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CIOT president calls for MTD ITSA delay | Accountingweb
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CIOT president calls for MTD ITSA delay

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The Chartered Institute of Taxation president says the current timetable for the Making Tax Digital programme is unrealistic. In attempting to digitise without first undertaking a full review, Rebecca Cave feels the programme has put the cart before the horse.

12th Sep 2022
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Speaking at the CIOT’s 2022 parliamentary reception at the House of Commons, Susan Ball, Chartered Institute of Taxation (CIOT) president, addressed three major concerns with the UK tax system.

Digitisation rollout

CIOT supports the digitisation of the tax system as set out in the government’s 10-year tax administration strategy. However, Ball emphasised in her speech that digitisation has to be rolled out in a way that everyone can cope with and benefit from.

Ball added: “The government should review the Making Tax Digital programme so it really does deliver better service to taxpayers, not simply more burdens.”

This is a sentiment that many AccountingWEB readers will agree with. 

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Replies (149)

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Replying to jonharris999:
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By SimonP
13th Sep 2022 17:12

Better? Better for whom?

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Replying to jonharris999:
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By Rgab1947
13th Sep 2022 09:45

Yup the sole trader just cannot wait for that financial report.

Sorry, but get real.

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Replying to jonharris999:
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By NotAnAccountant2
13th Sep 2022 12:32

jonharris999 wrote:

If you were the management accountant of a SME, would you be serving your Directors better if you gave them a quarterly report 4 weeks after the quarter-end, or an annual report 9 months after it?

Why would my wife's property business - where the tenancy agreement was signed at the start of May - benefit from quarterly reporting in July, October, January, and April? Other than some minor adjustments for a few expenses we already know what the numbers will be.

And how will MTD cope with the fact that she's handed her notice in to her employer a few weeks ago and started self employment work this week. She handed her notice in before she had any work but she's now done her first few hours. HMRC would have about two weeks to get that business setup in MTD had she already been in it due to the property income. And should she really be spending the first few weeks chasing HMRC so she can do some pointless reporting and avoiding penalties rather than finding more hours?

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Replying to NotAnAccountant2:
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By jonharris999
13th Sep 2022 16:16

I'm surprised by the very large number of contributors here working so hard to argue that less-frequently-produced information is likely to be the same quality as, or of higher-quality than, more-frequently-produced information. It seems to me a simple matter of logic and basic business knowledge that the opposite is true.

By all means argue that the greater frequency is unnecessary, or too costly. I disagree, but you have a valid point.

I do not for my life see how you can argue that the greater frequency will not be likely to be more accurate.

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Replying to jonharris999:
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By BryanS1958
13th Sep 2022 16:32

I doubt if many, if any, are arguing that more frequently is the same, or lower quality, than less frequently.

We (are at least I, although I think I am probably speaking on behalf of the majority) are contending that it is unnecessary and too costly and burdensome, especially for landlords and micro-businesses.

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Replying to BryanS1958:
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By jonharris999
13th Sep 2022 17:19

But that is exactly what Hugo and adjadj have argued here.

I think SimonP started there too but he might have changed his mind. I'm not sure.

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Replying to jonharris999:
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By Hugo Fair
13th Sep 2022 16:37

Well I like an (imperfect) analogy ... so try this one on for size:

* You are given 120 darts and a dartboard (all loose in a box) ...
Option 1: Every other weekday set-up the dartboard and throw one dart before putting everything away again; or
Option 2: Once every 3 months set-up the dartboard and carefully throw 30 darts, taking the time to 'get into the groove' and adjust after each throw.

Assuming that you're not a professional darts-player, which option is likely to produce greater accuracy overall?

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Replying to Hugo Fair:
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By SimonP
13th Sep 2022 17:09

That really is an extremely imperfect analogy.

Are you seriously suggesting that a client's bookkeeping will improve if s/he enters everything in 3-month batches, especially since HMRC do not approve of such batching of data input? They prefer that postings are carried out "regularly", without defining what that word means. So, every 3 months is indeed regular but not encouraged.

I would think that Option 1 would be more accurate since the data would be entered whilst the relevant event is still fresh in the mind.

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Replying to SimonP:
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By jonharris999
13th Sep 2022 17:16

Er, exactly.

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Replying to SimonP:
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By Hugo Fair
13th Sep 2022 18:45

Yes, that's exactly what I'm suggesting.
And I'm well aware that "HMRC do not approve of such batching of data input" ... but don't see the relevance of that as I'm not seeking their approval.

What was under discussion was whether frequency of reporting was justified by the claim of greater accuracy (and hence an inferred benefit for the taxpayer)?

FWIW I wasn't "arguing that more frequently is the same, or lower quality, than less frequently" ... but positing that the opposite isn't true (i.e. more frequently doesn't automatically generate greater accuracy), which isn't the same thing.

And the key part of my analogy has been ignored or misunderstood ... that the actions are being performed by an inexperienced operator (the taxpayer).

I've sat and watched such people attempting what is not dissimilar to them to filing paper documents (remember them) in files in filing-cabinets.
What quickly becomes apparent is that there's an amount of set-up/preparation time (some physical, some mental) before any filing takes place ... and that this effort isn't repeated with each subsequent filing action during a single session.
The same can also be observed in terms of the time taken to remember where and how each action needs to be performed ... hence my reference to getting 'into the groove' of it.

As non-professional 'filers' they are not prepared to expend effort on 'learning a new skill' ... so each 'filing session' starts from ground zero (rinse & repeat).

There are other salient factors (like the number of taxpayers who are innumerate and/or uncomfortable even with a mobile phone) that can make each 'session' a major source of stress ... and so encourages participants to minimise the number of sessions (by batching them together).

All this may be anathema to you (or merely a surprise) but that doesn't make it untrue!

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Replying to Hugo Fair:
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By SimonP
13th Sep 2022 19:06

I think most people would rather spend maybe 10-15 minutes each week (or even daily) entering their data than sitting in front of a computer for several hours every 3 months.

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Replying to SimonP:
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By adjadj
14th Sep 2022 00:06

As someone who has filled in a spreadsheet for both a small business and property income for more than a decade I chose to batch my work. Monthly for my business and quarterly for the property income which had very few transactions. As remarked by others there is a start up and end overhead and it does take a bit of time to get in the groove

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Replying to NotAnAccountant2:
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By adjadj
14th Sep 2022 00:07

Re registering the new self employment business. The process is not as you state.

Based on the published regulations the taxpayer can either register voluntarily commencement of a business stream or will be required to follow the MTD requirements for that source after the submission of their first tax return declaring income from it.

This your wife has plenty of time to do this

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As an aside this scenario adds a complication for the proposed HMRC Update and submit a Tax Return Service. It will have to cope with the situation where one income sources is captured through MTD ITSA and the other via the ...... Tax Return Service - I hope it's in HMRC's test plans!

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Replying to adjadj:
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By NotAnAccountant2
14th Sep 2022 13:19

adjadj wrote:

Re registering the new self employment business. The process is not as you state.

Based on the published regulations the taxpayer can either register voluntarily commencement of a business stream or will be required to follow the MTD requirements for that source after the submission of their first tax return declaring income from it.

This your wife has plenty of time to do this

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As an aside this scenario adds a complication for the proposed HMRC Update and submit a Tax Return Service. It will have to cope with the situation where one income sources is captured through MTD ITSA and the other via the ...... Tax Return Service - I hope it's in HMRC's test plans!

Hmmm, I replied to this but it seems to have vanished after I corrected a "know" to "now"

Thanks. I'd misread the legislation. But now I think there's a different conflict.

Part I sec 4 says that the *business* digital start date is 4th April 2024 for existing businesses.

Part 8 sec 22 says that a *person* is excluded if their relevant turnover in all of the previous three years is <10K

But doesn't that mean that if you have an existing property business with turnover 7K then you don't join MTD even though the business start date will be Apr 2024 - but if you then start a self employment business in March 2025 with turnover of 500 p.m. (pro-rata 6K) then your property business is no longer excluded starting from April 2025 - but only not exempt after you submit your tax return! So you'll have to make sure that you do all the MTD quarters before you submit the tax return...

(4) A person’s qualifying income for a tax year is—

(a)the sum of the amounts of income, before any deductions, which, for each business carried on by the person in that tax year, are included in that person’s return under section 8 of TMA 1970 for that tax year; or

(b)where the tax year has ended but the filing deadline for the tax year has not passed, so much of the amounts of income, before any deductions, as are included in the quarterly updates for that tax year for each business carried on by the person.

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Replying to NotAnAccountant2:
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By adjadj
15th Sep 2022 22:36

My thinking is based on the HMRC guidance that you must start MTD in year X+2 when HMRC tell you to and their decision is based on your tax return for year X which is submitted in year X+1

Note that trivial income of less than £1000 is not included in the £10k trigger decision however once you are in MTD then any such trivial income must be reported via MTD

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Replying to adjadj:
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By NotAnAccountant2
16th Sep 2022 10:18

adjadj wrote:

Note that trivial income of less than £1000 is not included in the £10k trigger decision however once you are in MTD then any such trivial income must be reported via MTD

Ouch! So someone who is self employed but who gets say 200 per year in rental income (perhaps because they're a 1% joint owner with their spouse 99%) will have to do quarterly reporting in MTD for their rental income?

Do you have a link for that - I cannot find it stated (either way) anywhere?

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Replying to jonharris999:
By jon_griffey
13th Sep 2022 09:19

jonharris999 wrote:

If MTD ITSA drives clients towards accountants, or towards a more frequent engagement with their accountants, that is likely to be better for them, not worse.

That's wishful thinking. Accountants will simply not have the time to do this on a quarterly basis or take on any more clients. The way I see it is that it may be possible to help perhaps 10% of clients with their quarterly filings (for 4 x the fee) - the rest will have to file themselves. I can't see any other way this is manageable.

Thanks (4)
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By Jo Nokes
13th Sep 2022 08:52

I’ve just revisited HMRC’s policy paper, published a year ago. The projected costs of transitioning are frankly unbelievable. And the article seems to conflate MTD VAT with MTD , although they aren’t really comparable, except both run on a computer. I guess if you are doing it yourself, perhaps it sounds attractive, well, until you need an accountant’s help
Here’s the site: /www.gov.uk/government/publications/customer-costs-and-benefits-for-the-n...

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Replying to Jo Nokes:
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By NotAnAccountant2
13th Sep 2022 09:23

Jo Nokes wrote:

I’ve just revisited HMRC’s policy paper, published a year ago. The projected costs of transitioning are frankly unbelievable. And the article seems to conflate MTD VAT with MTD , although they aren’t really comparable, except both run on a computer. I guess if you are doing it yourself, perhaps it sounds attractive, well, until you need an accountant’s help
Here’s the site: /www.gov.uk/government/publications/customer-costs-and-benefits-for-the-n...

"annual cost of £35 per business within scope."

coconut (chosen as an example only because they've recently been mentioned on this site) charges 7.50 per month inc VAT. That's 90 per year. Even an additional rate taxpayer able to reclaim VAT can't get the net cost down to 35.

Of course, now that your iphone, your computer, your internet connection, your electricity, your heating will all now be valid expenses and tax deductible expenses the monthly cost might well end up being negative...

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By Nebs
13th Sep 2022 08:56

I hope the costs for MTD have included a large sum for the NHS. They are the ones who will have to clear up the mental health problems in July 2024. Have they been warned to cancel all leave that month?

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By AndrewV12
13th Sep 2022 09:03

Fear not Liz Truss is against red tape, MTD is the top of the list of red tape, surly a prime target for a red tape cutting prime minister.

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By tedbuck
13th Sep 2022 10:09

Spot on, Rebecca!

Trouble is those at the top of HMRC like many other Civil Servants couldn't care a monkey's as all they are interested in is their pet project.

Still there may be hope as PM Truss has started off by sacking a senior civil servant so we may hope for more to come - perhaps HMRC will be persuaded to listen - and not before time.

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By Jo Nokes
13th Sep 2022 11:37

It's clear feelings are running strong, I have never seen so many thanks to so many posts. I'm wondering why it took so long for the CIOT president to make that speech.

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Replying to Jo Nokes:
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By johnjenkins
13th Sep 2022 11:48

The reason why it took so long was that the CIOT president knows full well that no one will take a blind bit of notice. Unfortunately political parties always put the party and what they think is right before the people.

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Replying to johnjenkins:
paddle steamer
By DJKL
13th Sep 2022 13:53

"I always voted at my party's call, and I never thought of thinking for myself at all."

William Gilbert

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Replying to DJKL:
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By johnjenkins
13th Sep 2022 14:29

So you're a poet and don't know it.

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Replying to johnjenkins:
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By Hugo Fair
13th Sep 2022 15:41

Oh he knows, to the core of H.M.S. Pinafore!

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Replying to Hugo Fair:
paddle steamer
By DJKL
14th Sep 2022 09:31

A childhood where both parents listened to G & S recordings plus dragged us to the theatre to watch performances has embedded bits and pieces within my memory.
(The other thing that stuck was Flanders and Swann)

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Replying to DJKL:
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By johnjenkins
14th Sep 2022 10:14

I was quite taken with Billy Cotton, Hinge and Bracket, around the horn, Hancock, Neddy Seagoon etc. etc. The fifties for me was a giant learning curve. My first trip to the pictures was to see King Creole, the next time was Road to Hong Kong (with my older sister, put me off Elvis for life), that was the first time in London and I was mesmerised. Rogers and Hammerstein made me cringe, however War of the Worlds (original and updated version) always intrigued me.

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Replying to DJKL:
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By Hugo Fair
14th Sep 2022 11:54

They wrote what should be HMRC's paean to efficiency (aka 'effort not results'):
https://genius.com/Flanders-and-swann-the-gas-man-cometh-lyrics

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Replying to Hugo Fair:
paddle steamer
By DJKL
14th Sep 2022 12:07

I work for a smallish property company, that is our typical week.

p.s Rather aptly the Scottish Gas man (Elec and gas) do cometh, he is due at my house today between 1.00pm and 5.00pm, his magic meter and the gizmo that goes into the red every time I switch on the kettle is not working and whilst I really could not care two hoots my other half is made of sterner stuff and has demanded their attendance to fix everything .

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Replying to DJKL:
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By johnjenkins
14th Sep 2022 12:15

Perhaps we need one of those "smart meters" to attach to our computers to make MTDITSA a doddle.

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Replying to DJKL:
Morph
By kevinringer
14th Sep 2022 12:39

(Un)smart meters: another crazy Government (un)initiative. Costing £millions, and for what? (Un)smart meters actually consume more power than a traditional meter, so immediately defeat their primary purpose. DJKL, I must prepare you for a long battle. Happened with a relative who switched power supplier and their SMETS1 meter would not work with British Gas. BG installed a SMETS2 meter (SMETS1 went in the bin thus proving that (un)smart meters generate waste). The new meter worked for 24 hours. BG were called out and fiddled around and installed a second SMETS2 meter. Months later my relative had not received a bill so checked the account online and noticed the new meter had stopped working months earlier and good old British Gas had used estimated readings instead. Long saga continued and relative is now on their 4th or 5th SMETS2 meter. What a massive waste of resources for no gain whatsoever because the relative leaves the (un)smart meter display in the garage next to the meters.

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By Nebs
13th Sep 2022 15:57

I agree with a delay rather than scrapping the project. It should be delayed until such time as Leyton Orient win the Premier League.

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Replying to Nebs:
ghm
By TaxTeddy
14th Sep 2022 08:22

Now THAT raised a smile at the end of a long and tedious debate, as I sit here in my replica Aston Villa 1957 FA Cup shirt dreaming of the glory days. It's the only antidote to all this gloom and doom (now that the Tour de France has finished).

I'll raise a glass to the Orient.

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Replying to TaxTeddy:
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By johnjenkins
14th Sep 2022 10:24

As we talking sport, did you know that we've had a Queen, got a King and had two Prime Ministers since Liverpool last won a football match.

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By chronus
14th Sep 2022 20:06

"President Ball set out three reasons to delay the rollout of MTD ITSA:

Taxpayer obligations are not yet clear
Approved software is limited
The pilot is not yet up to speed."
From the three reasons listed above, I would like to offer comment on the last, namely, " the pilot is not yet up to speed ".
Reliance on Automation.
Following the advent of semiconductors, the capability of automation has increased in leaps and bounds. The human role in controlling a system evolves as automation capabilities take over more complex tasks. However, the human controller unable to keep pace, would appear to be falling behind its robotic self.
The aviation industry is the corollary to this proposition.
I would suggest, aviation whilst remaining the safest mode of transportation is also the least forgiving of mistakes and errors. It is the costliest of all when error or mistake occurs.
It`s scale an importance is demonstrated by the statistics published by IATA. That in 2019, just before Covid, that from a world population of some 9.2 billion, over 7 billion passengers traveled by air.
Boeing in its challenge for supremacy against its rival Airbus, decided to make some changes to its highly successful, tried and tested 1967 design, B737 aircraft in order that it could be fitted with modern efficient power plants. They came up with the B737MAX. The aircraft required a special computer program to overcome an inherent design shortcoming, stability. They named it Maneuvering Characteristics Augmentation System, MCAS for short.
As we all now know, the thing failed to do what was on the label, it sort of did its own thing and the hapless "pilots" of the two airliners could do little to avoid the ensuing tragedies.
The cost was 346 lives lost, Being charged with Fraud Conspiracy and entering into a deferred prosecution agreement to pay $2.5 billion.
I ask myself, would, could this have happened without the wizards of automation on tap. I doubt it very much.
With IMTD, no matter how much HMRC has already spent on it, I know they would like to call it "invested", what could the casualty and real cost be and who is to pay for if the "pilots" never manage to get up to speed with it.
Me, no I do not need to loose any sleep over it, I will be out of the cockpit by then.
I am rather attracted to the idea of tackling NS (natural stupidity ). I think it is a far more fascinating subject than AI ( artificial intelligence ), where all you need is a hypodermic jab or even a pill which administered daily should work for most.
After all, did`t Boris prove that with his herd immunity for Covid. Despite that, the ungrateful so and so`s still gave him the boot. Unfair, I`d say.

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Replying to chronus:
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By johnjenkins
15th Sep 2022 09:20

I have been saying for a few years now that the gap between "high techies" and "low techies" is ever increasing with no end in sight. Don't get me wrong high tech, especially in health, can be a wonderful thing. However we do need to have a period of consolidation every now and then for us numpties to play catch up.
MTDITSA will not be operational in its present form by April 2024. My guess is that it will either be dropped completely or QU will be dropped and Agents will sign the Tax return as the records were completed digitally.

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