Chartered Accountant Charlie Carne & Co
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Accountants resist MTD by misconstruing what it's trying to do
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Don't resist MTD for the wrong reasons

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Am I in a minority of one in cautiously accepting and even embracing HMRC’s Making Tax Digital initiative, asks Charlie Carne.

16th Jun 2021
Chartered Accountant Charlie Carne & Co
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Andrew Oury’s article arguing that HMRC was ignoring the impracticalities of MTD and sleepwalking into disaster drew a lot of supportive comments from AccountingWEB members last week.

I beg to differ, however, and so did a couple of other members. While Andrew did raise some genuine points of concern around security, he made the mistake of conflating MTD with quarterly payments. The motivation behind MTD, he suggested, was to raise more taxes by collecting them much earlier rather than raising tax rates. There is a government call for evidence on the possibility of quarterly payments but, even if they do become a feature of the tax system, that’s not an argument against MTD. The figures submitted quarterly might help HMRC to calculate the liabilities, but I’d argue that the underlying purpose behind the digital tax initiative is not about payments, but to change the way businesses keep records.

Yes, some firms will face a challenge to keep more up-to-date records in an electronic format, but larger businesses already keep regular quarterly or monthly accounts, so MTD doesn’t pose a much of a problem for them. My stance is that the benefits for small businesses of compiling quarterly accounts for MTD will ultimately outweigh the drawbacks.

Lack of understanding

That’s not to say that MTD is a complete triumph, but any criticism of the initiative should address what it is trying to achieve rather than attacking it on false premises. When MTD was first mooted in 2016, I remember attending a meeting at the Treasury where the focus was aimed squarely at income tax and not VAT. The lack of understanding from HMRC and the Treasury on how this would work in practice was most obvious when an HMRC official told a room of practising accountants that we would no longer need to file an annual tax return for our clients, as we’d just file a simple report five times a year.

No matter how few the data points to be filed, we are still filing a tax return and are required to be conscientious and accurate in so doing.

The business (and its accountant, if it had one) would still have to work on the accounts four times a year, instead of just one (for non-VAT registered businesses). Like most of the profession, I was deeply concerned that our workload would be potentially quadrupled. I welcomed the switch to VAT as the initial implementation of MTD with great relief, as this did not require any additional filing, but merely changed the method by which we filed the familiar VAT return. HMRC had clearly recognised the mire into which it had stepped and sensibly realised that it made sense to proceed more cautiously.

As with most government IT projects, the initial implementation was a disaster. Creating an Agent Services Account (ASA) and linking it to HMRC’s old VAT mainframe system was far from intuitive. Two years in, however, the system now works pretty well.

Focus on record keeping, not filing

Since MTD for VAT still files the same nine boxes on the return, some accountants question the whole rationale for MTD. But they’re missing the point entirely. The purpose of MTD is not to change the way in which the data is filed, but rather to change the way businesses keep their records. By forcing filing via compliant software, HMRC can ensure that the business is keeping digital records and not simply grabbing a bunch of receipts once a quarter and adding them up (unchecked and unreconciled) and filing nine numbers via an online form.

If a check is made on the return, the software ensures that each field has an inbuilt analysis of every transaction that comprises the total. This was not the case pre-MTD for businesses that did not keep meticulous records.

The argument for MTD

Why do I now welcome MTD? Previously, I struggled to persuade some smaller businesses to use a proper accounting system, but now they have no choice. I benefit from being able to work from proper records, maintained throughout the year and I no longer have to prepare all of the quarterly accounts in the few, short days before the deadline when my client deigns to present the data to me.

AccountingWEB member Self-employed and Happy made the same point in a comment on Andrew Oury’s article: “All of our MTD clients are up to date within 14 days of every month end, along with a rolling CT estimate… This is the type of service accountants should be moving to for the majority of their clients if they wish to remain relevant.”

Like “Self-employed and…” I am fortunate in working with IT-literate clients who aren’t afraid to use a computer. My view would, perhaps, be entirely different if I had a rural practice with elderly clients who didn’t even use internet banking.

Software changes

MTD has led to significant change in the accounting software industry. As well as the big players in the bookkeeping space (QuickBooks, Xero, FreeAgent, etc), tax software providers such as Taxfiler and TaxCalc also produce MTD-compliant VAT filing and reporting tools. In time, and as HMRC opens up more APIs, I expect that this software will gradually add more reporting functionality.

Instead of struggling with HMRC’s appalling reporting, we can choose from a range of third-party software providers who will compete to give us what we want. The old HMRC mainframe, for example, was never able to tell the accountants via their agents’ logins how much VAT had been paid. As a result of MTD and ASA moving onto HMRC’s Enterprise Tax Management Platform, accountants will soon see the same data that is available on their clients’ own tax accounts, including details of payments and assessments, making it much easier to reconcile our figures to those held by HMRC. Payment information will be available from launch for MTD for income tax and is being introduced over the course of 2021/22 for MTD for VAT.

We now need to ready ourselves for the imminent launch of MTD for ITSA. This is a much more extensive project and will require even more small clients to use software throughout the year, rather than having them gather up their paperwork as an annual project.

I don’t pretend that I’m not concerned as to how this will work in practice as we will now have to file four times as often for each client. However, the biggest criticism that I hear about this – that the data will be meaningless until we finalise the year-end, as it won’t include provisions and adjustments – is entirely unfounded.

In all the recent MTD sessions I’ve attended recently, HMRC officials made it clear they don’t expect or require any adjustments to be made mid-year. As I explained in relation to MTD for VAT, the purpose is not to produce an estimate of quarterly profits, but to ensure that taxpayers are maintaining proper records in a digital form. There is no requirement to make quarterly adjustments; if you have not done so, you can still tick the box that the return is accurate from a transactional basis, not an IFRS-compliant basis.

In the long term, I suspect that HMRC will carry out their initial tax reviews via direct access to the digitally connected accounting software. With some adjustments to tax legislation, this could lead to a requirement for all invoices to contain unique identifiers that HMRC could track, ensuring that every cost deduction and input VAT claim is matched by an equivalent income and output VAT declaration in the supplier’s books. I’ve had client VAT inspections where HMRC asked for specific sales invoices from my client to ensure that these matched what had been claimed in the books of another business that had been inspected. If this could all be done online and via automatic processes, HMRC could spot more fraud and do so much more efficiently.

With less than two years to go before MTD for income tax becomes mandatory, shouldn’t accountants stop complaining about it (especially for the wrong reasons) and get on with planning and implementing how they are going to manage the transition instead?

By all means look for potential troublespots and be cautious about how you approach the project but, just as importantly, devote some rational thought to what MTD is trying to achieve and recognise that there might be some benefits for your clients in complying with it.

Replies (90)

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By Paul Crowley
16th Jun 2021 12:44

No
lots of software sellers love it as well.

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Replying to Paul Crowley:
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By Hugo Fair
17th Jun 2021 16:33

But Aweb can get a separate article out of all this by just reprinting all the responses under the alternative title of "Do resist MTD for the right reasons".

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By adam.arca
16th Jun 2021 13:18

Yes, but this article could just as easily be headed up "Don't support MTD for the wrong reasons."

Whilst some of these benefits claimed for MTD MIGHT happen, the reality is that most WON'T happen. That is what most accountants are complaining about, the prospect of pain with no gain both for ourselves and our non IT-savvy clients.

HMRC need to get out of their Soviet-style mentality and embrace the open market. When their software offering is so good and offers such advantages that the market moves that way and adopts, that is the time to make these things compulsory and not a second earlier.

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Replying to adam.arca:
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By Paul Crowley
16th Jun 2021 13:55

If the product is good, people buy. But only the people that see a use for the product.
Has anyone yet seen a cry of joy when explaining to clients the legal obligation.

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Replying to Paul Crowley:
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By adam.arca
16th Jun 2021 14:07

Well, that's my point.

HMRC have decided this is good for us (well, actually, it's good for them but they want to sell it as good for us). In fact, it's so good for us that they're making it compulsory and we can all then come to appreciate the benefits just as the article OP has. Hurrah for the Revenue (they think) but really that's all @r$3 about t1t.

In an open market, we the consumer would first decide that product X was good for us and then migrate that way. If HMRC really feel that digitalisation is good for everybody, then they should have the courage of their convictions and let the market decide (which it naturally would do over time, all the Revenue needed to do was wait 10 or 20 years and see the current business generation replaced by those millennial whippersnappers and their endless social media).

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By AdamMurphy
16th Jun 2021 15:17

The only thing it's good for is software vendors peddling their wares.

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By Mr Hankey
16th Jun 2021 15:49

I'm seriously considering ditching all my sole trade clients. My workload is at maximum and there is no way I will have time to deal with the initial setup, hand-holding, reviewing, submitting, troubleshooting etc.

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Replying to Mr Hankey:
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By bluebaron
16th Jun 2021 16:37

Me too! Over the next year I will be starting to offload sole trade clients. I don't want the hassle of having five times as many submission deadlines a year (plus as you say, all the setup, hand-holding etc). It's a nightmare.

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Replying to Mr Hankey:
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By 0098087
17th Jun 2021 10:49

Yes not sure how we can carry on like this. Our pubs were done manually every quarter by the stocktaker but now we do them as it's on software. As we have to travel to collect the paperwork, and don't say get them to post it, clients prefer to see you, it's more time.

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Replying to Mr Hankey:
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By RobertD
17th Jun 2021 11:16

Mr Hankey wrote:

I'm seriously considering ditching all my sole trade clients. My workload is at maximum and there is no way I will have time to deal with the initial setup, hand-holding, reviewing, submitting, troubleshooting etc.

Exactly this. I will disengaging most of my sole trader clients next February to give them time to find another accountant and have perhaps a year of using software before the start of MTD. How can that be good?

In other news London accountant says digital is good.

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By Geoff56
16th Jun 2021 16:56

If the author of this article had a client base profile even remotely similar to mine, he would not view MTD for ITSA with anything other than complete dread. Retirement beckons, methinks (I just wish I could afford it).

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Jennifer Adams
By Jennifer Adams
16th Jun 2021 18:43

In 2016 when MTD was first mooted and the first consultation document published I wrote an article for Accweb titled
'HMRC has a dream'- see link below
https://www.accountingweb.co.uk/tax/hmrc-policy/making-tax-digital-hmrc-...

The article attracted 88 comments and ended with the words:

'It is time to show HMRC that some facets of its dream will, in fact, be unworkable and as such be fantasy.'

I still hold that view.

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Chris M
By mr. mischief
16th Jun 2021 18:52

No need to worry about sole trader clients. My MTU solution will enable you to provide cost-effective solutions to quarterly reporting.

MTU = Making Tax Up.

Just do enough to make the cut with their silly checks, but at minimal extra work and minimal extra cost to your clients. Any decent accountant should be able to MTU in such a way which the current mugs at HMRC will never be able to fathom that it was in fact made up.

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Replying to mr. mischief:
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By Paul Crowley
16th Jun 2021 20:07

Agree
Submit 4 Bollox and one correct
But cost of 4 Bollox will be close to cost of the real one
I aint got the time
The system will fail unless the turnover rules are £85,000

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Replying to mr. mischief:
By ireallyshouldknowthisbut
17th Jun 2021 11:40

@Mr Mischief, I have long said the only commercial way for us to file all our landlords quarterly would be to just whack some data in a spreadsheet from the prior return, randomise it a bit, and dribble it out to HMRC every quarter and then file the difference on the 5th return.

So long as we meet all the filing deadline that should keep HMRC off our backs for several years until hopefully the farce has ended.

Otherwise we are looking at a £300 return being £700 if we charge £100 per quarter for the drivel filing and £300 as now. With the poo flicker we might be able to file for £50 for the 4 time waster returns.

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By GHarr497688
16th Jun 2021 22:46

I know full well MTD won't work. Today not related to my work I received three incorrect invoices produced by cloud software. The guy says that since MTD came in his Accounts are such a mess the Accountant cant correct them. Any way on 2022 I am 60 so I will retire. RIP HMRC.

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Replying to GHarr497688:
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By AdamMurphy
17th Jun 2021 09:09

All cloud software has done is replace the paper bag of screwed up receipts with an electronic tangled web which needs unravelling.

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By Open all hours
17th Jun 2021 07:11

‘Force filing via a compliant software’.
What happened to freedom?
These words chill my soul.

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By SteveHa
17th Jun 2021 08:30

MTD4IT may have a chance, if HMRC's systems worked. The fact of the matter is, because HMRC systems are so disjointed, they are trying to bolt complex systems onto already broken systems.

If they fixed their own systems first, then perhaps the information consolidated into oone place and available to taxpayers and agents may start to form the basis of a truly world beating digital system.

Problem is, HMRC's own IT is so far behind modern times that they can never make it work.

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By AdamMurphy
17th Jun 2021 09:10

The image of blinkered people in this article is offensive. The only blinkered people are HMRC and those who support their ideas.

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Replying to AdamMurphy:
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
17th Jun 2021 12:08

The picture selection was my responsibility, not Charlie's. I'm sorry if several of you found it offensive, but as with headlines we try to use images that grab people's attention while giving a clue to some element of what the underlying article is trying to communicate.

As a headline and basis for an illustration, "Anti-MTD argument based on false assumptions" posed a bit of a challenge, so I looked to see if I could find something that worked to illustrate "blinkered".

I'm sorry my picture selection may have crossed a line of acceptability and will bear that in mind when preparing items for publication in the future.

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Replying to John Stokdyk:
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By Paul Crowley
17th Jun 2021 12:35

Quite clear that unless contributor provides a photo you select from stock photos.
I just saw it a a suitable cartoon photo that fitted with the article.

All articles suggesting MTD is good come from people who are not dealing with the numerous small fee value clients that most responders deal with

MTD for companies that are not defined as small comes at zero extra cost or inconvenience.
MTD for an organised VAT registered client still came at a cost.
MTD and VAT schemes just do not fit well, esp second hand dealers and partial exemption
But there were already preparing quarterly returns that needed to be accurate, and even now get an extra 7 days over MTD ITSA

Contributor may not know that most small fee clients cannot operate a simple spreadsheet.

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Replying to John Stokdyk:
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By johnjenkins
17th Jun 2021 13:54

John, "anti-MTD argument based on false assumptions", "Blinkered", perhaps you really need to re-think your editorial prowess (no disrespect intended).

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By ireallyshouldknowthisbut
17th Jun 2021 09:44

Whilst there is undoubtedly considerable upside for many business keeping digital records, something I pursue with some vigour amongst my relevant clients. However there is no upside for ALL businesses and compulsion in terms of record keeping is massively overstepping the mark in terms of government's reach and private freedoms and choices.

Forcing landlords with a £1,000 rental income to file quarterly (apart from the year in which they have a 3 months void) is hugely over zealous and creates a massive admin headache and huge volumes of extra red tape.

It used to be the UK was looked on as an easy place to run a small business, and part of the reason why we have so many micro businesses is the ease in which you can do this, compared to most of Europe. All this seems to be being sacrificed at the alter of "digital is best".

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By Thorsten Orr
17th Jun 2021 10:42

Are you just visiting this planet, or intending to take up permanent residence? What a load of ****!

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By Gillian Mill
17th Jun 2021 10:46

We embraced the opportunity to get all trading clients onto software 2 years before MTD and now won't accept a client unless they agree to use a cloud system.

We spend a lot of time correcting / fixing their bookkeeping and offer a full service which some are willing to pay for. It certainly makes the year end easier.

Our work has changed and not always for the better but the truth is we don't have a choice and neither do clients so embrace it and work with it.

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Replying to Gillian Mill:
By ireallyshouldknowthisbut
17th Jun 2021 11:32

So your clients have been forced to do this, so by definition you have 'self selected' clients willing and able to using cloud software.

By doing so you have excluded all those who are not, so your client sample is self selecting and limited to those happy with cloud.

For those outside of those criteria (and I would conjecture is by far the greatest number in pure volume terms) for whom I am speaking up. There is always a choice to be made.

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Replying to Gillian Mill:
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By Paul Crowley
17th Jun 2021 14:08

You are effectively saying do it our way or no service.
Nothing wrong with that, your choice.
But not exactly inclusive.
I expect to be able to help most clients. I would now exclude people who used tax avoidance schemes without fees paid in advance of work, or others who need special work beyond my experience.

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By 0098087
17th Jun 2021 10:51

Unfortunately we have possibly the most incompetent MP's on the government side in living memory who are totally out of touch with reality so will endorse this unnecessary nonsense.
Cue our MP in Braintree who believes that the Tories implemented the NHS. Tells you everything.

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By TASG
17th Jun 2021 11:07

Yes, the final 9 numbers aren't being typed into a website.

However, those final 9 numbers arose - whether you used Sage, Xero, Excel or anything else - from typing several hundred other numbers into software. Even receipt bank or auto entry are not perfect. For a return with 900 transactions involving typing in a net and VAT or a gross and VAT figure, MTD has eliminated less than 0.5% of the opportunities for data entry errors. The expenses and time involved are grossly disproportionate.

Anyway genuine errors are equally likely to overstate as to understate tax. The central limit theorem would suggest that given a large number of erring taxpayers, the overall effect on the tax receipts of these errors tends towards zero.

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By johnjenkins
17th Jun 2021 11:13

Charlie, MTD's sole purpose (when it's up and running in all it's glory) is to make sure HMRC has knowledge (by tagging or whatever) of every transaction that every business makes. This will then be cross checked so that any transaction that doesn't match will be flagged. So HMRC will be able to investigate without having to legally open an investigation.
Please tell me Charlie, (I've been in the business for 56 years) what other purpose could it be for? All reasons HMRC have put forward have been shot down unanimously by experienced Accountants.
I'm all for clients posting digitally but not all the other stuff HMRC want to do.

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Replying to johnjenkins:
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By Open all hours
18th Jun 2021 06:27

Nail. Head. Thank you.

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Replying to johnjenkins:
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By BryanS1958
24th Jun 2021 12:27

LOL, can you imagine HMRC's systems being able to do that!!! They cannot even get the basics right.

And such a system would rely on data being correctly entered; for many businesses it will be garbage in, garbage out and accountants will force the accounts to make some sort of sense by using journals, so the prime records will remain garbage.

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Replying to BryanS1958:
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By johnjenkins
24th Jun 2021 12:48

Totally agree, however HMRC rely on algorithms etc. and the fact that they're nearly always wrong won't deter them from going for it. The mess it will create will be mind blowing.

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By Ben Alligin
17th Jun 2021 11:22

"MDT-VAT.... By forcing clients via compliant software, HMRC can ensure that clients are keeping digital records" Oh the panacea!

Firstly an Excel spreadsheet is deemed to be compliant software with bridging software for MTD-VAT purposes. There is no way you can compare Excel to Sage or Iris, but like any software it is generally not the software that is the issue, but the numpty who is inputting the data. GIGO, TITO, SISO or whatever the latest acronym is according to your age.

If it was that simple, there would be few requirements for an accountant and we could all simply retire. Heck the software does it all for you. So why on earth do we have to send clients closing journals to correct all their errors?

Better still we could just rely on the mobile apps downloading this all to the new software. Hang on a minute, how do I record my business mileage excluding the detour for personal shopping, oh and which car was I driving my wife/partners or my own, and then I just need to factor in the advisory fuel rate, oh did it change this month? and then digitally record the journey. Couldn't be simpler; it's very unlikely that any sole trader would get this wrong!!

I admire your optimism, but why not just make MTD-Tax optional? Those who disagree with your view and that of HMRC, could carry on with the old method, and in 10 years time when HMRC realise it doesn't work, you can re-join us on the old system.

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By graydjames
17th Jun 2021 11:26

“Since MTD for VAT still files the same nine boxes on the return, some accountants question the whole rationale for MTD. But they’re missing the point entirely. The purpose of MTD is not to change the way in which the data is filed, but rather to change the way businesses keep their records. By forcing filing via compliant software, HMRC can ensure that the business is keeping digital records and not simply grabbing a bunch of receipts once a quarter and adding them up (unchecked and unreconciled) and filing nine numbers via an online form.”

When MTD was first mooted many years ago, the clear implication – or certainly the inference most of those in the profession that I know took – was that the purpose was to allow HMRC to receive, in some kind of electronic form, more than the totals for the nine boxes on the VAT return or the totals of the revenue and expenditure arriving at taxable profit or loss. It then began to emerge that this was not the case and, not unnaturally, people questioned the rationale. You can argue we all missed the point initially – perhaps due to bad publicity or perhaps due to jumping to conclusions, it doesn’t matter which – but once we realised that the sole aim was to require traders to keep digital records, I believe that we remain perfectly entitled to question the rationale – and absolutely not because we are missing the point. This is pure arrogance.

Whilst no one can deny that good, computerised record keeping is a step up from a Tesco bag of receipts, I totally reject the notion that all traders should be compelled to maintain digital records and especially if its only purpose is to ensure a link between the total of a list of invoices, for example, and the totals on a return, which avoids human intervention. Essentially that is what MTD is about, or so we are told. Forget about faster tax payments or the imposition of more regular returns and definitely don’t expect that more data is being sent to HMRC (thankfully one might say); instead, this is about ensuring some kind of digital link – that is a link that does not rely on a human being.

I reject the idea that this tenuous principle is worth the upheaval that results from MTD.

A person grabs “a bunch of receipts once a quarter and [adds] them up”. The language used here is deliberately implying someone less than careful about record keeping. The picture is some unkempt trader surrounded by piles of invoices and papers, probably on his dining room table, who picks a random bunch and makes a rough list. Such people exist, but can they be relied upon to keep digital records? And who’s to say that their hand-written list is any more or less accurate than if they had keyed the same “random” bunch into a computer or their smart phone.

The notion that all traders will maintain their digital records regularly or even that they will do them at all - rather than ask their accountant to do it for them is, of course, pie in the sky. If I am asked to do them, can I expect the relevant paperwork to arrive in good time if it has never arrived in good time previously? Of course not. The notion that we are soon going to wake up in some Utopian accounting world where everyone will be up to date with marvellously accurate records regularly maintained is the idea of someone living in a dream world. It ain’t going to happen.

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By mydoghasfleas
17th Jun 2021 11:27

The arguments made for support tend towards the commercial software is available and clients can use digital it rather than their old "systems" or filing on HMRC software. Just because a piece of paper or a notebook is not in a digital cloud does not mean inadequate records are maintained.

Much of this is a step by step move being forced on businesses to use chosen software which HMRC does not develop. For a time after CT went digital you could file through HMRC software, now you have to use a commercial package.

You are forced into changes for the benefit of HMG and assisted in the transition. Once you have switched, off goes the assistance, up go your costs. You may as well call the available packages ransomware; you are now paying for what you did not need. Then the cost switches from ownership of the software to subscription.

I do not dispute cloud systems do the job, the problem is unless clients understand what they are doing the mess is the same. A professional recently managed to file a VAT return claiming both outputs and inputs as inputs. A very intelligent person who did not bother to check because, "the software did the calculation".

Do we know if the cloud based accounting packages end user licence agreements allow the provider to harvest data? Have you read the eula before you tick the box?

I believe personal data is personal. Each piece of data (or is it each datum?), given the computing equivalent of infinite monkeys and infinite time can be linked to its owner. The compiler then choses, whether I like it or not, how the file is used; I do not even know it exists.

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By BryanS1958
17th Jun 2021 11:39

Yes, you are in a minority of one. Two if you include the Chancellor.

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By Arbitrary
17th Jun 2021 11:42

My view is that the main error by HMRC is the level of turnover precipitating MTD. I have suggested in the past that something like the present VAT registration limit-& indexed (but not that itself because that could in theory become any sum) would be sensible. The £10,000 turnover is far far too little and to include property rental income at that level is absurd and quite unnecessary.
Also in view of the comments so far about ditching sole trade clients it has occurred to me in the past that one of HMRC's purposes in its implementation of MTD, in particular the setting of the bar so low, is to make it very much more inconvenient to be a sole trader, especially a small one. HMRC is keen on wholly exclusively and 'necessarily' and the relative ease in collecting PAYE. HMRC's intransigence about the £10,000 limit has persuaded me that I was not being paranoid. All that stuff about improving accounting records is so much bxxxxcks in relation to most small sole traders and the quarterly preparation/filing will not be a lot of use to them.
Have our institutes been a little passive on this front? I have not read a great deal about them protesting in any big way.

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By kdbr
17th Jun 2021 11:52

Turnover limit - £10k or £85k?

For the micro businesses below the VAT limit, and for their advisers, this is a crock of the brown stuff. Many more will be joining the band off-loading self employed clients or retiring completely. Those traders will continue to trade. Many will not be able to justify the expense of the all singing, all dancing services available from the firms that are left, who may or may not be able to take them on as clients.

They'll continue to write up their weekly taxi driver record book, or put the daily takings from the window cleaning down in their ledger. Does anyone see them recording digitally and submitting quarterly, with or without the help of the advisers who have kept them on the straight and narrow for decades? Very simple businesses have very simple records, and needs.

I'll spare you the letter my MP received from Rt Hon Jesse Norman MP, Minister responsible for the UK tax system, especially the bit suggesting 'This will allow both agents and their clients to focus on higher value business activities'...

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Replying to kdbr:
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By 0098087
17th Jun 2021 13:30

As I said, the most incompetent bunch of MP's in living memory

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By Mr Hankey
17th Jun 2021 11:53

A typical VAT registered limited company client of mine: Turnover of over £85k so should expect reasonable accountancy fees and to have proper accounting systems in place, some even have their own internal bookkeeper. In the habit of submitting quarterly returns anyway and a good chunk already using electronic record keeping = MTD implementation had it's challenges, but managed to get it done.

A typical sole trade client of mine: Low hanging fruit January carry-a-bag man, turns over £12k per year with no interest in computers or record keeping, and wants the accountancy fee to be rock bottom = MTD implementation never going to happen.

I'm glad to hear I'm not the only one going to be disengaging. For the small bottom of the barrel clients it just isn't worth it.

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By Ammie
17th Jun 2021 11:55

This is just one muddled and contentious, ill thought out issue.

How will HMRC untangle the horrific mess of payments, allocations, reallocations, payment splitting, monies disappearing from clients accounts, interest and penalties over 5 submissions, when they are totally inept in dealing with the current system and are notoriously unable to easily and quickly resolve in too many cases.

HMRC live in a world where their over simplistic view of how efficient the idea will be is clouding the reality of the mayhem awaiting and more importantly how they propose dealing with the certain problems they will be faced with.

Someone needs to remind them who is paying for all this.

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By HarryB
17th Jun 2021 11:55

This article really p's me off.
I don't think there are many accountants that don't want an easier life.
The trouble is that most accountants can see that what is being forced on the unsuspecting taxpaying public will not make anyone's life easier - not HMRC, not the accountant, and not the taxpayer. There are no winners here - apart from Sage, et al, selling their singing, dancing software.

It would be great if all clients kept their records accurately and digitally - but that is a utopia that is long way away from where we are, and forcing MTD is not going to magically make your average plumber (other tradespeople are available...) understand how to accurately maintain their accounting records.

My issue is that MTD drags in individuals and micro businesses who will now have - without exaggeration - over 10 times as much admin to deal with as they have now. My example below, which I gave in the answers to the previous article, shows what that might mean to a ordinary person with 3 sources of income - currently requiring only ONE annual Tax Return:

"1. They won't be able to use the HMRC system once MTD gets going - it will HAVE to be third party software.
2. They might have to do quarterly returns/final recs for different sources of income. Eg someone with ordinary rental, FHL and self-employment now prepares ONE Tax Return after 5 April. Under MTD that person would do a quarterly MTD return for EACH of those sources if combined T/o was > £10k. So that's 12 quarterlies per year, plus a further 3 end of year reports - 15 effective Tax Returns. Instead of one. Moronic.
3. They will be penalised for missing any of the submission deadlines each year - all 15 of them!"

In this example the additional bureaucracy produces nothing of benefit to the taxpayer or HMRC. The OTS should step in, and should HAVE stepped in, to advise HMRC that this, as it stands, is not a sensible step. And that's before we get to the HMRC software issues.

That's why I am 'resisting' MTD - its a good reason.

Make the Turnover limit the VAT threshold - that would be so much more sensible and workable, and more likely to garner support from the people that sort out HMRC **** every day of the week.

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Replying to HarryB:
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By codling
17th Jun 2021 16:48

There will be one extra filing requirement in many cases. As there will not be a formal Tax Return any more, details of other income will need to be filed separately where there is no facility to do this within the software used, for example when using spreadsheets.

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Replying to codling:
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By Hugo Fair
17th Jun 2021 17:43

From where did you get that "there will not be a formal Tax Return any more"?
Note: pronouncements by politicians don't count, just official guidance (preferably backed by legislation).

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Replying to Hugo Fair:
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By codling
17th Jun 2021 18:28

I watched the same seminar as Kate 123456 and that was the impression given!

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Replying to HarryB:
By Nebs
18th Jun 2021 10:23

HarryB wrote:

Make the Turnover limit the VAT threshold - that would be so much more sensible and workable, and more likely to garner support from the people that sort out HMRC **** every day of the week.

Careful what you wish for, a £10,000 VAT threshold will bring in lots of extra revenue.

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Replying to Nebs:
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By HarryB
18th Jun 2021 10:48

I think you've misunderstood my comment (or it wasn't clear enough!). Or were you joking?? Hard to tell.

What I meant was that to be caught in the MTD net a person's turnover should not be £10k, but rather the VAT threshold - currently £85k.

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Replying to HarryB:
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By execprac
18th Jun 2021 11:00

Yes ... Sign the petition ... available soon :)

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