If you are interested in Making Tax Digital (MTD), but don’t want to tackle the 243 pages and 116 consultation questions in the seven consultation documents, you might want to consider the HMRC webinar service.
It's a seminar you attend from your own desk: you can hear HMRC staff talking live (either by using the sound on your computer or else by dialing in over the phone) and watch a simultaneous slide set on your screen. You can also interact with the presenters by typing questions into a text box, and by voting in a couple of interactive instant polls.
Unfortunately, as the interaction is all controlled by HMRC (you can hear them, but they can’t hear you) there’s a certain amount of spin. For example, when I sat in on a webinar last week the presenter started by explaining that “businesses are already required to keep up to date records…” Are they though? I thought the requirement was to keep “adequate” records, and who is to say that sticking your invoices and receipts in a bag and asking your accountant to type them up once a year is inadequate for the very smallest businesses?
When I typed that question into the onscreen box, it took a while for it to be dealt with and then the answer which came back was:
“Through keeping up-to-date records in near real time instead of by processing paperwork at the year-end, businesses are less likely to lose receipts or to make basic errors. This also makes good business sense, gives them a better overview of their position through the year, and ensures that businesses have ready access to their financial information. Prompts built into digital tools will eliminate common errors, giving businesses greater certainty that they’ve got their tax right first time.”
Well yes, but that is the justification HMRC are using for introducing MTD rather than an answer to the question about the definition of records in the legislation. “Up to date,” or “adequate”? What is the definition now, and does HMRC plan to change it for MTD?
The presenter went on to explain that “there is a demand for digital”. My scribbled contemporaneous notes go a bit squiggly at that point, as there was no way to argue with her and say, yes, there is a demand for HMRC to engage digitally by - for example - letting people communicate with them by email. But that isn’t the same as a “demand” for a compulsory system of digital recordkeeping - I’m not at all sure there’s an appetite for that.
At this point we broke for a quick poll of what we thought the threshold might be for businesses to get an extra year to prepare. This is in the context of HMRC planning to make MTD mandatory for businesses with a turnover of more than £10,000 from April 2018, but to allow the very smallest businesses over that threshold to have a further year before the system becomes mandatory for them. The offered options were £15,000, £20,000 and more than £20,000.
The responses from that particular webinar were:
- 15,000 - 9%
- 20,000 - 22%
- More - 69%
This is a reflection on the apparent speed with which the whole project is moving: responses to the consultation documents are due by 7 November but the draft legislation (for inclusion in the 2017 Finance Bill) will be published for comment on 5 December. As one text exchange said:
“The consultation document says that the first software will be available in autumn 2016. Well, it is autumn 2016 now, so where is the software?”
The reply was: “HMRC are working with the software industry to get these developed. There will be more information on this shortly.”
Finally, there was an audience question on what and how many ‘errors’ do you get that you need to reduce?. The response was: “The published tax gap due to failure to take reasonable care and error is £6.5 billion."
At this point I’d given up on trying to interact with the webinar and was on Twitter saying “Funny how the actual business recordkeeping interventions programme didn’t find that missing £6.5bn eh? #MTD”
For readers interested in HMRC's wider approach to consultation, AccountingWEB recently attended a face-to-face Making Tax Digital for Business consultation event.
About Wendy Bradley
Wendy Bradley is a retired tax inspector, now working as a freelance journalist.