HMRC fires starting gun on MTD comms
With six months to go until the new digital VAT regime goes live, HMRC has launched a major communications campaign to try and build awareness amongst small businesses affected by Making Tax Digital.
Aside from providing clarity around the thorny issue of spreadsheets, the lack of education or guidance from HMRC has been the biggest complaint coming from the profession, and vendors and professional bodies have hailed the move as a step in the right direction.
However, questions raised at events and webinars show that there is still a huge knowledge gap, even within the accountancy profession itself. Yesterday the ICAEW published research that showed over 40% of businesses that will be affected by MTD for VAT are not yet aware of it, despite the April 2019 deadline for its introduction.
Campaign activity
The campaign started yesterday with a tweet linking to a webpage entitled Making Tax Digital: how VAT businesses and other VAT entities can get ready.
AccountingWEB understands that HMRC is planning to increase its social media and public relations activity around MTD, and will also send a direct mail to all affected businesses. No dates have been set for this activity.
An HMRC spokesperson said: “We are starting to ramp up communication activity with businesses, initially with information to help them prepare for MTD and later how they can sign-up for the service."
Simplified guidance
The page itself does not contain any previously unreleased information but simplifies the current guidance on how businesses should prepare for MTD for VAT.
The webpage spells out the criteria for businesses that will be mandated to join the scheme (registered for VAT with a taxable turnover above the VAT registration threshold), but also encourages businesses with a turnover below the VAT threshold to sign up voluntarily “so they can also benefit from MTD”.
It also contains information on the MTD for VAT pilot, which is currently available only to invited volunteer businesses and their agents but will be open to a wider audience at a later date.
Spreadsheets and bridging software
According to the guidance, spreadsheets can be used to calculate or summarise VAT transactions to arrive at the return information needed to send to HMRC.
“If you use spreadsheets to keep business records, you’ll need MTD-compatible software so that you can send HMRC your VAT returns and receive information back from HMRC,” states the guidance. “The information must not be physically re-typed into another software package.”
It goes on to state that bridging software may be required to make spreadsheets MTD-compatible. Bridging software is HMRC’s term for a digital tool that can take information from other applications, for example, a spreadsheet or in-house record keeping system, and allows the user to send the required information digitally to HMRC in the correct format.
31 March 2020 deadline
Businesses will, according to the guidance, be given until 31 March 2020 to make sure there are digital links between their software products. Before that date, cut and paste will be an acceptable way to transfer information.
The exception to this is where return information is to be transferred to a software product enabled for an Application Programming Interface (an API provides a secure link between software and HMRC) and designed to submit the 9-box VAT return (such as bridging software). In those circumstances, the transfer of information must only be digital.
Available software
HMRC has confirmed it will publish details of the available VAT products later this year when the private pilot becomes a public one, but a list of software companies currently working with HMRC to produce compatible VAT software is available on GOV.UK.
The tax authority is currently working with more than 150 software vendors that have said they’ll provide software for Making Tax Digital for VAT in time for April 2019, and more than 40 of these suppliers have or will have software ready during the first phase of the pilot.
One of the approved vendors on HMRC’s list is UK-based SaaS provider Clear Books, and their MTD project lead and CFO David Carr told AccountingWEB that the release of the webpage was a “great step” in raising small business awareness of MTD.
“The information on it isn't anything new, but it's in a shorter, more readable format, making it easy to understand,” said Carr. “Clear Books is receiving hundreds of inbound enquiries a week from the .gov website, so it's clear the message is getting through to small businesses”.
You might also be interested in
Tom is AccountingWEB's technology editor, providing unbiased news and analysis from the accounting tech universe. Got a tech tale to tell? Message me on the site or email [email protected]
Replies (97)
Please login or register to join the discussion.
I think everyone should click the "Is there anything wrong with this page" link at the bottom and note that there is absolutely no benefit in MTD for business (or, indeed, for HMRC, or anyone else, except the software industry).
But where is the software!! I have seen the updated HMRC list and made enquiries of several software providers (both for mainstream double entry guys like Sage and the bridging software guys like BTC) but so far no one seems to have actually released anything on the open market. Several are now promising availability 'soon' but back in June/July they were saying to be released 'in August' which did not happen.
Am I the only one who would like to review a product before making a recommendation to clients? At this rate I won't be able to review and try out any products until we start to run into the December/January period - am I the only one who might have other client priorities then??
Once I have been able to review/recommend products how long are clients going to have to familiarise themselves with the new system? In my humble experience clients only do VAT returns once every three months so how many 'trial runs' are they going to get before MTD VAT goes live - perhaps just one (in the Spring 2019 quarter) if they are lucky? What planet is HMRC and the accountancy profession as a whole living on? I have no beef over changes happening but why oh why are we going to have so little time to familiarise ourselves with the practical aspects of the new requirements? Why are our prof bodies not now shouting from the rooftops? Hello - is anyone out there....
I couldn't agree more with you on the lack of available software/systems to actually test and hence recommend to clients. Sage are probably the most frustrating, like getting blood out of a stone for pricing, availability and the possibility of actually getting hand on demos. TAS which they took over and wrecked apparently will now offer a module for MTD, but the sting in the tail, customers if they dont have a support contract must upgrade/tale out contract and then on top pay a further £25 a month for the MTD module!
I couldn't agree with djtax more! I have been on to SAGE umpteen times trying to get software downloaded on a trial basis to see how my clients could use it, and how we can supposedly log in to "the cloud" and view and amend their entries!! I can't get anywhere. Originally I was told/ hoping spreadsheets could be imported and I relaxed a little earlier in the summer. Now we're told they can't really be unless they are done in a very specific manner. Does anybody out there know of any SIMPLE product that isn't going to take days to train clients on and which is currently up and running for MTD, which we can TEST before telling our clients: "try this"?? The timeframe for this is ludicrous given the current state of the products out there...unless some one can enlighten me.
Some of the older software companies are still struggling with their MTD offering but Xero and other modern software companies are ready.
For spreadsheet transfer look at Data Dear
@DELLA
Pardon me??
How could ANY software house and/or their product offering be "Ready", when:
1. HMRC themselves are not even ready! and:
2. The necessary "Cast In Concrete" statutory law and final fixed regulations are not ready and neither nor are the amended Tax Codes and/or the essential and necessary amendments and changes to TMA, ICTA et al
been made,
An idea (no matter whether it is such as the spavined aberration MTDfb, or indeed any other) CANNOT be Statutory Law, until and unless it has received "The Royal Assent [RA]". Furthermore, the RA cannot be granted (it is today a rubber stamp exercise), until and unless the originating White Paper has been distributed, examined and critiqued by the delegated Select Committee; recommended - perhaps with certain amendments to be placed before Parliament (The Commons firstly) as a proposed Bill for Open Debate in the Commons and if the results of such debate prove a majority for the Government of the day, then the putative Bill is then passed to the Lords, for their scrutiny and , critique by The Lord's Select Committee for open debate and either voted as yes: yes with certain amendments: or rejected out of hand.
This process may result in any proposed bill being shuffled backwards and forwards between Commons and Lords for some time, before a final vote in the Commons proves a majority win for the Government in power.
After (from memory - Google it and correct me with pleasure!) two sessions of backwards and forwards between Commons and Lords, either the Bill dies; or if Government wishes to live dangerously, it invokes the "Guillotine" by invoking The Parliament Act of 1911, amended by the Parliament Act 1949.
Such is a highly dangerous action for any Government in power to take! As it is seen as Non-Constitutional, Anti-Democratic and can change the electorate's perspective and voting intentions.
Worse, for a Government such as Mrs May's, with a limited majority, serious schisms in her own party and a highly tenuous position as PM, owing to Brexit and Immigration, in particular.
Q.V.
https://www.parliament.uk/about/living-heritage/evolutionofparliament/ho...
https://www.parliament.uk/about/living-heritage/evolutionofparliament/ho...
In response I would say
a, The HMRC have already receiving lots of VAT returns using MTD software by API under the private beta.
b, The legislation has already been through parliament. The enabling legislation was in FA 2017 (no 2) and the detail was in statutory instrument passed in March this year.
https://www.accountingweb.co.uk/tax/hmrc-policy/mtd-vat-regulations-have...
@David
Ms Cave, an authority and writer for whom I have much respect, points out, clearly, in her article you cite as a reference, the frailty and specious assumptions made by HMRC. Furthermore, a Statutory Instrument, is simply a sneaky methodology abuse by Governments to sneak new legislation onto the statute book by adding bits to extant Statutory Law; and is easily overturned, subsequently.
What on earth do you believe the House of Lords Select Committee are doing on their forthcoming sessions?
Debating and investigating the price of sausages in Aberdeen? And if so, then why on earth are they calling for input and comment from the profession and other commentators?
However, as you assure us everything is fine and dandy, please point us ignorant ill-informed fools to the extant choice of software we can buy tomorrow which is MTD VAT compliant, full developed and de-bugged?
My cheque book is open and ready to go...
There are a few of us creating bridging software. I have run it through on the test environment, we just need to run it through on the production system. HMRC have sensibly waiting for waves of clients to test. Most of my clients pay by Direct Debit which means this month they will be coming through on the pilot the scheme. The software is coming.
I am involved in software production (spread sheet bridging software). The problem is HMRC. Their is no agent filing ability on behalf of clients even in testing phase available yet to developers. Therefore software production folk are having to sit on their hands until HMRC sort themselves out.
We are itching to go, but don't have the APIs from HMRC to set much up, and nothing that can actually be used.
Software providers are therefore just trying to get their name out there with the advertising you see, nothing is available to be used as yet.
Also, individuals are excluded from the testing phase as well as agents . Nothing at all has been released yet for open beta testing for your clients to on board either.
The only testing that is available for developers is for organisations that are filing their own VAT returns, but this is a test scenario (using made up organisations), so no one (except those in the private beta), can actually do any filing.
Personally, it seems to me that HMRC have one part-time developer at their end, working just a couple of days a week on this.
@NEWaca
Couldn't agree more!
I am an Alpha Tester of one such product and then a Beta and Gamma Tester.
Removing bugs and glitches as we both know, is never a short-term seamless system.
Unless you are one of Uncle Bill's teams, who copied Detroit in using "Customer Proving, Fault Finding and Improvement"!
P.S. I used to work for Ford Europe on IBM System 360 Mainframes... the pain remains with me.
This also reminds me of an old techie's joke.
Woman goes to attorney. He asks why? She states she wants to divorce her husband. Attorney asks why? She explains failure to consummate marriage. Attorney asks how long have you been married; women replies "25 years". Attorney is duly stunned!
Attorney tells woman impossible! She states it is true. Attorney asks woman if she fully grasps the core reasons for non-consummation of marriage? She replies yes.
Attorney states he does not wish to embarrass her, but asks her to fully explain.
Women says "Well it is like this. When it is time for bed, I go up first, wash and, primp myself and anoint parts of my body with enticing perfume; slip into a really sexy nightie, and relax into a seductive pose on bed.
Husband then comes up, sits on end of the bed and tells me hos utterly fantastic, superb and wonderful it is going to be!
"And then, night after night; week after week; year after year it is the bloody same!!!
Attorney smiles and says "Oh I get it now! You are married to an IBM systems salesman!"
Now you all know why I.B.M. stands for It's Better Manually!
The clients who present a bag full of receipts at the end of the VAT quarter aren't going to be seeing a HMRC announcement using Twitter!
I invested in my new software in the summer and am working to get only 5 clients up and running for next April. But (as a sole practitioner) I'm feeling anxious that I've only 6 months left to make sure everything is working. It'll be interesting to see how the 40% of businesses still unaware of MTDfVAT are going to be ready in time.
Ha Ha Ha Ha!
This has made my morning! Oh I do so wish this site had Smilies enabled: since I have a huge active graphic of a man rolling on the floor and kicking his chubby little legs as he clutches his tum tum, since he is in stitches!
It might be of some benefit, Great Gods called HMRC dwelling in their Ivory Tower in utter incompetent and delusional complacency, to err, sort of finalise the statutory law, finalise the ACTUAL specifications and expected deliverables and await for the currently under consideration Finance Act to gain HM The Queen's signature!
It would also be of great assistance to the SME business owners which equates to circa 49% of ALL UK businesses, (and which represent a vast majority of the TOTAL business population of GB plc and create circa 48% of Private Sector Revenue - GDP if you like - and what's more some 47% of Private Sector Employment) and their financial advisers, accountants et al, if HMRC actually knew what they were doing and the final rules and regulations on MTDfb were at last cast in concrete; and the approved software houses could thereafter, finalise their schemas and code, and move onto to the normal -lengthy process - of Beta and Gamma Testing and de-bugging.
April 2019 indeed.
Ha Ha Ha Ha! Again...
NB: Quote from HM Government, sent to me on 12th September 2018: i.e. JUST SEVEN DAYS AGO! (Since I am invited, again, to participate and am in the middle of writing my submission at this moment.
"The House of Lords Economic Affairs Finance Bill Sub-Committee, chaired by Lord Forsyth of Drumlean, has today launched an inquiry on the draft Finance Bill 2018. As part of its scrutiny of the draft Bill, this inquiry will explore the recent expansion of HMRC powers and its practical impact on taxpayers, and follow up on the Sub-Committee’s 2017 report on Making Tax Digital for Business".
and so say all of us, and so say all of us.
For MTD is not going to be ready, for MTD is not going to be ready, for MTD is not going to be re e dy, and so say all of us.
In order to smoothly transition your business to the new MTD regime, it would be best to switch to your chosen software provider at the beginning of the accounting period in which you will become a part of MTD.
For many businesses, that point was several months ago.
Hmm "they sent a tweet" is now an acceptable form of communication with the tax payer?
the gulf between the MTD team and the tax payers grows ever wider.
Indeed. I want a posted letter which gives me ideally a free bridging software product from HMRC (which won't happen) or at worst say 4 products to choose from (not over 100) which will allow me to keep all my records off the cloud and just does the transfer - the bridging software - ideally for a one off fee (I hate renting anyway or paying regular fees).
The people in charge seem to have little clue as to how things happen in the real world.
Clients have no interest in registering for their own portal- especially those using the current HMRC submission site, or getting their accountants to use it.
Clients have no interest in MTD- not one sees any benefit to them, only increased bureaucracy and increased costs.
Companies won't swap systems just to comply with MTD.
Companies won't change their accounting ways just to comply with MTD.
Clients do NOT want to pay more to their accountants to comply with MTD and see it as a huge waste of money.
Trying to ban transfer of information by hand is like trying to stop a tsunami with an umbrella- just not going to happen.
People who don't currently use any accounting package aren't suddenly going to start using one (and if they do, it will be a complete mess).
And of course, when will the main implementation period be? January 2019. great timing....
So as a recap
1. There is still no proper pilot
2. There is little if any software avaiable
3. We are doing this from April 2019
Do remember to contact the Lords select committee looking at whether or not to postpone the launch.
https://www.accountingweb.co.uk/any-answers/important-call-for-evidence
https://www.parliament.uk/finance-bill-2018-sub-committee-submission-form
Just are HMRC going to do with all of this additional data they are going to receive. I think they are going to collect data for the sake of it. Unless HMRC take on a lot more staff to scrutinise the data, whats the point of collecting it.
@AndrewV12
HMRC have no sufficient staff; already!
HMRC (And Government) lack the resources and MONEY!
HMRC lack sufficient physical premises: not much helped by one Gordon Brown flogging off all their offices on a dubious Sale-Leaseback deal:
Just are HMRC going to do with all of this additional data they are going to receive.
What "additional data"? MTD for VAT is initially only going to send the same 9 fields of data that are currently submitted via the HMRC web filing portal.
The purpose of MTD is to instil in taxpayers the first step in a long process of capturing all data electronically (via internet-connected software, ideally stored in the cloud) so that eventually (not for many years, I suspect) HMRC can access all transaction data and use AI to check both sides (the customer's purchase invoice to the supplier's sales invoice) for easy capture of error and fraud. Yes, of course, there is no benefit to anyone directly arising from this first stage (which is why I would not recommend that any business below the threshold sign up voluntarily for MTD), but the long-term goal is a fundamental shift in the level of oversight that HMRC will gain into the financial transactions of all businesses.
It is the goal of HMRC to cut the 'individual' out of the equation completely and just 'uplift' their take as a 'natural part' of the value flow.
Remember, its not so long [7 years?] since they floated that employers should pay all gross earniings to HMRC, and HMRC would apply the earnings after [their view of]
tax into the individuals' bank accounts.
Sadly our doltish politicials really cannot even see the straws in the wind on this one - or, even worse, 'think' its a great idea.
Not sure that collecting data for the sake of it complies with the spirit of GDPR but no doubt HMRC will claim exemption or be prepared to lose 4% of revenues?
Not sure that collecting data for the sake of it complies with the spirit of GDPR but no doubt HMRC will claim exemption or be prepared to lose 4% of revenues?
It's quite a big issue. There is a legal challenage going on against international sharing of personal data of tax payers on proportionality grounds that you might if you were a very righ hich profile person at risk of blackmail be forced to tell a dodgy bribable tax office abroad about very personal details of only a £5k transaction which could identify you and put you at risk.
Also I cannot neame a client by law without their consent so any product which would send data into the cloud or to a cloud provider or name a client to HMRC I would be very wary of doing.
I’m so pleased that finally HMRC are going to start communicating about MTD. I’ve felt like a voice in the wilderness telling my clients about it. I’ve tried to prepare them; they mostly use spreadsheets so I’ve only been able to warn them about it and say that some functional and reasonably priced APIs should become available sometime in the future. I tell them that many of the technical staff at HMRC who should be working on this are allegedly dealing with Brexit. The dearth of information to help the millions of businesses who use Excel for their accounting has been scandalous so maybe if there is to be some publicity about it we will see some action.
The webpage spells out the criteria for businesses that will be mandated to join the scheme (registered for VAT with a taxable turnover above the VAT registration threshold), but also encourages businesses with a turnover below the VAT threshold to sign up voluntarily “so they can also benefit from MTD”.
Ha ha, that's never going to happen!!
I am not in the slightest surprised in this move, nor the sloppy handling of this whole affair. I have done very little other than read, research and make sketchy plans as I expect many more twists and turns in this saga.
Spreadsheets will need much closer attention as these are still, and will continue to be, a major tool for the small incomplete records type client.
HMRC will have great difficulty justifying penalties and a torrid time issuing penalties and the pile of appeals that follow if this kicks off in April, warts and all.
If this is to work it needs to start in a very basic format and develop incrementally over time and be assisted by FREE software channels to faciliate it.
Another HMRC cost saving exercise by piling more unpaid civil service work on to the taxpayer, who will need to pay for it.
Where will all this end?
I know of at least one software provider that hasn't even started their MTD preparations, because HMRC wouldn't let them. Crazy!
WOW - I have just phone Sage and have been told that their new MTD VAT compliant software is now available, albeit (surprise surprise) only on the monthly subscription pricing basis. Did I miss the Sage marketing campaign telling accountants all about it? I was
not already in their 'accountants division' so presumably they have only advertised to those accountants in that scheme - bit of a marketing oversight perhaps in not approaching all the other accountants like me?!
Most of our clients are using Xero or other software providers who will be ready for MTD (Beta testing already completed).
All clients have been informed of MTD and what if anything they need to do to be compliant.
There seems to be a lot of moaning on here and not a lot of doing.
Sounds as though you’re in a good position to pick up more clients as you’ve already prepared your existing client base
In common with many small practitioners I have a lot of (small business) clients who have been using Excel spreadsheets quite adequately for VAT (and accounts). I see no need to force those clients onto full double entry systems (past experience shows not all small business people cope well with such systems). HMRC are committed to ensuring ('bridging') software will be made available to allow continued use of spreadsheets. I have not yet found any such software yet available so I will have limited time to review /advise the affected clients and get them up and running by April 2019. Without seeing the available software and testing it myself I still cannot even start to assist those clients. How is that 'moaning'?
That's great, Mark, and no doubt you are in a position to help those that are having difficulties with MTD. I hope you don't have too many problems with the rest of your clients.
When you know something won't work in a certain timescale then advising the people involved (HMRC) of that concern isn't moaning. I don't think we would be doing our job as Accountants if we didn't advise of certain scenarios and the reasons for them. If you are a lemming then follow the others over the cliff. I don't know anyone that thinks MTD will be up and running properly by April 2019. Some bits will be but not all.
John - for us the movement to the cloud started on day one. Now I see it as the logical solution for all clients.
It allows you to provide the best service you can to clients - real time data - immediate solutions.
MTD happening is neither here not there for us, it will have minimal impact on existing clients.
We do expect to have a decent increase in client numbers though as other businesses look to vote with their feet and move away from practices that have either not done anything, offered an inadequate solution or shoe horned them into a solution and left them to get on with it.
Whatever happens in April 2019 - we're ready.
No way is anyt of my data going anywhere near the cloud and Sage was down recently.
There is no MTD VAT product which just bridges to an excel (or paper record) yet so we can hardly prepare for it!
I trust you have told your bankers and the HMRC about your views.
Your bank transactions are there in the cloud even if you don't do online banking and your personal tax account exists even if you have never logged into to it.
You will be aware that Xero went down for 7.5 hours last week.
Their explanation was vague and unsettling.
You may not be so confident if that becomes a regular occurrence.
My electricity supply (along with that of thousands of my neighbours) went down for a few hours last week. Using your logic, I should avoid all devices that require a power supply and keep my accounting records in paper-based analysis books!
I do. My records are on paper as well as in word on my computer and yes my office could burn down so I agree that different systems bring different risks.
That does not mean everyone has to use the cloud in a free society; it's fair we give people a choice as long as their records are impeccable and correct.
My electricity supply (along with that of thousands of my neighbours) went down for a few hours last week. Using your logic, I should avoid all devices that require a power supply and keep my accounting records in paper-based analysis books!