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They have been back-peddling on MTD for some time this comes as no surprise to me its been in the long grass for some time.
It of course makes the VAT changes even more of a nonsense, a classic bridge to nowhere. Its a shame no-one has the guts to just pull the plug on that too rather than shambolically carrying on.
At least they have admitted what a colossal waste of time dynamic coding is. Of course no-one predicted that before it happened did that? Well apart from anyon who works in this area......I don't know why they bother with consultations when they don't listen to them.
Remembering 'Sink the Bismarck', will the equivalent of HMS Dorsetshire please step forward....
Is it bad that this has made my day just knowing that HMRC's new systems have caused them as much aggro as it has caused us. Maybe now they will see the value of agents having full access to our clients information and stop pushing us out.
In my opinion this is heading in one, perhaps logical, destination which will be that quarterly reporting under MTD would ultimately only apply to VAT registered businesses.
That would then mean that the data from the VAT submissions would be used to estimate the tax liability with the year end process then also being made via software.
MTD and quarterly reporting for businesses with a turnover below £85k has always been the one part of this that I felt was going to risk going out of control. Perhaps the risk of such an unrealistic strategy being rolled out is reducing - at least until technology and more widespread behaviour by people make that a logical development (people are certainly not there yet).
We've been migrating clients to the cloud now for 18 months starting with the largest and working our way down. However, we've done it for the right reasons and not because of MTD and I have to say that I am starting to see that the year end process for us is going to be easier than was the case previously.
All MTD has achieved so far in my opinion is to cause a lot of us an awful lot of stress and anxiety worrying about how on earth we would cope.
But it forced us to move forward towards the cloud and, actually, that's been a good thing.
Lords Economic Affairs committee meeting 22 February 2017. Jim Harra was asked why HMRC was not prepared to give businesses more time to prepare for MTD, and replied he wanted to know what businesses would do with that extra time.
The answer with hindsight is wait for HMRC.
The problem with MTD is the digitisation of transactions: this is a requirement for MTDfV and MTDfB (or whatever the abbreviation is). This digitisation is what is going to take all the time and cost. If we're having to digitise transactions for MTDfV there won't be much more work to comply with MTDfB. There's no sense postponing MTDfB if HMRC are going to stick to the 2019 start date for MTDfV. HMRC needs to understand the huge cost to businesses in digitising their transactions and therefore postpone MTDfV. MTDfV is guaranteed not to work. HMRC's IT will collapse. Look at RTI: it's been in operation for 4 years but HMRC's IT still struggles.
I have some sympathy with HMRC re Brexit. 2 years ago we thought there wouldn't be a Brexit. Since then it's been "Brexit means Brexit". Literally yesterday they've started talking about a "single market partnership". We've got 10 months to go and we're no clearer what is happening so how can HMRC re-build their systems to cope? Therefore it is madness to plan to start MTDfV just a few weeks later. MTDfV needs postponing.
I have some sympathy with HMRC re Brexit.
I have the same degree of sympathy that HMRC feel for me when circumstances screw me/my clients up -
to wit ... none whatsoever.
Galatians, 6:7 springs to mind.
Do like this espcially if read in the KJV - it has a sense of finality to it. I too am smiling from ear to ear, none less so than for my seasonal clients who wouldn't have a snowball in Hell's chance of completing quarterly returns in July/August - sheer madness. Decision makers all beavering away within the M25 probably don't even know where Cornwall is leave alone what a small business might look like in that same County or why so many have to be self employed in Cornwall. Jobs don't grow on trees down here.
I would love to know what exactly MTD has to do with Brexit. I have the feeling that HMRC are just making up excuses because they have no idea exactly what is going to happen after 1 April 2019.
@Richard the answer is nothing. HMRC have 297 IT projects of which the biggest are Brexit and MTD but HMRC doesn't have the resources to deliver both. Brexit has a legal deadline therefore MTD is the one that will slip, and hopefully cancelled.
Or why not take the opportunity presented by Brexit to scrap VAT and replace it with a much simpler sales tax?
Eh? VAT is what a 'simple' sales tax looks like in practice.
Any change would be a massive upheaval.
Factor in a proposed major change in VAT into the discussions with the EU and see how much further off the rails the negotiations can wander.
Divergence may be possible from the rest of the EU post exit but even then it will not be straightforward and will need to be slow, trying it during the negotiations will kill all prospects of actually getting any deal, the negotiators would be searching for the black cat in the dark room that was not even there.
@Kevin:
That's probably because those living in the bubble are simply too dull to understand the difference between a customs union, the single market and what third-country status really entails and it's only now just dawning on them.
But we've finally got HMRC to admit (albeit tacitly) that the system is currently FUBAR and they cannot cope any more.
I do enjoy a large glass of schadenfreude with my morning coffee!
Ode to joy...
@Kevin:
That's probably because those living in the bubble are simply too dull to understand the difference between a customs union, the single market and what third-country status really entails and it's only now just dawning on them.
But us voters needed to know this to make an informed decision before the referendum. We learned so much in the weeks and months following the vote that we should have known beforehand. Who had heard of the customs union before the vote?
But us voters needed to know this to make an informed decision before the referendum. We learned so much in the weeks and months following the vote that we should have known beforehand. Who had heard of the customs union before the vote?
So you didn't know what you voted for?
Well, do we ever - look at the relationship between 'Manifestos' and the reality on the assumption of power!
Frankly, I cannot see how any rational professional could fail to understand the trade implications as well as the de-federation aspect.
'Third country status' is a denigratory aphorism espoused by our haughty French masters in their propaganda around the negotiations - merely indicating the enforced state of not concluding trade agreements outwith the constraints of the horrendous EU tariff walls.
That's what happens when they ask a stupid question for party reasons before national ones and then get the answer 42.
If they'd have asked a sensible question, the answer might have been more explicit.
So they've no-one but themselves to blame.
Likewise, there is a possible answer to the last 40 years of entanglement that might solve the Irish question and all the rules of origin and phytosanitary bureaucracy and might also sate both mild leavers and mild remainers (the EFTA/Norway+ slowly-reverse-out) but they're only just starting to notice there might be a problem.
I don't blame the voters for being lied to (right back to at least the early 1970s!)/and not understanding all the issues, either way. You'd have to be a right bloody anorak to understand the foregoing...
But I came to the conclusion a long time ago that politicians ought not to be trusted with crayons.
Hence it was a very good idea to stop them being able to fiddle with stuff they know nothing about, by tying them up in knots.
They wouldn't listen to sense over MTD and so a bit of peaceful civil disobedience has thrown a spanner in their works big time.
I wonder what else we can break..?
Thanks Nick - you've made my day. I love the reference to crayons which gives me visions of my small grandchildren at play - not much difference there then.
HMRC missing a deadline?
Do they have a "reasonable excuse"? (remember work load is not one.)
Penalty?
Do as I say not as I do springs to mind.
Rest assured, more changes and relaxations to come if the current level of government efficiency is anything to go by.
So these are my questions.
Anything on property owners?
Limited companies ?
Voluntary VAT registered businesses where turnover is less than £85K?
Businesses exempt from VAT where turnover is more than £85K?
I thought we knew some of these already. MTDfV applies to (1) all VAT registered businesses (2) with turnover over the VAT threshold therefore it does not apply to voluntary VAT registered businesses nor those exempt from VAT. It does apply to limited companies (and clubs, estates and trusts). It would apply to property owners if they meet (1) and (2) above but my guess is most of us won't have property clients that large.
MTDfB we know less about (as does HMRC!). At the moment I believe (I don't know, I'm guessing) it will apply to individuals and partnerships with turnover over the VAT threshold from some date from 2020 onwards. If an individual or partnership also has a property business, that property business will also be caught even if it by itself is below the VAT threshold. At some future date MTDfB will be extended to other entities. At some future date the turnover threshold will be lowered: HMRC's aspiration is £10,000. If HMRC get their way, MTDfB will eventually apply to all entities with turnover over £10,000.
Sorry, I just do not understand where you have got your information from. I have read everything and have seen nothing written on properties with partnerships/exempt businesses in excess of £85K or limited companies. Could you direct me please?
Question: What about a trading limited company whose directors also have property income outside of the company. Are they caught by MTD? Thank you.
The combined turnover was in https://assets.publishing.service.gov.uk/government/uploads/system/uploa... point 7.30 page 56 and point d top of page 57. This was discussing the £10,000 turnover test: a self-employed individual with gross earnings of £8000 plus £4000 rent would be caught by MTD. Re trading limited company, see point 7.29 - I don't know what HMRC mean by this point. Maybe they are referring to IR35 type company?
Seeing these plans come crashing down is amusing.
Thinking about all the wasted time spent learning about & planning for MTD & SA - not quite as funny.
Unlucky. - a lot of us recognised a slow motion car crash developing and acted accordingly.
Yep just remember everyone £1.3bn of our hard earned taxes has gone into the pockets of private software and related companies. And did I hear right that one senior Civil Servant has left his post and joined one of these companies, or is that a melicious rumour someone has put about?
“We were overly ambitious about the number of customers who would stop contacting us by phone and post after we introduced digital channels. Demand is falling, but not by the amount assumed in 2015.”
Because they do not realise that online for everything isn't the perfect solution for everybody
HMRC only think they are getting less calls because they have fewer people manning the phones. After 30 minutes waiting to get into the queue most of us give up and try later or just guess!!!!!!! (which with some responses I get I think I would do rather better)
Freeing up HMRC staff ?
They must be down to single figures already with cuts to the bone in favour of moronic call centres.
Freeing up HMRC staff ?
They must be down to single figures already with cuts to the bone in favour of moronic call centres.
Don't write off MTD yet.
You don't need me to tell you about the tax system but a little reminder about back in 2006 when HMRC got details of 400,000 people with offshore bank accounts and only 10,000 were declared on Tax Returns. This lead to umpteen disclosure facilities starting with the Offshore Disclosure Facility in 2007, and the obtaining of information direct from various sources, eg. land registry.
It has taken HMRC 11 years to get to where we are with offshore income with minimum 100% penalties kicking in October 2018.
HMRC will go back to assessing tax using directly held information and once they get the interest, dividend income etc in, what are they missing - property, self employment etc. Hence the need for MTD.
Look at Capital Gains Tax going to be payable within 30 days of sale. HMRC will want the same for other income.
MTD may be delayed but IMHO it will happen.
MTD will happen, there is no doubt about that.
But it should have been set up in a more basic form with the online facility to deliver, and then fine tuned over a few years of trouble shooting.
Its initial form was far to optimistic and riddled with shortcomings, a naïve plan by HMRC. No surprise there.
Back to the drawing board lads and come back when you have a more sensible workable product.