Benneyworth: Don't slow your MTD plans just yet

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HMRC’s 2 May announcement that it was delaying some of the elements in its Making Tax Digital (MTD) overhaul should not blind accountants to the underlying direction of movement, according to tax lecturer Rebecca Benneyworth.

All told, HMRC has just under 300 transformation projects on the go, but the tax department opted to scale back their efforts on all these fronts so it could concentrate on adapting its systems to the new trading and taxation arrangements that will come into force when the UK leaves the European Union in March next year.

While some AccountingWEB members have likened MTD to watching a car crash in slow motion and cast doubts that HMRC’s digital vision will ever come to pass, Benneyworth is pressing ahead with her own plans to go digital.

“It takes time to get things right and we should applaud HMRC for listening to representations from the ICAEW and other bodies and opting to do just that. Now MTD won’t happen until it’s ready,” she said.

May accounting excellence sponsors Intuit QuickBooksAccording to Benneyworth, the biggest challenge of MTD was not the requirement to file quarterly submissions, but getting clients to keep the digital records needed to feed HMRC’s online system. The leap will be a big one for small businesses who still use paper books, spreadsheets or merely pass all their invoices and receipts to their accountant to work up.

Looking at the time and effort needed to make that switch, Benneyworth decided like many other accountants to move all her clients onto cloud bookkeeping.

“That will allow me to reap the benefits,” she said. “When MTD comes, I will be ready because I will have access to all my clients’ records.”

One project that is proceeding as planned is MTD for VAT, which is scheduled to go live next April. As part of her preparations, Benneyworth has agreed to take part in the pre-launch pilot scheme but is still waiting for the technical infrastructure work and formal guidance to be completed.

Find out how Rebecca Benneyworth’s preparations for Making Tax Digital are proceeding in the Accounting Excellence Talk with Intuit QuickBooks and HMRC at 11am on Thursday 17 May.

https://www.accountingexcellence.co.uk/talks-sign-up/?utm_source=account...

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About John Stokdyk

John Stokdyk is the global editor of AccountingWEB UK and AccountingWEB.com.

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11th May 2018 09:37

I disagree. I think that the biggest challenge is the whole concept of making (mandatory) business between £10k and £85K (VAT threshold) go digital and file quarterly accounts (oops sorry, updates).
If you look at it from the business point of view. Do they really want to know what their tax bill is likely to be 3 months into the year? Could this be harmful to expansion? etc. etc.
So whatever way you look at it HMRC are seeking to destroy the one man band. This is why mandatory MTD will not work and I predict that it will be at least 5 years before it's voluntary and 10 before they even consider mandatory.
As for VAT registered business with a turnover of over £85K going live next April, that will be the biggest April fool joke of the year. I predict voluntary 2020 (although there are business doing the pilot now - having to double input) and mandatory by 2025.
Sorry Mel but you're dealing with real people who do real work and are the mainstay of this country.

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11th May 2018 11:21

“It takes time to get things right and we should applaud HMRC for listening to representations from the ICAEW and other bodies and opting to do just that. Now MTD won’t happen until it’s ready,”

They haven't listened to anybody, they've merely realised that it can't be delivered in the timescale originally planned. But they should have known that in the first place.

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11th May 2018 11:52

I am not going to applaud a numpty for showing a little bit of common sense.

Any more than I would have applauded Captain Smith for hitting the iceberg at 19 knots instead of 20.

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11th May 2018 13:18

'According to Benneyworth, the biggest challenge of MTD was not the requirement to file quarterly submissions, but getting clients to keep the digital records needed to feed HMRC’s online system' This is exactly what I have been saying.

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11th May 2018 13:21

'Benneyworth decided like many other accountants to move all her clients onto cloud bookkeeping' sponsored by QuickBooks!

I'm QBO accredited and have just put my first client on QBO and I'm not impressed (simple things like presentation of a logo that is not square, also lack of customer account numbers needed for online payment purposes). If this is the quality of cloud software then MTD is going to be even more of a mess than I had expected.

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By morgani
11th May 2018 14:17

I think what MTD has unearthed is two very different views. You have those who believe nothing should change and the current system works well. Then you have those who believe digital is the way forward. Whichever camp you are in is up to you.

For me MTD highlighted what I already knew but hadn't taken action on. We have always been a modern firm with a modern forward thinking approach. Taking traditional accountancy and then looking at it with a customer focused view to decide what should actually be delivered. MTD and the preparation period for this made us realise that we needed to do more. I now sit firmly in the camp of 'this will be a benefit'. I don't expect everyone to agree with me but I do know it is right for me, the majority of my existing clients and my target clients for now and the future.

We will be delivering a digital cloud based solution that is about what is happening now and looking towards the future, whilst considering the past. Achieving this on a much more regular basis than once a year (and at that often 9 or 10 months later for many).

We are now far more organised, have a better client base, have improved GRF per client and deliver far better value for money.

For those who wish to stay still delivering traditional year end accountancy services, that is fine. But it's definitely not for me.

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to morgani
11th May 2018 14:58

Good for you and your clients.

However, all these services can be provided without having to report a load of figures to HMRC every quarter which they don't have the resources to review.

Many smaller , non VAT registered clients aren't going to want any quarterly reporting service., however much we try to be positive about the benefits of keeping regular records, and frankly why should they be forced to report a load of information for no purpose?

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to morgani
11th May 2018 15:11

MTD hasn't unearthed two different views. Most Accountants move forward on a natural basis, trying out different methods. Some work, some don't.
MTD is not a natural progression is is a Mandatory Taxation Disaster (others have well apt names for it).
Being in the cloud or on planet Mars has nothing to do with the concept of digital records and quarterly reporting. Does anyone know the cost of the software?

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11th May 2018 16:12

Much as I respect Rebecca Benneyworth, as I have greatly benefited from many courses that she has run, I still think she is wrong on this.

She says “When MTD comes, I will be ready because I will have access to all my clients’ records.” That's all very well but MTD is still all based on the idea of self employed people and landlords being compelled to use digital software themselves, entering all the information and submitting their returns (sorry updates) themselves.

As far as I can see, HMRC have not moved on this and this is why, as John Jenkins says, mandatory MTD will not work.

HMRC need to recognise that they have to work with accountants and tax advisers in bringing this project in on a voluntary basis over a number of years and removing all the silly mandation nonsense.

Will they work with us? Sadly, I very much doubt it at the moment.

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11th May 2018 16:49

What a load of tripe some people write about these so-called wonderful cloud systems!

The latest one I am looking at shows aged creditors on QBO of £6,000 compared to £8 - eight pounds - in the trial balance. Utter drivel.

Neither the client or the book-keeper has a clue how this can have arisen. In fairness to the book-keeper, her key role is to make sure the bank is right, which it is compared to a £10k difference to the statements last year.

Pointing a gun at everyone's heads to force them to go digital is the stupidest thing to come out of HMRC in the last 20 years. And when you consider just how many utterly dumb things HMRC has done in that timeframe, that shows you how stupid this whole thing is.

I will be just fine, my clients will be just fine. There will be casualties over this mess, some of them in my view quite big ones. None of the wounded or dead will be on my patch, that is my sole aim.

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By Tornado
11th May 2018 18:40

Thanks for the heads up Rebecca, but the wheels in this camp have not just slowed down, but have ceased turning.

I am fed up with trying to persuade many of my clients (many with successful businesses) that they will have to stop what they are doing to spend money and time on learning how to keep their accounting records in a specific way in accounting software.

My larger clients are particularly difficult to deal with as many have bespoke accounting systems, created to make their businesses run profitably and smoothly, but are not MTD compliant. Are they really going to ditch all that investment and spend thousands of pounds more on new software, probably to be in a much worse situation afterwards.

I think they would rather pay the fines than severely disrupt their business activities just to satisfy some unrealistic crackpot idea.

Make MTD for VAT voluntary and allow a long period of time to move over, and we are taking about something more acceptable.

This is a far cry from the days when HMRC introduced special VAT schemes, mainly to reduce the book-keeping requirements of small businesses. We have now swung the other way and every one will be expected to keep meticulous records of every transaction. The obvious outcome of this is that the special schemes will become redundant as we will all be keeping records in the default format with perhaps Cash Accounting as the only alternative. No need to reduce book-keeping work any more.

HMRC need to be held account for the unreasonable violent swing away from making life easier for small businesses to making it very difficult for no acceptable reason.

My money is on a last minute 'get out of jail free' card that makes MTD for VAT to be only voluntary from April 2019 otherwise with everything else going on, the VAT revenues are going to dry up as everyone struggles to work out what they owe and how to pay it.

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11th May 2018 20:20

I think Rebecca is in cloud cuckoo land. I never hear a word of criticism of the project. HMRC put a temporary stop to MTD, not because it listened to its critics, but because the General election was called and that threw a spanner in the works. What about a mention of the cost of cloud software that traders don't need. What about the idea that the current VAT portal, with possibly just two boxes to complete (under flat rate) is perfectly effective, and the proposed system provides no more benefit. And even worse, she, and many others, only see this from the accountants point of view. What about the millions of traders who don't have accountants to help them. How will they get to grips with this MTD thing? That seems sh0cking thing to me, the idea that an app on your mobile phone will enable you to cope. I could go on, but frankly, it's just too depressing

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14th May 2018 13:39

I'm pretty sure those which are saying 'make it voluntary' actually mean 'make it so we don't have to bother'.

Which isn't very helpful.

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to andyjdicker
14th May 2018 14:07

Wrong Andy.
Firstly let me say that MTD in its present form is unworkable and not needed.
Sending in quarterly or otherwise "updates" to HMRC is a nonsense with no logical reasoning.
If HMRC are so keen to get MTD off the drawing board then there are certain business scenarios they are going to have to deal with. It is always better to deal with these under a voluntary agreement rather than mandatory with heavy handed penalties for non compliance.
I don't know any Accountant who really thinks that MTD will make things easier for everybody. In fact the reverse is true. I actually don't know anyone that thinks it will work. Yes there are a few that are "going with it".
How can you help a "lost cause" Andy?

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to andyjdicker
14th May 2018 14:10

Not at all, Andy. A few years ago when HMRC were seeking to get everyone to file PAYE returns electronically, they offered a PAYE incentive scheme "carrot" over 5 years to encourage employers to do it. Many employers did so (and I'm not talking about those who abused the system and deliberately tried to setup loads of spurious companies to try and claim the incentive payments)

A similar system would actually make a lot of sense now, as MTD is a far greater change to the tax world than electronic PAYE filing ever was. If they would offer it on a voluntary basis, with more of a "carrot" than all the "sticks" currently being beaten, then it would be far more likely to have better take up and with early resolution of any problems.

A gradual transition period over 5 years or so would help all sides achieve a workable system and would benefit taxpayers, businesses, accountants and indeed HMRC.

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By Tornado
to andyjdicker
14th May 2018 14:25

"I'm pretty sure those which are saying 'make it voluntary' actually mean 'make it so we don't have to bother'.

What a ridiculous thing to say.

It is matter of allowing people to deal with this properly over a period of time rather than being forced to try and do this. now matter what, with a virtual gun to our heads if we don't comply.

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to Tornado
14th May 2018 16:48

1. The software is not ready. We're 14 months into the MTDfB trial and 2 months into the MTDfV trial and the only software that is MTD compliant is Rhino which I've never previously heard of. The big players such as Sage, QuickBooks and Xero aren't yet on HMRC's list of approved software. When HMRC accepted Lord Carter's recommendations (see http://webarchive.nationalarchives.gov.uk/20060719043117/http:/www.hmrc....) HMRC agreed to a minimum 12 month testing period. How can this happen when the software is not available?
2. There is a lack of awareness about this in the business community. HMRC say how they've got info on their website and have held webinars but unless you're actively looking for this information you wouldn't be aware of it. HMRC needs to contact all SA taxpayers (traders and landlords) to tell them what is happening. That contact needs to be via non-digital means.

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to kevinringer
14th May 2018 23:07

@kevringer

If I might try to add a little clarity to the question you raise...

There is not yet a list of MTDfb (VAT) compliant software providers since the HMRC API side - and therefore the software supplier side - is not yet finished.

The suspect list you're possibly referring to the MTD for Income Tax software supplier list, but of course, this flavour of MTD is no longer mandatory and this far only Rhino Software and Iris have compatible products listed for this, now effectively redundant, initiative.

I believe by the time we reach the midpoint of the summer, we'll see the first vendors doing meaningful piloting with clients on the new VAT submission testing through the new API gateway. Thereafter, I presume a newly curated list of MTDfb VAT API ready products will emerge, but whether every single one of the existing 100 or so products that are presently certified for filing VAT currently will also feature on the new list, I would doubt.

I agree awareness is still weak, and general understanding among businesses and practitioners is incomplete.

Right now, MTDfb for VAT submissions is the only element of MTD that's on the radar. There are two parts to the change; first to mandate that all businesses above the VAT threshold must file their returns from software (what constitues 'software' is somewhat debatable for some), but the point is presently only around 1 in 7 VAT returns are made from within accounting or bookkeeping software with the remainder being manually completed using HMRC's online form.

And secondly, as part of mandating this new API gateway VAT return method from April 19, HMRC is also therefore building a new gateway that utilises a more modern, API method which relies on HMRC completing the construction of their side, as well as software vendors building or amending their existing VAT filing functionality to be compatible with it.

Hope this helps.

Gary Turner
Managing Director, Xero
@garyturner

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to garyturner
15th May 2018 09:59

Gary, thanks for your very helpful reply. This is the sort of information we have been asking from HMRC.

garyturner wrote:

There is not yet a list of MTDfb (VAT) compliant software providers since the HMRC API side - and therefore the software supplier side - is not yet finished.

I though the MTDfV pilot started 01/04/18 but how could it have started if HMRC's APIs are not ready? Am I right in assuming the pilot has therefore not started?

garyturner wrote:

MTD for Income Tax software supplier list, but of course, this flavour of MTD is no longer mandatory and this far only Rhino Software and Iris have compatible products listed for this, now effectively redundant, initiative.

Interesting use of words: 'redundant' instead not 'postponed'. Does this mean Xero now think MTDfB won't happen?

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to kevinringer
15th May 2018 11:38

The pilot for VAT has begun but it's being done in stages from testing onboarding through to full-service submission at the end and this will take some time to prove out.

I think it's fair to say MTD (Income Tax scope, not MTDfb (VAT)) is 'effectively' redundant. Last July they said it would be 2020 earliest, and last month added that any remaining HMRC resources and focus on this part were being pulled altogether.

I think I'm confident that MTDfb (VAT) will go ahead because it's the least amount of distance to travel in terms of change (unlike with Income Tax, VAT registered businesses already submit quarterly returns) albeit there's a huge amount of work to do to inform, educate and motivate non-software using businesses (and their agents) to change from submitting in their quarterly returns manually online and adding software into the equation.

Plus after software companies have invested a considerable chunk of time and money adapting their products, to now cancel this part after having stopped the Income Tax element wouldn't really endear HMRC to software developers for the future.

Gary Turner
Managing Director, Xero
@garyturner

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to garyturner
15th May 2018 11:37

Thanks for posting yet more helpful information.

garyturner wrote:

I think it's fair to say MTD (Income Tax scope, not MTDfb (VAT)) is 'effectively' redundant. Last July they said it would be 2020 earliest, and last month added that any remaining HMRC resources and focus on this part was being pulled altogether.

Wow, 'being pulled altogether' is quite a revelation.

garyturner wrote:

Plus after software companies have invested a considerable chunk of time and money adapting their products, to now cancel this part after having stopped the Income Tax element wouldn't really endear HMRC to the software developers for the future.

HMRC has not endeared themselves to anyone but we need to remember the purpose of MTD was to replace the Tax Return, not the VAT Return. All businesses already submit digital VAT Returns to HMRC, though most are through GOV.UK. So MTDfV won't save any HMRC resources.

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By juzza07
14th May 2018 16:30

"The leap will be a big one for small businesses who still use paper books, spreadsheets or merely pass all their invoices and receipts to their accountant to work up."
I thought/ believed/ hope/ pray spreadsheets (in Excel) are allowable?
I have no intention of moving away from my self-built in-house Excel system just because HMRC think( ? - hopefully thought) Excel is not a Digital Record...because it is!

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By Tornado
to juzza07
14th May 2018 17:00

I think the conflict here is that what HMRC desires with MTD compliant software, is for the software to be able to deliver every single transaction to the HMRC computers, preferably on a quarterly basis. This then enables the HMRC computer to identify any entries that the computer thinks needs to be looked at in great detail. The problem with this is that there are about 100 times too few HMRC staff available to deal with this.

If it was just a matter of pulling out totals to transmit to HMRC, then there would be no need for MTD compliant software as the current system works wonderfully well. A great opportunity for HMRC to cut staff by 100 times.

I think the situation is confusing for all at the moment and HMRC are clearly having to consider the possibility that their dream of a fully automated tax system is just that, a dream. Start thinking practically and then there might be some progress.

With regard to spreadsheets, if HMRC are expecting to receive information about every transaction from the thousands of different spreadsheet formats that we use (and a variety of spreadsheet programs as we do not all use Excel) then it is obvious to even the lowliest civil servant that this cannot happen.

It seems to be a case of waiting to see what happens, but it will take a miracle for anything workable to arrive by April 2019.

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to juzza07
14th May 2018 16:56

I too hope excel tools are available but I have to warn that these don't meet HMRC's intention with MTD to digitise every transaction because the spreadsheet tool can't guarantee 100% digital transactions: there'd be nothing to prevent a taxpayer continuing to maintain paper records and simply input the totals. But I suppose that's the same with software. HMRC are in cloud cuckoo land if they think this will force 100% digital. In fact HMRC admit this isn't possible because they will still permit taxpayers to make scheme adjustments (partial exemption, retail schemes etc) on paper. And what area are taxpayers most likely to make mistakes? You guessed it: schemes. Why have HMRC permitted this? Because software can't handle them. I've just done a Sage job where someone has come off FRS. Sage made a pig's ear of it by allowing all the VAT on expenses from the FRS period as input tax in the first non-FRS period.

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14th May 2018 17:59

I love using bookkeeping software, and have many client using cloud products.

However its not suitable for all.

A "one size fits all" policy fails your clients for whom its not the best solution.

So either you only chose clients for whom cloud work and freeze out the others, or you offer a variety of solutions.

Which ever way you look at it there is a pool of people for whom cloud is not the way, even if you own practice is 100% online.

Its a function of the volume of transactions, how well the current system works (legacy QB2006 systems are very hard to beat for example) and the propensity to learn new tech (which gets lower with age) and the number of years left with a business.

only a fool would change a functioning accounting systems 2 years before retirement for example.

I do my company accounts in Xero because it works for my business.

I do my father's BTL accounts in Excel. Because its a lot quicker.

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14th May 2018 18:07

I don't know about everyone else but the bit in the QuickBooks TV advert when they say its 'great for accountants' really sticks in my craw.

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By ABS2
to jon_griffey
14th May 2018 21:09

Yep. One of my clients who previously kept an immaculate spreadsheet for his simple part-time photography business bought QB because of the adverts and said it would be good for me.
And this year it took me three times as long to prepare the accounts because of all the errors.

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to jon_griffey
15th May 2018 11:09

Accounts and taxes done.
I like the bit where the decorator sends his invoice by app on his phone as he is packing up and when he gets out of his van at home he looks at his phone to find the invoice paid.

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By djtax
15th May 2018 11:51

Does anyone know where we are on the compatibility of spreadsheets with MTD for VAT, effective in less than 12 months time? My understanding is that HMRC are 'still in discussion' with software providers re developing the requisite 'bridging software'.

When will this software be approved by HMRC, when will it be available to us accountants for our appraisal, when can we then introduce it to clients for their appraisal, when can it be tested in the current pilot ..... and all before compulsory implementation next April. Hello - is anyone at HMRC listening to those of us in the real world out here!

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to djtax
15th May 2018 12:06

Absolute have told me that they are developing a spreadsheet linking tool but can't do any more work on it because they're waiting for technical specs and APIs from HMRC. The timescale is in HMRC's hands. Gary Turner's comments above are helpful re the pilot. It could be some time before those in the pilot may be using software which is close to production ready. And what for because all it will do is replace VAT returns submitted digitally (via GOV.UK) with VAT returns submitted digitally (via software).

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By hollow
15th May 2018 22:49

I would say its all Cloud Cuckooland.

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15th May 2018 18:44

One thing I would like to add which I feel has generally been overlooked - just about the only parts of the HMRC online service which actually function well are VAT submissions and corporation tax.

Everything else - self-assessment, PAYE, CIS have issues, glitches, daft letters sent out, confusion with clients and so on.

So what we are left with in MTD is an attempt to "fix" one of the few pieces of the HMRC empire which is currently not broken.

HOW STUPID IS THAT?

There are a million things which are a higher priority than this, and thanks to Brexit and MTD they are pretty much all being axed.

Doing daft stuff to things which are not broken, whilst ignoring low hanging fruit which urgently needs to be picked, is the very definition of Numpty management.

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16th May 2018 14:04

See https://www.accountingweb.co.uk/community/blogs/kevinringer/is-mtd-dead re HMRC's updated list of software suppliers.

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17th May 2018 13:28

Does HMRC have 'preferred' MTD software developers? Only two days ago on https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14332 Gary Turner MD of Xero said they were still waiting for the HMRC APIs. Why have HMRC released them to QB and not Xero?

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to kevinringer
17th May 2018 14:08

They have made them available and Xero along with, I'm sure, a number of vendors are busy building and testing right now.

I didn't say we were waiting, apologies if my explanation was confusing - the pilot process of building and testing against the new APIs isn't a single step process for any vendor, nor is there just one simple API - some APIs are complete and available to test against today, and others will follow later.

Once everything has been completed, tested and proven out, then HMRC will deem it appropriate to publicise a curated list of products which will be MTD ready.

Gary Turner
Managing Director, Xero
@garyturner

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to garyturner
17th May 2018 14:13

Thanks for clarifying that Gary.

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