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So how much extra VAT revenue has been raised from the 370k returns?
That MUST be the question pushed back to HMRC given this huge amount of time and effort that has gone into this farce for sending the same 9 numbers in a slightly different digital system than before.
Why? The short-term purpose of MTD is not to generate an instant increase in tax revenue, but to move businesses onto a system that will, in future, allow real-time reporting and, potentially, cross-checking without opening a formal enquiry.
Not so Charlie.
The whole point according to HMRC was to (laughably) increase the tax take by reducing errors in the returns.
Apparently billions has been lost when transferring figures between computations and the VAT portal, and also rather memorably, due to invoices flying out of van windows. (no me neither)
This system has been introduced at huge cost to the public purse, and to the tax payer in order to increase the tax take.
At no point during HMRC's lengthy appearances in front of the Lords economic affairs select committee was there any mention of reduced time in tax investigation - not least as this project does not deliver that at all. Its the same flipping numbers filed as before.
I agree with you that it is nonsense to assume that HMRC are out of pocket due to numbers "going missing" betwixt comps and portal. If these were innocent errors, then the numbers would just as often go the other way (with a consequent over-payment of tax) and, if they were intentional, then taxpayers can just as easily (and fraudulently) adjust the numbers in their MTD-compliant software prior to filing.
I have always assumed that the ultimate long-term goal is to give HMRC a back-door into all cloud software so that their algorithms can check all businesses' books at any time. That would indeed reveal errors and frauds more quickly and easily. If I am right, it makes sense for them not to explicitly state that as a reason up front, so as not to frighten the horses! This will come in stages: firstly moving everyone onto standardised software (ultimately removing the option for bridging software), which will make it easier to run standardised checks; then making it easy for HMRC to gain direct access to the books without needing a visit to the taxpayer's premises; and, perhaps, ultimately (as we move inexorably towards the Big Brother state) granting HMRC permanent access to all cloud providers' databases.
I've asked this in my blog post. HMRC was quite clear that the purpose of MTD was to reduce errors and close the tax gap.
Back on 1 March 2019 I said on this good forum
https://www.accountingweb.co.uk/tax/hmrc-policy/mtd-exemptions-guidance-...
"Filing penalties do not have to have a warning letter sent by the HMRC."
I was politely told that I was wrong.
The press release is now implying I was correct.
VAT regulations 1995 reg. 25A (17)
Those are the existing penalties for not making an electronic return.
Assuming the tax payer files under the current system they cannot be applied.
Moreover if you have tried to comply you have a reasonable excuse under section 16. Ditto, if the fugging thing doesnt work, ie its fallen down one of HMRC's black holes you have a reasonable excuse to file on paper.
There are no penalties at all for filing under the current system rather than MTD. This is "an electronic system".
HMRC simply cant penalise you at the moment, despite their pretence that they are somehow doing everyone a favour by not doing so.
I have several clients not in MTD who report exempt/OTS supplies in Box 6 and there is no way that HMRC can tell these from zero rated supplies. I fully expect that I will have to waste time dealing with worried clients that have incorrectly received threating letters from HMRC.
In a perfect world the HMRC would only send the threatening letters to taxpayers who had £17,000 or more in box 1. (Obviously an advantage to zero rated or reduced rate suppliers) Then send a more polite reminder letter for VAT registered business with a box 1 amount of less this amount. However ....
As any one seen a letter yet.
This doesn't work either David. Most of my clients are farmers who have next to nothing in box 1 because they make zero-rated supplies.
If HMRC didn't make the sign up process so convoluted, and had a system that actually works they may have had more success, but their bid to rush it all through with ill conceived processes puts them firmly at fault.
I don't understand why HMRC had to change the DD over. Most of my clients receive refunds so didn't face the sign up restrictions. I signed up one just 24 hours before the deadline and the registration was accepted on deadline day so the return was filed on time. If it wasn't for the DD restriction other businesses would have had less hassle and more would have signed up.
The DD was for VAT before MTD and is still for VAT afterwards. It is the same tax. The only change is the reporting mechanism and for my clients who filed using software pre-MTD (eg QBO or Sage) that hasn't changed either: they're using the same software and the same filing process (from a software user's perspective) to file the same tax which they pay by the same DD. So why did HMRC change the DD and introduce all these problems?