HMRC advises changing MTD year ends in 2023/24
In an online session with accounting software provider FreeAgent, HMRC clarified several points surrounding the introduction of Making Tax Digital for income tax self assessment (MTD ITSA) in April 2024.
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"FreeAgent will soon be inviting its Practice Partners to use the software to make MTD ITSA submissions through HMRC’s pilot programme"
= "gobble, gobble, gobble ... I cast my vote for Christmas"!
'The programme will expand in 2023/24 to test simple, mandated customer journeys at volume and to start testing more niche customer groups.'
Hilarious. Still testing the simple stuff in 23/24!!
Someone get HMRC to re-read the Carter report from many years ago, the gist of which was that HMRC must ensure that software must be fit for purpose before being implemented.
Testing software for millions of people on a select group of taxpayers (allegedly only NINE people/landlords) is beyond a joke. How can such a small group be representative of the millions who will have to use this rubbish.
Most of our clients would fall in in the 'niche' category - multiple businesses, properties, partners, etc, and I guess that would be the same for a lot of represented taxpayers. so, we're still in the dark about what these quarterly dates actually look like......
Shambles.
Why is it when I see these relatively close dates I cant do anything but laugh loudly.
There is huge mountain still to be climbed by HMRC, the biggest one of all being of course the "end of period statement (EOPS) and a final declaration (which will replace the annual self assessment tax return)"
So its taken 7 years to not yet be able to work out to file quarterly filings (the really easy bit as there is no tax here and its garbage data no-one cares about) and they are going to design a brand you SA tax return by April 25.
Which is the mind boggling complex bit. A tiny part of which they got so badly wrong with the 30 day report and pay for CGT. Which is one of several hundred potential entries.
I think what they mean is "replaces SA tax return with a hotch potch of disasters and work arounds" which is quickly shelved once they realise how big a job that is, quickly followed by the EPOS, and copy all of that only to the normal tax return for 99% of tax payers whilst we spend a further 10 years promising the end of the tax return, before coming in with a "Return of taxes" in 2035. Which goes pretty much what the old one did, but its more cumbersome and harder to complete, and is stuffed full of faults. ie following the path of the 30 day report and pay and all the other "improvements" such as putting NI for the self employed through ther tax return, which what 6, 7 years later (?) still doesn't work properly.
Its hard not to be cynical when the whole system is just going backwards.
8 people on the pilot
Only 3 products 'available now'
17 in development...
44 listed by HMRC for current self-assesment
They are at least 24 short for MTD SA, let along any new entries to the market... this is just for a final declaration, if the quarterly updates are (in some cases) going to be done in the bookkeeping product...
....over 500 can do MTD VAT
‘Teams within HMRC are working closely together to align their communications….’
Really? There are ‘teams’ working on comms but very few of the unrepresented know anything about MTD except that it has spawned some seriously deficient ads from various software providers.
Come on HMRC, time to front up properly. Your customers deserve nothing less.
I've told my 70 year old client that his year end will have to change and he has to start using digital records for MTD ITSA from 2024 not to mention me filing six times a year for him. The comment was ignored so HMRC MTD Readiness Guru perhaps you can tell him. I won't be working after 2023 , us Accountants have had enough from you bully boys so let the Tax System collapse and then see what happens to your jobs.
And today we hear the powers that be want to ditch a ton more civil servants, including HMRC staff. It really doesn't bode well.
Whilst we have moved on with cloud accounting etc., our problem and which doesn't appear to be being addressed, is because we deal with 99% of our clients' accounting/book keeping entries, how on earth are we going to get all transactions updated within a month of each quarter end, to enable a quarterly report on time anyway? We always require the 7 days at the end of the vat submission dates as it is, to get the vat registered stragglers' returns submitted and who still don't let us have the information early or won't use our other system to scan their invoices in. Or am I just missing something here?
Whilst we have moved on with cloud accounting etc., our problem and which doesn't appear to be being addressed, is because we deal with 99% of our clients' accounting/book keeping entries, how on earth are we going to get all transactions updated within a month of each quarter end, to enable a quarterly report on time anyway? We always require the 7 days at the end of the vat submission dates as it is, to get the vat registered stragglers' returns submitted and who still don't let us have the information early or won't use our other system to scan their invoices in. Or am I just missing something here?
and in year one you will also be doing the tax return for the previous year, plus in the first reporting quarter half you staff could be sunning themselves on a beach somewhere but, hey, I'm probably just nit picking I'm sure HMRC have taken all of this into account.
So HMRC want us to become competent in all the changes that MTD ITSA brings, and change our self-employed clients years ends to 5/4 including two overlap relief calculations and detailed Payments on Account for 2425 calculations - all so they know our clients income and expenses on a quarterly basis, which can then be changed anyway and on which they have no intention of taxing on a quarterly basis. No mention so far of how the other elements on a Tax Return, eg interest received, chargeable events, CGT will be reported under MTD ITSA.
Responding to the question on this issue, HMRC’s external customer readiness lead for Making Tax Digital, Melanie Hume, recommended that taxpayers considering changing their accounting period to align with the tax year should avoid doing so until the start of the 2023/24 tax year.
I think Melanie is going to have her work cut as HRH External Customer Readiness Lead for Making Tax Digital.
Has she ever talked to a 'customer' , they are taxpayers, always have been , always will be.
Should also ask Melanie Hume, why wait until 2023/24 for an accounting year change?
Can't HMRC cope with all the overlap relief claims before that? And if so, why not?
Because if they can't handle accounting year-end changes over the next 2 or so years, how on earth will HMRC cope with literally millions in 2023/2024?
Should also ask Melanie Hume, why wait until 2023/24 for an accounting year change?
Can't HMRC cope with all the overlap relief claims before that? And if so, why not?
Because if they can't handle accounting year-end changes over the next 2 or so years, how on earth will HMRC cope with literally millions in 2023/2024?
What extra work is involved for HMRC?
Unless we're thinking of providing information for taxpayers who couldn't be bothered to keep records of their overlap.
Perhaps it's because the extra profits arising in 2023-24 from this change will be subject to spreading relief, which will not be available if the change is made in an earlier year.
That's true. But there could be a case for spreading even thinner by moving the year end forward by a couple of months in 2022/23.
Every case will be different.
That's what I assume. In which case, presumably assess on a case by case basis as to the impact it is going to have on the business.
A business making very little profit or using up losses from Covid might not be bothered about an 18 month period, for instance, especially if there are overlap profits that can be released in the process.