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Certainty grows around MTD for income tax

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With Making Tax Digital for income tax due to be introduced in April 2026, Amy Chin looks at the current state of play and what the advantages of joining the scheme early might be.

4th Jun 2024
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In her inaugural speech as president of the Chartered Institute of Taxation (CIOT), Charlotte Barbour highlighted the growing role of technology as one of the key issues faced by the tax profession. Commenting on Making Tax Digital (MTD) for income tax she said: “There remain concerns about the speed and nature of ‘going digital’. It’s a sensible aim. But the objective should be that taxpayers and agents choose the digital option, rather than being forced into it.”

Digital not optional

When it comes to MTD for income tax, it’s fair to say that that ship has sailed – the buzzword “mandated” is a far cry from “optional”. 

Despite the MTD team having cancelled meetings, appearances and other media engagements this week as the government locks down in pre-election purdah, HMRC today communicated to software developers a commitment to review and update the minimum functional standards for MTD for income tax with a revised end-to-end service guide to be published on 20 June. A strong indication that whatever happens on 4 July, pulling MTD for income tax is not on the agenda.

Out with the old (hopefully)

Recent reports suggest a notable shift in the messaging from MTD HQ. HMRC representatives at recent industry events and on social media have been sharing insight into some of the reasons for the department’s tenacity in ploughing on with the project. 

As well as (hopefully) addressing the challenges faced by call volumes and the need to encourage customers to self-serve digitally where possible, MTD is part of a wider re-platforming at HMRC. MTD for income tax will see self assessment taxpayers moved over from the creaky old Computerised Environment for Self Assessment (CESA) platform, which was designed in the 1990s, to the Enterprise Tax Management Platform (ETMP). It’s a lot of work, but important as CESA is no longer fit for purpose.

ETMP should also be able to connect with other parts of HMRC better, so will reduce the issue of different bits not talking to each other as well as (hopefully) allowing greater pre-population (for example, of Construction Industry Scheme (CIS) information).

Delay after delay after delay…

With all the delays it’s hard to believe MTD for income tax will actually happen in April 2026.

But with the private beta already in full swing, HMRC assures us that it is on track to implement MTD for income tax from April 2026 for self-employed individuals and landlords with income from self-employment or property that totals over £50,000 as planned.

Emma Rawson, technical officer at the Association of Taxation Technicians (ATT) is cautiously optimistic that there will be no further delays. She told AccountingWEB: “In the past, when a deferral was announced we had been expecting it. If one were to be announced now I would be surprised. I think the only thing that would lead to deferral now would be a major disaster in the pilot or further falling out with software houses. I think it’s important that agents start preparing their practice now if they haven’t already.”

Why should I care right now?

April 2026, when MTD for income tax is currently due to be mandated for taxpayers with income above £50,000, seems a long way off. However, “qualifying income” for mandation testing will be based on the self assessment tax return due on or before 31 January 2026. That return will report the 2024/25 figures, the tax year we’re in right now, so mandation status will be determined by income earned this year. Anyone toying with the idea of reducing activity in the run up to 2026 to avoid MTD for income tax may already be too late.

HMRC will check your reported qualifying income when you submit your 2024/25 self assessment return and if it’s over £50k, you’ll be mandated from April 2026. 

What is included in qualifying income?

Qualifying income is the total gross income you receive from all relevant sources in a tax year. This will usually be income from self-employment and/or property added together. For example, your gross income (income before you deduct expenses) in 2024/25 could be:
• £25,000 from rental income
• £27,000 from self-employment income.
Your total qualifying income would be £52,000 and you’d be mandated from April 2026.
If you get income from a jointly owned property, only your share of the property income that you report on your self assessment return will count towards your MTD for income tax qualifying income.

Income from other sources including partnership income, employment income (PAYE), dividends and bank interest will not form part of the mandation test. The ATT has written a helpful guide to qualifying income.

Are there any benefits to signing up to the beta?

• No more hanging on the ADL

Agents and individual taxpayers can get ahead of the changes by volunteering to test the system now. For an agent this could be for just one or two consenting clients at first, with the option to add more later.

An HMRC spokesperson said: “Those who take part in testing now will have an opportunity to get familiar with the service ahead of others. They will experience the benefits of using the user-friendly software to keep accurate and up-to-date digital records of their income and expenses and submit simple quarterly returns to HMRC, generated by their software. It also enables users to help shape the final design of MTD for income tax, by sharing their experience and suggesting improvements.” 

As well as getting a headstart on preparing for the full roll-out, anyone who volunteers to join the testing programme will have access to a dedicated support team in HMRC. That team will not be limited to strictly MTD-related queries, they will provide a “Rolls-Royce” service for wider income tax self assessment issues, reducing the need to contact other more busy helplines such as the Agent Dedicated Line (ADL). For agents that support will only be available for issues relating to clients enrolled in the beta.

An HMRC spokesperson told AccountingWEB: “Taxpayers participating in testing and their agents will have access to a dedicated, specialist customer-support team who have been specifically trained to support them throughout the whole testing period and answer their questions now, before MTD for income tax is mandated. This won’t be available outside of testing.”

Multi-agent access is a vital feature that is currently missing from the beta. An HMRC spokesperson assures us: “We understand multi-agent access is important for MTD for income tax and have committed to building a solution in time for mandation in 2026, with an ambition to deliver it earlier.”

• Beta the crowds

Signing up to test MTD IT now is optional and will give users the chance to test a full cycle, including the year-end filing, before they are forced to join the digital revolution in April 2026 (or April 2027 if their income is below £50,000 and above £30,000). 

As Claire Bartlett, Director of Arden Bookkeeping Ltd, puts it: “We need to be on the beta testing. It’s there, it’s live – we’ve got the best support we will ever have for MTD. We have the opportunity to transform how MTD comes out, to give feedback and influence changes – that’s what the beta testing is for.”

Agents or individual taxpayers can sign up for the MTD for income tax private beta if they meet certain criteria. Details and sign up can be found on HMRC’s website here for individuals and here for agents.

Replies (66)

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By AdamJones82
04th Jun 2024 12:32

Yeah, I wasted many many hours, when this was first announced by Osborne, with HMRC being involved in matters.
Won't be wasting my time again as there's no way it will be ready - again - in under 24 months

Thanks (18)
Replying to AdamJones82:
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By FactChecker
04th Jun 2024 14:13

"HMRC today communicated to software developers a commitment to review and update the minimum functional standards for MTD for income tax with a revised end-to-end service guide to be published on 20 June" ... says it all (if you read carefully between the lines):

- there is currently no "end-to-end service guide", because there is no comprehensive definition of the end-to-end processes (for all constituents / for all eventualities / for corrections & late updates / for sharing data between joint owners or mixed agents / and so much more ... all the way up to and including the year-end and any tie up with tax payments, or indeed NI, SL, etc);

- communicating with software developers is essential to HMRC because so many have threatened to walk away (and several have done so) ... but it's Agents and Taxpayers who really need to know what's happening, without relying on what a software developer may or may not pass on (possibly inaccurately);

- and merely saying that "a commitment to review and update" is around the corner is hardly re-assuring ... reviewing and updating is what they should have been doing every week, or even day, since the start - once they rejected the method of control via Specification under the hypnotic trickery of 'agile' development.
If they haven't been doing so then a disaster is ensured, and if they have then (cycle back to my first point) why have they STILL not got a complete road-map.

The time for mere words (PR puffery) is long past ... there are only two possible outcomes from where we currently are (with insufficient time to test a full year's cycle, which isn't yet specified, and yet adapt routines in the light of failures):
1. Keep the foot on the accelerator and shut down all conversation - similar to Thelma & Louise;
OR
2. Stop the project.

Thanks (9)
Tornado
By Tornado
04th Jun 2024 13:48

Mandated is an interesting word.

In the Context of MTD, it has little meaning as there is nothing to mandate at the moment, and it is unlikely that there will be anything to mandate in 2026. This is still a dead project.

Optional is a much better word and if the Government had used this word much more in its approach to MTD then by now we would probably have been much further down the road to a more digital Tax system which was acceptable to all.

Instead of working with us and encouraging us to support their project, the arrogance and single minded approach of HMRC and the Government and their unwillingness to trust and work with us has left them with a disaster of a failed (and very expensive) project, which is a bit of a shame really. :-(

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By ireallyshouldknowthisbut
04th Jun 2024 13:53

Yes HMRC should update their creaking systems (albeit idealing with some thought about agent's use which seems to be completely absent right now, many of the new systems are vastly inferior to the old and more time consuming to use, where the flip is my agent list for example? )

But this has nothing at all to do with the totally batty concept of reporting duff figures every quarter to HMRC for no real reason. That concept has been totally destroyed. Its not happening.

The **only** chance HMRC have of making quarterly reporting working is to make it optional and so dazzle us by the clear advanatages of the system of reporting 5 times a year and not once that all the nay sayers are forced to admit the god like genius of HMRC in not realising how brilliant this is. Or more likely, it to be just another government IT project failure.

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By Jane Wanless
04th Jun 2024 14:07

"But with the private beta already in full swing, "

So how many people are actually taking part? The whole article reads to me as if it's an advert for taking part, due to numbers being too low.

Thanks (17)
Replying to janewanless:
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By FactChecker
04th Jun 2024 14:19

Unfortunately it's not just Aweb who are happy to gobble up the '30 pieces of silver' proffered by HMRC's marketing dept.

There isn't a single 'benefit' or even justification given in the article that stands up to the 'cold shower' of reality ... just claims that at best are unproven and probably unfounded, or at worst are deliberate non sequiturs that are intended to obfuscate and mislead.

Sorry, Amy, but you've been 'had'!

Thanks (24)
Replying to FactChecker:
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By FactChecker
04th Jun 2024 14:48

One (boring) example of the way that HMRC misdirect is in the following:

"MTD for income tax will see self assessment taxpayers moved over from the creaky old Computerised Environment for Self Assessment (CESA) platform, which was designed in the 1990s, to the Enterprise Tax Management Platform (ETMP). It’s a lot of work, but important as CESA is no longer fit for purpose."

1. the "creaky old CESA platform" is actually working, so should only be replaced with a working system - not used as an experiment for untried ideas/processes;
2. ETMP is hardly a bright shiny new toy ... it will celebrate its 10th birthday for PAYE shortly (and already existed at that time);
3. It might have been pertinent for HMRC to recall just how much of the blame for catastrophic problems has been laid by them in the past as being *due* to exactly these kind of platform changes (moving NI to co-exist with IT for instance) - and the promised 'lessons learned' included .. no more trying to cram two or more innovations into a single project;
4. Oh, and "fit for purpose"? Now an overused soundbite that means nothing without examples - which, even if they exist in this case (unproven), are not going to be admitted by HMRC as that would mean admitting one of their core tax collection systems is unreliable or dysfunctional already (and even they are not that stupid)!

Thanks (10)
Replying to janewanless:
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By AdamJones82
04th Jun 2024 14:44

Yes, the first thing I thought on reading this was "advertorial"

Thanks (15)
Tornado
By Tornado
04th Jun 2024 14:15

Income Tax is an Annual Assessment and that is how it should remain.

We already have an excellent system with Self Assessment that just needed a fraction of the cost so far of MTD to bring it up to a very high and efficient standard.

But there I go again, MTD has nothing to do with HMRC efficiency, or indeed our efficiency, but everything to do with the lorry loads of cash being dumped into the project to enable a select number of people and businesses to make obscene amounts of money for nothing.

Amy, your reporting is good and an enjoyable read but you are too trusting about what you are being told. Some more cynicism and scepticism in your reporting would give it a bit more punch and show that you are thinking independently.

Thanks (22)
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By Open all hours
04th Jun 2024 14:49

We know who butters the bread at AccountingWEB.

Thanks (13)
Replying to Open all hours:
Tom Herbert
By Tom Herbert
05th Jun 2024 15:25

I love the taste of a good conspiracy theory (I also like bread and butter, mmm)

Thanks (2)
Replying to TomHerbert:
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By Amy Chin
05th Jun 2024 16:57

We must ask them to include some plant based butter next time Tom ;-)

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Replying to Amy Chin:
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By johnjenkins
05th Jun 2024 17:34

Smart Balance, Amy.

Thanks (1)
Replying to johnjenkins:
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By Amy Chin
05th Jun 2024 17:39

johnjenkins wrote:

Smart Balance, Amy.

Thanks, I usually go for Flora but will try other brands if they come highly recommended by AWEB users.

Thanks (1)
Replying to Amy Chin:
Rob Swan
By Rob Swan
05th Jun 2024 18:55

Full on dairy, salted, except Lurpak - just can't stand Lurpak :(
Other disgusting brands are probably also available ;)

BTW - are we not spreading a touch off topic?
OK, I'm leaving ....

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Replying to Rob Swan:
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By johnjenkins
06th Jun 2024 09:19

Just a ripple.

Thanks (1)
Replying to Amy Chin:
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By johnjenkins
06th Jun 2024 09:18

Amy, I was trying, in my own warped way, to let you know that I can be witty without cutting remarks.

Thanks (1)
Replying to TomHerbert:
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By Open all hours
06th Jun 2024 13:48

The difference between a conspiracy theory and the truth? About 3 months.

Thanks (3)
Rob Swan
By Rob Swan
04th Jun 2024 14:51

HMRC gave.... "A strong indication that whatever happens on 4 July, pulling MTD for income tax is not on the agenda." What The Fruitcake!!!

So.... Harra really does think he's above his masters.

Anything - literally - could happen after 4 July. There might even be enough common sense in Westminster to pull the plug on MTD. Wouldn't that be 'refreshing'?

Thanks (12)
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By jonharris999
05th Jun 2024 06:27

It's all very well recommending "sign up to the Beta". As I have written here before, we are one of what appears to be a very small minority in being largely sympathetic to the MTD motivation and largely feeling that if it works, it's good news for us and many of our clients.

But if our software provider can't take part, neither can we. And we use all the common small- and mid-scale software. Which kind of makes the whole Beta a useless nonsense.

Thanks (7)
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By steve 12321
05th Jun 2024 09:10

When can we get some sensible people making decisions who understand this is totally a stupid idea. Digitalisation fine, but quarterly reporting is just a terrible, unworkable proposal. Spend money catching criminals (HMRC can focus on tax/fraud losses), that would a better use of money.

Thanks (8)
Replying to steve 12321:
Jennifer Adams
By Jennifer Adams
10th Jun 2024 14:17

Agreed Steve, but an even better use of money would be chasing taxpayers who dont pay or pay late.

I have just finished a review of my clients with the intention of nagging them into sending me their accounts... 'send me your stuff now and I will see if I can reduce your July tax bill etc etc'.

when doing so I check their outstanding tax bills online and am surprised at how many still owe going back to 2022 or even further back.

(of course this gives me even more reason to nag which, after all, is one of the pleasures of being an accountant!)

Thanks (2)
Replying to Jennifer Adams:
Morph
By kevinringer
10th Jun 2024 14:55

I've encountered that too, but when I ask clients, they tell me they've not received any reminders from HMRC. HMRC only sends out one demand and if that's not paid HMRC doesn't send any reminders. HMRC sometimes passes it to third party debt collectors, but since Covid, HMRC seems to be doing nothing for most cases. It's HMRC's job to collect the tax.

Thanks (1)
Replying to kevinringer:
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By johnjenkins
10th Jun 2024 15:56

"Let's make the tax gap bigger so we can say, we need more money and stuff".

Thanks (1)
Replying to Jennifer Adams:
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By johnthegood
10th Jun 2024 16:31

Jennifer Adams wrote:

when doing so I check their outstanding tax bills online and am surprised at how many still owe going back to 2022 or even further back.

Yes same here, I have clients that have owed VAT for over 4 years, no one seems bothered, same with Corp Tax, the only extra motivation now is that interest rates are higher, but if you are a business that is struggling with cashflow there is no way you are going to pay anyone until you really have to, and in the meantime how many businesses will fold and end up not paying taxes, shocking from HMRC.

It really started going downhill with CT when some genius decided to stop sending out statements/payment reminders.

What really annoys me is that its such a quick fix.

Thanks (1)
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By AdamJones82
05th Jun 2024 09:17

Id bet good money this ends up like MTD for VAT
No actual changes except submitting the same figures through a different portal.
What a colossal waste of money

Thanks (8)
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By PAULLEWISFCCA
05th Jun 2024 09:24

how do you know you are in a cult

Thanks (2)
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By Mr J Andrews
05th Jun 2024 09:30

If , as Charlotte Barbour CIOT president puts it, taxpayers and agents should choose the digital option - rather than be forced into it - whats the point of ''joining the scheme'' early when clearly MTD is going to no more than create unnecessary, time consuming administration, costs and general headaches for the vast majority of taxpaying Joe Publics ?
Given the choice, who would walk a mile in the pouring rain to the supermarket when there's one two minutes away.
And you can bet your bottom dollar that the specialist HMRC dedicated support team will be tunnel vision indoctrinates to anyone suckered into volunteering.
Can anyone remember the initial HMRC propaganda summarising those categories of 'customers' who should be exempted from MTD ?

Thanks (2)
Replying to Mr J Andrews:
Rob Swan
By Rob Swan
05th Jun 2024 10:55

I suspect - and there's more than enough evidence to avoid doubt - that HMRC are effectively trying to build a modern stealth warship on top of something akin to HMS Victory underneath. The disparate and crumbling legacy IT systems at the back end, and no doubt various 'consultants' fudges and workarounds, will never withstand the technical demands of millions of users on MTD. And when reality overtakes hype and hope....

So long as HMRC is allowed to peddle hope over common sense, they - not us - are doomed.
Time will tell.

Thanks (0)
Morph
By kevinringer
05th Jun 2024 10:40

"Are there any benefits to signing up to the beta?
No more hanging on the ADL"

Really? Most of my calls to the ADL recently have been PAYE, which won't be part of MTD ITSA. And every SA client I have phoned the ADL about recently won't be mandated for MTD ITSA (none of them are sole traders with turnover of more than £30k).

HMRC seems to forget that any system switch will increase the number of phone calls. Just look at 30/60-day CGT. Prior to 30/60-day CGT we only needed to contact HMRC about SA queries. HMRC invented the new 30/60-day CGT regime which means we now need to speak to HMRC about 30/60-day CGT and still need to speak to them about any SA CGT queries. 30/60-day CGT created the need for support where none previously existed. MTD ITSA will similarly create the need for support where none currently exists. And don't forget that if HMRC's timetable happens (0% chance of that), we'll still be in the transition period for BPR. Will MTD ITSA cope with that? I suspect HMRC thinks they'll be able to push support onto the software industry.

Thanks (9)
By Charlie Carne
05th Jun 2024 10:47

So many replies on here are missing the point. I don't know why I keep wasting my time repeating my tired old mantra, but here goes again. There is indeed, as most AWEB readers keep complaining, little to no advantage to the taxpayer (and there won't be for some years yet) to quarterly filing. But that is not a reason to reject MTD for ITSA because (and listen carefully here), that is not the point of MTD!

AdamJones82 wrote:

Id bet good money this ends up like MTD for VAT. No actual changes except submitting the same figures through a different portal.


To misquote Frankie Howerd: " yes, yes and thrice yes"! The intention is not to provide more information to HMRC, so why complain that it doesn't do that?

The purpose of MTD is to encourage businesses to keep their records in digital form. This is a long-term project and in 10-20 years, once we're all keeping digital records, HMRC will be able to run AI-based checks on every business transaction in real time. Company A sells a service to company B but is A's recorded income the same as B's declared cost, is A's output VAT the same as B's input tax? HMRC won't even need to open an enquiry as, I suspect, by then every time a business raises an invoice in its digital accounting system, it will be required to append a unique transaction ID (issued by HMRC either in real-time as the invoice is raised or downloaded in batches in advance). Many countries (including much of Europe) have already started to use eInvoicing which will allow each county's tax authority to instantly check both ends of a transaction.

Accountants ask what is the point of quarterly filing if the data is nonsense. The requirement for regular filing is to prove (at multiple points across the year and not just once after the year has ended) that the data is maintained digitally, not to provide accurate data. The head of HMRC's MTD team told me two years ago that, if I ensure that my client's books are connected to a digital bank feed and they issue electronic invoices and I file the quarterly MTD for ITSA submission on time, then I am compliant, even if I do not check that a single transaction is accurate; but, if I check every transaction for accuracy and file 5 minutes after the deadline, then I will not be compliant. Many accountants don't see the purpose of this but they miss the point. HMRC don't care about accurate quarterly data for IT (unlike for VAT where tax is actually due based on the quarterly submission); all they care about is ensuring that the business is complying with the requirement to be digital so that the long-term future goal of real-time data checking is on track.

HMRC have not helped themselves by branding this as Making Tax Digital, when it's about making business or invoicing digital. HMRC also sell this as allowing the taxpayer to get estimates of their tax liability earlier, which is also nonsense as that relies on the data being accurate and not subject to adjustments for accruals, prepayments, stock, etc. If the taxpayer wants an early estimate, their software could do that without linking to HMRC.

But my plea to the profession is to stop fighting MTD, recognise that the whole world is moving in that direction and see the long-term advantages even when there are zero short-term benefits.

Thanks (5)
Replying to charliecarne:
Rob Swan
By Rob Swan
05th Jun 2024 11:11

Big Borother.... Never works. (cf. Russia, China....)

Technological solutions to problems of morality and corruption never produce the desired/required/expected result. Ever.

When there is less technology and more human eyeballs, accountability, and reponsibility things are generally more effective, of higher quality and produce more of the desired results. And... the work is generally more pleasant and enjoyable.

Net results of 'digital': More rubbish/incorrect accounting, ... more fraud/corruption, ... , and LESS tax collected.

I suspect, long before the (your) stated objectives of MTD are realised, western societies and governents will have collapsed into chaos and we'll all be wondering what happened.

It's not difficlu to see but... what do I know?

Thanks (3)
Replying to Rob Swan:
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By PAULLEWISFCCA
05th Jun 2024 12:44

It was about to collapse in 2008 but Gordan Brown saved the banks (world) by increasing the debt - but the debts are far larger now, so it appears to be a race to install a complete tyrannical system where everything and everybody is tracked and traced in real time by the slave masters before the banks/currency collapses. Enjoy the show.

Thanks (3)
Replying to Rob Swan:
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By FactChecker
05th Jun 2024 19:13

Charlie: "HMRC don't care about accurate quarterly data for IT; all they care about is ensuring that the business is complying with the requirement to be digital so that the long-term future goal of real-time data checking is on track."

So new business opportunity for OMB software developers ...
* Offering 1 = £2.50/qtr for bridging software (user to input their own data);
* Offering 2 = £12.50/qtr for same software (auto-submits with system generated made-up data).

Thanks (5)
Replying to charliecarne:
Morph
By kevinringer
05th Jun 2024 11:40

You're quite right that Making Tax Digital is not the right branding. For me, tax has been digital since 1998 (that's when I switched 100% of my SA clients to digital Tax Returns). MTD is Making Transactions Digital. And that's a problem for small businesses because their records are not just the bank account, but numerous other sources too, and digitising doesn't improve accuracy. It certainly doesn't improve accuracy for HMRC. I started in practice pre-SA when HMRC issued hand-written assessments. Back then, HMRC usually issued the assessments within a few weeks of submission of the tax return, and the assessments were right 99% of the time. The problems started when HMRC moved to digital and as HMRC moved more services digital, HMRC's service levels reduced and errors increased. I've spent a chunk of this week progress chasing HMRC about HMRC errors capturing submissions that I have made digitally. I support digitisation where there is a benefit, but all my clients that would benefit commercially from digitisation have already digitised. Those that are left won't benefit commercially and will only be doing it because HMRC wants them to. I'd even consider that a benefit if I knew it would improve what clients get out of HMRC, but we've been submitting 100% digital SA returns for 27 years and MTD ITSA merely replaces one means of digital submission with another, just as MTD VAT did. And given HMRC did something similar for PAYE to RTI 8 years ago and HMRC still can't cope with RTI, I have no confidence HMRC will be able to cope with MTD ITSA. Look at 30/60-day CGT that HMRC claimed to have piloted, but HMRC hadn't taken on board feedback from the PBs and look at the mess of 30/60-day CGT when it was mandated. But MTD ITSA is vastly more complex than 30/60-day CGT.

Thanks (8)
Replying to charliecarne:
By ireallyshouldknowthisbut
05th Jun 2024 11:51

Charlie,

The trouble with all of what you say about the theortitcal direction of travel is that HMRC simply are not going about it in the right way.

if they want a digital system to one business income is another's costs then they need to build it rather than building a nonsense system of "busy work" which will have huge levels of non-compliance as it has no practical purposes for the business owner. The only rational solution for the small business owner is to file any old junk by any method which will fool HMRC's system which by definition fails the point of it.

If however they cant issue an invoice without being on system X, then boy everyone will be on it, as that is then a business critical issue.

Virtually all my clients who should be using digital bookeepeing methods are doing so. Those that should not (small landlords for example) are not as there is no point. Im not sure where this cohort of "should be using digital but are refusing just to be awkward" are.

Thanks (2)
Replying to charliecarne:
Tornado
By Tornado
05th Jun 2024 12:30

"But that is not a reason to reject MTD for ITSA because (and listen carefully here), that is not the point of MTD!"

If quarterly reporting is not the point of MTD then it clearly is not required!

Thanks (5)
Replying to Tornado:
By Charlie Carne
05th Jun 2024 13:24

Did you read what I wrote? It's not about submission of data quarterly, but sending an electronic flag on a regular basis to prove that you are using a digital accounting system. It has nothing whatsoever to do with accuracy. Yes, you can game the system by setting something up and ignoring it, just as you can wait for the greengrocer's back to be turned and steal an orange, but the purpose is to slowly move the dial on businesses becoming digital for the long-term benefit of the country.

The arguments I'm hearing are like the arguments against the government's proposal to stop anyone born after 2009 from ever taking up smoking. "Oh, how silly that in 20 years a 34 year-old cannot buy cigarettes but a 35 year-old can" goes the daft argument. No one cares if people a couple of years the wrong side of the line get away with buying cigarettes; it's about moving the line ever forwards so that in 20 years, a twenty-something can't easily buy them and, in 40 years, a forty-something, and so on.

Centuries ago, they built cathedrals that they knew would take so long to complete that the original planners and builders would never to live to worship in them. If the readers of AWEB had been around, none of them would ever have been started!

Thanks (4)
Replying to charliecarne:
Rob Swan
By Rob Swan
05th Jun 2024 14:18

..."becoming digital for the long-term benefit of the country."

Come on! I'm beginning to think your HMRC's advocate for MTD.

MTD has NO!!! - that's ZERO - benefit to anyone. Period. (The consultants working for HMRC may gain some short term benefit, but I'm pretty sure that before too long they'll be in the 'Fujitsu position' and feeling more than a little regretful.)

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Replying to charliecarne:
Tornado
By Tornado
05th Jun 2024 14:55

We joke about MTD because that is what this project is for all the thousands of reasons already given on AWEB.

If you go back over all the postings, you will see that most people are happy to progress with digital accounting, indeed many, like myself, were preparing Accounts for clients on a desktop computer is 1983, so I do not need to be preached to about the benefits, I have 40 years experience.

What the problem is, and what you do not seem to accept, is the way that HMRC and the Government are trying to do this now to the extent that it will never achieve the point of the project.

MTD for ITSA is a joke and that is it really.

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Replying to Tornado:
Morph
By kevinringer
05th Jun 2024 15:11

To support Tornado's comment about digital accounting: I was writing accounting software for micro computers in 1979 (before the PC). I'm all for digitisation if it brings a benefit to the client, but object to small businesses being told they have to digitise when there's no benefit to them, and I would argue there's no benefit to HMRC. Look at MTD VAT. Has it brought any benefit to HMRC?

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Replying to charliecarne:
Stepurhan
By stepurhan
05th Jun 2024 15:04

charliecarne wrote:

The arguments I'm hearing are like the arguments against the government's proposal to stop anyone born after 2009 from ever taking up smoking.

The inappropriateness of this comparison gives some indication of your flawed thinking on the subject.

Stopping people smoking does not come with extra cost for individuals. Stopping smoking does not require them to learn new skills. No-one has to report that they have stopped smoking quarterly to the government.

Stopping smoking also has clear and well-established benefits for the health of individuals. Mandated digital record-keeping does not. The repeated claim that digital record-keeping will reduce errors can be disputed by every high-street accountant that has had to fix client's online book-keeping. It doesn't stop people who don't understand accounting records from making mistakes, it just gives them new and interesting ways to make them.

MTD in its current form is not a cathedral. It is a shabby lean-to held up by acrow props. I can see the potential for digitisation being helpful in the long-term, but MTD in its current form will not get us there.

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Replying to charliecarne:
By ireallyshouldknowthisbut
05th Jun 2024 13:02

And another thing, in the time this farce has been going on for, I have had a number of clients start a small business...........run it for several years........and close it.

This is quite common. Why should that business have to be prepared for an even which is probably 10-15 years away?

Moroever just becuase business A issues and invoice which is matched to business B, this doesnt mean its tax deductible in business B. So the benefits of the system in terms of audit are limited.

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Replying to ireallyshouldknowthisbut:
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By buttinski
11th Jun 2024 14:35

And another thing ......... if Charlie's benefits will not be seen for 10, 15, or 20 years, why not exempt those who will have long gone by then from the cost, inconvenience, sheer waste of time and general misery of it all?

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Replying to charliecarne:
Morph
By kevinringer
05th Jun 2024 13:03

charliecarne wrote:

Accountants ask what is the point of quarterly filing if the data is nonsense. The requirement for regular filing is to prove (at multiple points across the year and not just once after the year has ended) that the data is maintained digitally, not to provide accurate data.


But that won't prove digital record keeping. I'm aware of businesses and accountants that don't have MTD-compliant VAT records and hoodwink HMRC by simply typing the VAT return totals into MTD VAT bridging software; HMRC receives an MTD VAT return and is fooled into thinking the business is MTD VAT compliant. The same trick can be used by non-compliant taxpayers/agents for MTD ITSA, therefore quarterly MTD ITSA proves nothing at all.
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Replying to charliecarne:
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By johnthegood
05th Jun 2024 13:05

charliecarne wrote:

So many replies on here are missing the point.

With respect I would say it's more likely you missing the point here Charlie.

When MTD first reared its head I was all for it, but over the many years since then we have seen more and more why this will not work, and now it needs to be killed in its current form.

Build a new system, and give agents more access and support - yes!

Move from an annual system to quarterly, impose costly software on businesses that gain no benefit from it, increase the workload of every single practice in the UK - No thanks!

its all stick and no carrot, there is absolutely nothing good you can say about it because those that would benefit are already using software!

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Replying to charliecarne:
Morph
By kevinringer
05th Jun 2024 13:15

charliecarne wrote:

This is a long-term project and in 10-20 years ...


You're absolutely right about this being a long-term project, but maybe you'll need to extend your time periods. This project has already been running for 9 years and so far all that has happened recently is the MTD ITSA pilot that started in 2017 has started again 7 years later in 2024. So it's taken 9 years to achieve nothing.
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Replying to charliecarne:
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By GHarr497688
05th Jun 2024 16:18

That's not how it reads especially if you use your own spreadsheet. Do you know something we don't ? You would need more than MTD to reconcile every transaction across different businesses.

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By Peter-S
05th Jun 2024 12:52

"This is a long-term project and in 10-20 years, once we're all keeping digital records, HMRC will be able to run AI-based checks on every business transaction in real time"

But if Mr X digitally records a business transaction of mowing my lawn at home HMRC won't be able to check anything for corroboration especially if I use real money for the transaction. What percentage of transactions will fall down at that point because they are with Joe Public who doesn't have to record or file anything?

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Replying to Peter-S:
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By johnjenkins
05th Jun 2024 13:15

You said it, Peter, how long before Joe Public has to record business transactions (like mowing the lawn) in real time? I know it sounds daft, but then doesn't quarterly updates.

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