tax due for any tax) and wee are still getting duplicated records with RTI, are they realy the people to tell us a smart phone with an app will turn you into a brilliant bookkeeper?
In the mean time the software companies are cashing in.
1) Shouldn't it be called "forcing you to Make Bookkeeping Digital"?
2) Can we give valid advice to clients when, with less than six months to go, HMRC are still in the pilot stage?
Today HMRC are not MTD compliant as they are still developing the system, so how can anyone else currently be compliant?
That said, I do have one client who is compliant, their broadband is slow, even by local standards, to the point where they can only send emails without attachments and they are permitted to file paper VAT returns, so they will continue to file paper returns.
Given the state of broadband speeds here, the cloud is not a solution to MTD.
We are told: Making Tax Digital for Individuals, " the additional tax revenue will primarily come from HMRC using bank and building society savings interest data to
automatically pre-populate tax codes"
In April Jon Thompson told the PAC pre-populating tax returns reduced the tax take.
Do HMRC realy believe what they are telling us?
But CT rates are at a historic low and for lower paid workers the effective tax rates are not that high - on £20,000 tax and NI is about £4,600, effective rate 23%
Presumably the aim is for the machine to produce more output for less cost which will increase the amount CT is due on.
"Automation, the logic goes, dramatically reduces tax revenue"
Why should it? if the aim of automation is to increase profits are we not in a position where Income tax goes down and Corporation tax increases, all we are talking about is the difference in productivity and tax rates.
As the tax gap is the difference between estimated amounts due and actual amounts received and considering the result of prepopulating tax returns - less tax collected; is MTD going to lower the tax gap, not by increasing the tax take but by showing how inaccurate the estimates are?