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L-R: Giles McCallum, head of MTD for HMRC with Glenn Collins, head of policy at ACCA
L-R: Giles McCallum, head of MTD for HMRC with Glenn Collins, head of policy at ACCA

HMRC’s Giles McCallum on the vision for MTD and THAT article

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Giles McCallum’s column about HMRC’s vision for MTD wins the prize for having the most reader comments in 2021, so during his session at the AccountingWEB Live Expo he had his right to reply.

1st Dec 2021
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Giles McCallum’s column, published on AccountingWEB in October, about HMRC’s vision for MTD and the benefits it will bring to the tax system wins the prize for having the most reader comments in 2021.

Whilst many of the views and concerns expressed were not anything that hasn’t been said before by the AccountingWEB community, the level of responses and strength of feeling certainly made HMRC sit up and listen.

So it was no surprise that when McCallum, who heads up MTD for HMRC, spoke at the AccountingWEB Live Expo he took the opportunity to set the record straight, tackling some of the challenges and questions shared by readers of his original article.

First, he qualified his credentials for doing the job he has been tasked with. McCallum said: “Some of you may have read my recent article on AccountingWEB, judging by many of the comments some may have expected me to be presenting this from a golf course - maybe between holes 9 and 10 - telling you how to do your jobs. I’m sorry, that’s not me. Or you were expecting me to be a pinstripe-suited civil service mandarin from Whitehall. That’s not me either. 

“My background is from the private sector where I have been running digital transformation programmes across many different industries for a great number of years and I’m bringing that into MTD, combined with my wide team.”

He also tackled criticism in the article’s comments that HMRC “is sitting in its ivory tower” and is “blind to the pain or the journey ahead”, reassuring the audience that he is out in the field, speaking to accountants and businesses regularly.

“Just the other day I was in Newcastle speaking with a number of different accountancy firms. We are very close with all of the software industry and are working with them hand in hand. But there is so much still to do and we are well aware of that and are taking that forward.”

McCallum also underlined his recognition of the role accountants had to play in readying clients for MTD, but said: “MTD is happening and MTD for ITSA is happening, the legislation in parliament has been passed and we have a lot to do. It is not a question of whether we work together on this, it is how we work together on this because we will need to.”

“There is plentiful reward for the accountancy profession and for businesses if we get this right. I am committed to ensuring we do get this right and with you we will move on this journey together.”

In the session, Glenn Collins, head of policy at ACCA, steered questions and said that the concerns expressed by agents were on behalf of their clients. McCallum reassured the audience that the message had come through “loud and clear”.

He added: “I talk to individual accountants who are uber digital as well as those who have not started that journey and I understand it is about getting the message out and helping their clients understand what this is, what the journey is and how to get that across.

“This is about the taxpayer having the ability to keep digital records and a different way of submitting tax. We are utterly cognizant of the impact that this will have. It will be much bigger than VAT because there is a more fundamental change going on in ITSA than there was in VAT, with quarterly reporting and so on. 

“But digital record keeping is the way forward. Sticking your receipts on a spike and dealing with them at the end of the year is not the way things are going. We have got to make that change. It is happening. But I agree it is about the taxpayer.”

Collins pressed hard on the low £10,000 threshold - and it is something the ACCA continues to lobby against.

McCallum said that while £10,000 is a low bar, it was purposefully low to get the long tail of smaller UK businesses and taxpayers filing digitally.

“We are not trying to exclude here, we are trying to create as much inclusion into MTD as possible because filing records digitally is the way to go."

Talking of end goals, Collins also asked whether quarterly reporting was the test bed and starting point for quarterly tax payments in the future - McCallum’s response was an unequivocal ‘no’.

“There is a lot of confusion and we have to up our game in getting these messages out. Quarterly submissions are not the same as the end of year tax calculation. There will still be one end of year calculation and the quarterly submission is just a summary to say ‘yes we are keeping our records digitally, we are able to submit digitally and those records give an accurate representation of where our business is over that quarter’.”

Coming soon: more from Giles McCallum’s session and the UK business journey to digitalisation.

 

AccountingWEB Live Expo is in the Coventry Building Society Arena on 1-2 December. 

Replies (69)

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By raybackler
03rd Dec 2021 10:59

This morning I am waiting for a call back from HMRC. A client had their 2020 tax return amended by HMRC. They reduced the Class 2 NI from £159 to £99 and the letter said that the reason was because of information HMRC held, but gave no further explanation. The letter also said no need to re-submit the return. As the client was £60 better off, I left it at that.

Roll forward a year and the 2021 return was submitted with £158.60 of Class2 NI. On Wednesday, another letter arrived amending the return by setting the Class2 NI to zero and again not providing any reason for the amendment. This has now become a problem because the client is trying to re-mortgage and HMRC tax due does not agree with my SA302 (substitute).

I called HMRC and was told they could not provide any reason for the amendments for either year and the matter would be referred up the food chain for a supervisor to call back today.

In the meantime, I re-submitted the two tax returns so they agreed with the amending letters, so the client could get their mortgage, so at least one problem was solved. I reasoned that even though I know the NI is understated by a small amount, it was not material to the mortgage application.

The reason for going through the above, is that this is a representative example of the day to day rubbish that HMRC systems turn out. Accountants have to use digital technology and as others have said, we help our clients adopt digital technology when it is beneficial to our clients. Forcing someone with a single buy to let to adopt quarterly reporting is a nonsense. The threshold ought to be set at £85000 and then all the myriad of system glitches can be sorted out on larger clients. Once this beds down, the threshold could be lowered in stages. However in all of this, quarterly reporting is a nonsense, unless there are quarterly tax payments instead of the twice yearly payments on account.

Another beef is with information HMRC already hold. If you click on the link in an HMRC Self Assessment Account for Information we hold to help complete your tax return, there is virtually nothing there, including no information on under and over payments of tax within tax codes. This is information HMRC already have, but can't link it within their broken systems.

Others have explained the situation eloquently above, so I won't add further comments, because it would be the same old, same old. I though giving some real world examples of current problems would be relevant, because HMRC should spend the money earmarked for MTD on improving their antiquated systems and leave MTD for ITSA well alone, particularly after the damning report on the lack of success surrounding MTD for VAT.

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Replying to raybackler:
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By RogerMT
03rd Dec 2021 11:07

I've been waiting for confirmation of a UTR for a new client for 6 months! I won't go into boring details, but the upshot is I was advised to send in a paper return (won't get fined apparently, but we'll see!) to their investigation department. If something as simple as either confirming or cancelling and reissuing a 10 figure number takes well over 6 months (and counting), then gawdelpus!

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Replying to raybackler:
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By djn
03rd Dec 2021 11:16

[quote=raybackler]

The threshold ought to be set at £85000 and then all the myriad of system glitches can be sorted out on larger clients. Once this beds down, the threshold could be lowered in stages. However in all of this, quarterly reporting is a nonsense, unless there are quarterly tax payments instead of the twice yearly payments on account.

If MTD for tax has to come then this would make sense. Having a small self employed person to do this for say 20k of income is madness.

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Replying to raybackler:
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By fozia
03rd Dec 2021 11:45

Well said and good example. They have been straddling 2 platforms of the agent account for years and it is high time somebody who has been running "digital transformation programmes across many different industries for a great number of years" take a look into that and oh while they are at it, why R40s can't be filed online and repayment received in a bank account and why simple employment income filed and of March does not show on the digital tax account till end October??

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Replying to raybackler:
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By raybackler
03rd Dec 2021 12:29

12.30 and no HMRC call back yet on the Class 2 NI issue, but then why should I be surprised. Where is the ownership?

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Replying to raybackler:
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By Tax Dragon
07th Dec 2021 23:20

Don't forget to re-re-submit once the mortgage is approved, or you'll confuse HMRC (currently they think you agree with them, so why should they phone back?... I'm assuming they haven't?)

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By HLB
03rd Dec 2021 11:12

ICAEW, ACCA and CIOT (and others) should now double their efforts to help their membership.

We can see the issues that are coming and our representatives should be lobbying Parliament (not working with HMRC). As Giles said 'the legislation has been passed'. Therefore it is the MP's that need to alter the legislation otherwise HMRC will continue to push forward on this path that their masters have told them to follow.

It is time for the MPs to realise the pain this will cause their constituents rather than listen to the propaganda from HMRC. If they think they will lose votes over it watch them act. A campaign for accountants to lobby their MPs and for their professional bodies to take it to ministers is what is needed.

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Tornado
By Tornado
03rd Dec 2021 11:19

One thing is for sure, and this has not changed, the success or otherwise of MTD is most definitely NOT our responsibility, but I guess Mr McCallum will move on before the mess hits the fan.

I am now 98% sure that the only option HMRC have to save face is to increase the threshold to £85,000, probably at the last minute.

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By fozia
03rd Dec 2021 11:35

"just a summary to say ‘yes we are keeping our records digitally" - WHY?? Since it is NOT about quarterly payments or a realistic tax estimate can the tax payer not simply "check-in" on an world class HMRC designed app to say they are still alive?

"plentiful reward for the accountancy profession" - you are kidding me, our clients that don't walk will be burdened with higher bills or more likely we will drop our profit margins because we feel sorry for our clients and carry on being HMRC's unpaid employees to educate and communicate with taxpayers.

"filing records digitally is the way to go" - newsflash that is already happening and being done by us annually for our clients.

A sad read and leaves me thinking if HMRC are unable to communicate the point of MTD to accountants how are they going to communicate this to taxpayers.

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the sea otter
By memyself-eye
03rd Dec 2021 12:09

I wonder how many 'customers' turnover will suddenly drop to £9,999.99!

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By dmmarler
03rd Dec 2021 12:29

McCallum is an IT guy through and through. I have been involved in many new systems implementations (or digital transformations as he grandly calls them) for small charities to multi-billion turnover multi-nationals and none of the IT guys had the least idea about accountancy or bookkeeping . Tax compliance, management reporting, contract compliance, confidentiality, governance, charity accounts and proper reconciliations were all beyond their scope. Yes, HMRC is close to the software industry, and it shows. Mr McCallum's visits to accountancy firms is not helpful as (1) they would not put themselves out on a limb with HMRC in case there are repercussions, and (b) client matters are confidential. His experience of larger organisations does not translate to the comparatively tiny businesses with which the accountancy profession engages. Doing accounts on a computer does not make them right, so making quarterly returns is a waste of time. The real test would be when the 4th quarter accounts are compared with the final annual submission by an accountant .... and who in HMRC is going to check that? I suspect there will be bundles of tenners in back pockets again, and manufactured information on cloud accounting software submitted direct by businesses, which will all seem to be compliant. HMG will lose revenue (as will we) until they realise their mistake at the taxpayers' cost.

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Joanne Birtwistle
By Joanne Birtwistle
06th Dec 2021 12:54

Comments in this thread have been moderated. As a community team we will continue to review this thread on a regular basis.

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Replying to Joanne Birtwistle:
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By johnjenkins
06th Dec 2021 13:28

Hi Joanne,
Unfortunately when you come up against arrogance and complete utter contempt for what people with MANY years experience are trying to convey, then a thread of this nature will sometimes attract the odd adverse comment.

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Chris M
By mr. mischief
06th Dec 2021 13:57

In a nutshell:

I qualifed ICAEW 1991. In that 30 years all of the following things are miles faster, better and more accurate than they were then:

Internet, e-mails, accounting software, tax software, telephone links, mobile phones, payroll software, pensions software.

In that 30 years HMRC has become miles - MILES - slower, more slapdash, more incompetent, and more dishonest and spivvy.

What HMRC needs to do RIGHT NOW is NOTHING NEW. Fix MTD for VAT. Fix RTI. Pay corporation tax refunds - ALL of them - within 1 month. Pay CIS refunds - ALL of them - within a month.

This guy and his ilk are well meaning, but let's face it he represents "same old, same old" and the whole thing is going to get even worse with no hope of any improvements for at least 5 years.

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Replying to mr. mischief:
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By johnjenkins
06th Dec 2021 14:35

5 years. Bit optimistic eh.

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Chris M
By mr. mischief
07th Dec 2021 07:43

Just in the last 5 days, getting authorised for being a client's accountant has been down for nearly 3 days. Self-assessment submissions was down for half a day, and now it is down again.

This is utterly, utterly routine for dealing with HMRC systems. Yet instead of fixing this, Giles gets set on the task of putting even more strain on the system instead. Any private business would simply be busted, since at least one of their competitors would not be anything like as stupid or incompetent. Unless possibly they were in the banking sector.

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Replying to mr. mischief:
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By Paul Crowley
09th Dec 2021 18:48

+1
Get current systems working first

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By Tax Dragon
07th Dec 2021 23:27

+1.

To pretty much everything.

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