ICPA chair blasts HMRC anti-accountant rhetoric and MTD

Clint Eastwood
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Richard Hattersley
Practice Correspondent
AccountingWEB
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ICPA chairman Tony Margaritelli opened his organisation’s Practice Evolution conference with a Wild West-themed keynote, pitching the small practice accountant in a shootout against HMRC.

Speaking yesterday in Manchester, Margaritelli outlined how accountants can overcome Making Tax Digital (MTD) and thrive, and challenged the “anti-accountant rhetoric” he feels has accompanied the government’s digital tax plans thus far. 

Margaritelli’s speech, entitled ‘HMRC & MTD: The Good, the Bad and the downright ugly’, was intended to act as a reset for accountants who had taken their eye off MTD after its scope was stripped back earlier this summer.

The Sergio Leone-inspired metaphor underpinned the tussle accountants have felt in their relationship with HMRC since the inception of the tax authority’s digitalisation plans.  

The good

The western comparison was used to encapsulate the situation in which many accountants find themselves: the idea of being cast in a Clint Eastwood role – the professional gunslinger trying to find the gold but often thwarted by HMRC.

But Margaritelli was confident MTD wasn’t going to change the role of the accountant. “If HMRC’s systems continue to be so poor, I expect more employed taxpayers will need our help”.

Confident in the resiliency of small practice accountants, he added: “We made self-assessment work. We made RTI work. Because we spent hours of unpaid work helping clients, while our clients were used for the testing.”

The bad

Meanwhile, the ICPA chairman cast HMRC in the Western’s traditional villain role.

“You can choose to believe HMRC that the delay was because it listened,” he said. “MTD will not go away. APIs have been rolled out to software developers. Software developers are still spending millions.

“So don’t think the £10,000 threshold has gone forever. I believe it will be back because MTD is predicated on the tax gap of small business clients. To ignore it is silly.”

That said Margaritelli believes accountants can still succeed if they use this MTD “breathing space” wisely.

“If you accept small digital record keeping is inevitable it could bring an end to the January 31st workload,” he said.   

“Instead of immediately thinking negative thoughts, think for a minute how much easier your lives, your Christmas, your January would be better off if all your small business clients operated in this way.”

To do this, he said the only logical way forward is for the bulk of larger clients to get to grips with technology, the cloud and automation such as bank feeds.  

However, according to Margaritelli those clients HMRC deems as ‘straightforward taxpayers’ (the non-VAT, non-corporate clients) are anything but. For the classic shoebox client, he said that there was no obvious answer.

“You don’t want to stick automation on their private bank account and neither would you want to train or explain bookkeeping to them”, he said.

The ugly                     

All good Westerns climax with a showdown, and Margaritelli’s speech concluded with shots being fired at HMRC’s attitude towards accountants, as typified by Jim Harra’s 2016 Hardman lecture speech and his “anti-accountant rhetoric”.

In one example used by Margaritelli, Harra said: “I want to remind you that half the tax gap is attributed to small businesses, despite the fact that the vast majority of them pay a tax agent to help them.”  

HMRC’s reluctance to engage with the tax profession was clearly felt in the conference room. As further examples, Margaritelli reeled off a number of recent announcements that seem to cut advisers out of the three-way relationship between HMRC, the taxpayer and the accountant. When Margaritelli asked the delegates to stand if they believe HMRC values the work accountants do, nobody left their seat.

Capturing the irritation felt by delegates over the implication that accountants are the problem, Margaritelli said: “If we get tax wrong, we are responsible to them [our clients], our institute, and simply saying sorry in our world doesn’t cut it.”

About Richard Hattersley

About Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

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By Tornado
22nd Sep 2017 17:17

Tony has done a great job of summarising the obvious.

When I say this, I mean that he has summarised very well what is obvious to most of us but seems to be something that HMRC and the Government seem unable to understand.

I feel that we are not getting value for money from HMRC or the Government and I would remind all that both of these entities work for us and they should be doing our bidding and not vice versa. They are not there to follow their own agendas but to follow ours and I think there is enough evidence that this is not happening.

I know that Tony has already been very active indeed in supporting our profession, and particularly the smaller businesses in it, but perhaps he could be persuaded to take a stronger stance on our behalf against the arrogant and dictatorial ways of the Government and HMRC to remind them that they are our servants and not our masters.

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to Tornado
25th Sep 2017 11:22

" ....to remind them that they are our servants and not our masters."

Regretfully they DO think they are our masters. And they will not change their beliefs.

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By Robbo
25th Sep 2017 10:11

If they worked with those who are reputable & straight rather than encouraging the dodgy with the way they work it would be a win for both of us.

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By SXGuy
25th Sep 2017 11:00

The day I accept hmrc are their for the tax payer will be the same day a person who calls them with genuine concerns of raising funds to pay tax bills arnt met with rude obnoxious arrogant staff who would rather you sold your TV than set up a payment plan.

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By tedbuck
25th Sep 2017 12:06

Good for Tony but the real problem is that no-one in HMRC or, indeed Government, has the slightest idea of what small business is like.
The graduates entering these institutions are products of academia not business and have little or no experience of real life.
Look at May's election manifesto - she couldn't have done more to upset her voters if she had deliberately tried to do so and the management of the campaign was , by all accounts, so bad that one shudders thinking that Politicians are actually in charge.
Our profession used to have a good relationship with HMRC - we knew the local Inspectors and they knew us and we each helped each other to keep the wheels turning and it worked well.
Then the smarty pants Chancellors got into the game and Brown and Osborne between them made such a mess of the Tax system that even HMRC doesn't understand it. The good staff at HMRC saw the writing on the wall and left - mainly for the profession, and the training of the current staff is seemingly poor as they often don't understand what they are being asked - if, that is, you are actually lucky enough to be able to speak to a human.
I assume that the rush to digitalisation is to save them having to have people at all so the situation will only get worse.
Does HMRC listen? No they don't they just shrink back behind their barriers and carry on muddling through.
Do their systems work? Not really - demands for money which has been paid - RTI not working properly - post taking 6 weeks to be answered - penalties issued where obviously none are due and so on.
Basically they have lost their grip but won't admit it and are desperately trying to find ways of recovering the situation and as they don't have experienced staff they are trying to use computers. Don't hold your breath!

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25th Sep 2017 12:27

The other thing that will be obvious is, that after the roll out of MTD on over vat threshold business and the subsequent success, (this will not be too difficult for us to make work) HMRC will think it's an easy job to then bring in the over £10k mob. That is where it will all go wrong.

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25th Sep 2017 14:02

We all know the MTD initiative was to hang joe public high and screw his ilk for a few dollars more.
Harra's comments that half the tax gap is attributed to small businesses really makes me puke. He should have added the reason - HMRC's impotence and incompetence in tackling the big boys.

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25th Sep 2017 22:56

Excellent, well done Tony. But unless I've missed something, why the hell is he always the only one doing the blasting ?

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26th Sep 2017 13:22

Why is it only Tony and the ICPA saying this kind of thing?

Why are the ACCA and ICAEW so silent - they're doing their members are massive disservice.

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By Glennzy
to Ken Howard
28th Sep 2017 13:46

Ken has beat me to it,although not a member, I was actually at the ICPA event last week and you have to admire the graft Tony puts in on behalf his members and small practitioners in general.

He raises more valid points and calls it like it is, more so than all the accounting bodies put together.

Total respect for the guy and can see why he has nearly 1,000 members who signed up with him.

Certainly doesn't pull any punches.

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By 0098087
29th Sep 2017 14:49

And the clients who are happy with paper records?

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