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MTD director: We have listened to stakeholders

31st Jan 2017
Listening
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AccountingWEB spoke to Making Tax Digital’s director of business Theresa Middleton about the raft of consultation responses and draft legislation published today around the government’s digital taxation plans.

Key announcements

Making Tax Digital had been generating discussion and controversy even before any details emerged about the plans, and according to HMRC the consultation documents published last year generated an unprecedented 3,000 responses to the six consultations.

“We had a really good response”, Middleton told AccountingWEB shortly after the consultation responses were published, “and we found broad and general support for the direction of travel in terms of a digital vision to build a transparent and accessible tax system.”

Legislative timetable

Middleton confirmed that the proposals are proceeding along the proposed legislative timeline, with mandatory quarterly udates due to begin for unincorporated businesses in April 2018. The rationale for this decision is to tackle the tax gap caused by errors from the small business population, which HMRC estimates at just over £8bn a year.

“Not only does it cost the public purse, but it also brings uncertainty and expense to the business community when we have to get involved to put things right, so we think there’s a genuine benefit to small businesses as well as for the taxpayer,” the HMRC director said.

Middleton acknowledged concerns flagged by the consultations over the pace of change, the cost to business of adopting the new system and whether the very smallest businesses were equipped to make that change.

“We’ve listened to those responses and they’ve been instrumental in shaping the detail of what we’re announcing today,” she said.

Threshold review

One thing not announced in the responses was the level of the initial exemption for mandation, stated at £10,000 in the consultation.

“Given the range of views on this matter,” said Middleton, “the government has decided to take a little more time to examine these issues, alongside their fiscal impact. A decision on this will be made before the legislation is laid later this year.”

The government is also considering measures to support the group just above the threshold, wherever it sits, to give them more time to prepare.

Both of these issues will be clarified before the Making Tax Digital (MTD) legislation appears on the Finance Bill in July [we presume the Finance Bill 2017, but will clarify this with HMRC], but no further details were available.

Cash basis

Middleton announced two decisions around the cash basis. First, the thresholds to enter the cash basis for small businesses will be extended to £150,000 from April 2017.

Second, incorporated property businesses previously unable to use the cash basis will be able to do so if they have receipts of less that £150,000 a year.

Businesses eligible for three-line accounts will be able to submit a quarterly update with only three lines of data – income, expenses and profit.

Spreadsheets

Another development is that businesses will be able to continue using spreadsheets for record keeping, but will have to ensure that the spreadsheet meets the requirements for Making Tax Digital. That is likely to be combining the spreadsheet with software in some way.

According to Middleton this was requested by a wide range of stakeholders, particularly small businesses, and the Treasury Select Committee in their assessment of the MTD scheme.

End-to-end pilot

Having listened to the Treasury Select Committee, who championed a thorough end-to-end pilot of the scheme, the Revenue is determined to involve “hundreds of thousands of customers” in its beta testing programme ahead of the initial MTD rollout in April 2018. 

“We’re going to start in a small, gentle way in April this year and then ramp up during the year once we’re confident that the products are user-friendly, work well with our systems and that individuals, businesses and those who represent them are ready,” said Middleton.

Free MTD-capable software

According to Middleton HMRC has been working with 18 software companies in the initial private testing beta phases of the project. Five of these developers hope to have a product available before April – at least one expects to have a product available during February. Middleton expected to see a mixture of free and paid-for tools.

“All of the companies are going to want to build both varieties. They will want to have a free product and products that have a range of price points,” she said. “Free software will be available to small businesses with the most straightforward affairs – in broad terms we are talking about people below the VAT threshold, not employing anybody and using the cash basis.” At time of writing it is not clear whether partnerships will be able to use the free software.

Although the government has not waited for products to be enabled for MTD before announcing the timetable, a full end-to-end MTD-enabled product will be able to keep your records digitally, categorise expenses for you, produce a summary and prompt you to send the summary to HMRC. HMRC will receive it and then play back what that says about how the tax bill is evolving.

“We’ve got between now and April 2018 to test the full end-to-end products,” said Middleton, “and we’re pretty confident that we’ll have one in February and we should have a few more before April. Those announcements should help because the software industry has been waiting for confirmation of the timetable, because they’ve got to invest in designing, building and delivering these new services. I’m hoping that more will start to emerge now that we’ve got some clarity.”

Consultation document for complex businesses  

The consultation for complex business will come out at some point in the Spring – but no further details were provided.

Penalties

Middleton confirmed there will be a 12-month soft landing to become familiar with the changes before any penalties for late submission will be applied. HMRC will consult again in the Spring on the penalty model.

“The responses we had on that [the penalty model] made us think that we needed to do a bit more work on it,” she said.

Impact assessment

With some large numbers banded about by some stakeholders on what they thought Making Tax Digital would cost, HMRC has taken on board the consultation responses based on the transitional and ongoing costs and benefits and come up with a transitional cost figure of £280 on average per person on transition. After that the Revenue estimates an average of a small ongoing annual saving.

Unanswered questions and discussion points

Almost immediately after considering the collection of consultation responses and legislative proposals released at 12:30pm this afternoon, questions started emerging from accountants and tax experts. AccountingWEB’s tax policy editor Rebecca Cave was not the only commentator to remark on the amount of detail that was being delegated to secondary legislation.

In a stinging response ICAS director of taxation policy Charlotte Barbour commented: “The granting of powers, duties and functions are an important exercise of Parliament’s duties. Such powers should be exercised through primary legislation so that there is full consideration by Parliament before doing so... Exceptionally few of our concerns have been addressed. SMEs are still going to be expected to dance to HMRC’s tune.”

Some of the other unresolved aspects of the MTD blueprint include:

  • Increased scope for HMRC to alter or amend regulations by way of “directions”, significantly increasing its ability to pre-emt guidance from courts and Parliament.
  • This power extends to the software systems used and their quality. Who will actually police whether what is set out in statute is accurately reflected in the software specifications used by developers?
  • When will questions surrounding partnerships, LLPs, complex organisations and many other issues be resolved?
  • What impact will all these changes have on agent-client relationships. As Andrew Jackson has argued, in its rush to press ahead with MTD, HMRC is neglecting this vital aspect of the whole digitisation project.
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Replies (167)

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By steve 12321
31st Jan 2017 17:30

this does nothing to help business or productivity and shows that HMG / HMRC have no interest in businesses and the effect on them. It will cause untold trouble and is a disaster in the making. what a joke

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Jennifer Adams
By Jennifer Adams
31st Jan 2017 17:50

It is very unfair to tell us to wait until later in the year to find out the turnover limit. Am I supposed to make clients aware and frighten them? And then in the end they set the limit at the VAT limit and its all been a waste of time telling clients?
One thing that will happen now that the consultation outcome has been published is that the press should now get hold of this and make comment.

No they havent listened - as I've said previously in my blog it was always going to be. A bit of tinkering about the edges but they are getting their own way and there is nothing that can be done.

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Replying to Jennifer Adams:
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By BryanS1958
01st Feb 2017 12:40

There is something that can be done. All businesses can vote no and refuse to do it. If enough businesses did this it would bring the system to a halt before it even started - even 5-10% could be enough.

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Locutus of Borg
By Locutus
31st Jan 2017 17:54

My clients will ask what the point of all this change is. Especially as it will be of no benefit to them.

I don't have an answer.

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By steve 12321
31st Jan 2017 18:02

this will lead to the collapse of the tax system for one and many small businesses will collapse too. How on earth do the people that make this up get the jobs in the first place? This is an utter disgrace.

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By Michael C Feltham
31st Jan 2017 18:48

Middleton has listened, huh?

Presumably with her deaf ear!

Since I have just finished my last partnership returns and the personal SA100s for the partners, big sigh and onwards and upwards; after, naturally, pouring myself a rather large bracer of much needed Amber Nectar from Ecosse!

Worth recounting, verbatim, with the data omitted, naturally, a text exchange with a client last week...

He doesn't "do" computers and all that complicated stuff.

He is not, shall we say in the top tier of Rocket Scientists!!

Me to client:

"X; you have £xxx tax to pay before Jan 31st. Use Payment Ref. YYYY Pay HMRC, Sort Code: 123456, account Number 45678998, HMRC, Cumbernauld. Telephone banking easiest way."

Reply:

"Michael,that is like a foreign language to me,could you pay it please an i pay you."

In my self-defence, without going into the gory details, I regretfully inherited him and was unable to refuse. (personal matter).

Upside he pays: downside, pretty damned obvious!

Still, a perfect example of how MTD will work seamlessly in the future, Ms Middleton.

Oh; and by the way, Ms Middleton, you are all bloody barking!

P.S. Specsavers have some good offers on digital hearing aids...

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Replying to Michael C Feltham:
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By Michael C Feltham
01st Feb 2017 13:03

I have clearly undergone a Damascene moment and the scales have fallen from mine eyes!

Clearly, there is a covert strategy mounted by HM Government, to eradicate the pesky small business for all time!

The hidden plan, laid to please their mates at Davos and in accord with the core concept of globalisation, is to allow their mates such as Capita, to hoover up all the activities hitherto served by class size zero and micro-businesses in order that:

1. Capita et al can perform the business appallingly badly using minimum wage zero hours staff:

2. Charge twice as much for whatever they do:

3. Make the executive team multi-billionaires:

4. Appoint redundant clueless Government wonks non-exec directors @ £200,000 per annum:

5. Bankrupt UK plc and hand it over to China!

You read it here first!

(Oh for smilies and emoticons!)

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By steve 12321
31st Jan 2017 19:14

surely this is worthy of a public inquiry into this obvious farce and pending car crash? we all know how poor they are performing currently. This is a joke of gigantic proportions.

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By ireallyshouldknowthisbut
31st Jan 2017 19:03

Lets face it, its classic "bury the bad news" when there is the parliament debating Brexit and Trump doing his little dictator bit.

They havent listened, if they had the madness would have been canned, and the £10billion budget spent on HMRC staffing in the next 10 years. £1 billion a year would be a 25% boost to their annual budget!

If you want to close the tax gap - hire several thousand tax inspectors. Dont chuck it away on software.

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By steve 12321
31st Jan 2017 19:36

to encourage start ups (maybe quite few school leavers) we have

1) a very complex tax system
2) more and more reporting
3) A need to provide a pension
4) more and more regulation

What a joke.

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By sigcima
31st Jan 2017 20:06

'Tis FUBAR

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By rockallj
31st Jan 2017 20:10

HMRC HAVE COMPLETELY IGNORED THE 3,000+ RESPONDENTS TO THE CONSULTATION

............... except for spreadsheets to work "alongside" MTD compliant software. What the hell does that mean?

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Worm
By TheLambtonWorm
31st Jan 2017 20:36

I love the way they will still allow spreadsheets for record keeping.

They will also allow pencil and paper, or even scrawlings on cave walls. As long as that information is also input into MTD software of course.

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Replying to TheLambtonWorm:
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By adjadj
01st Feb 2017 11:16

I fully support the continued use of spreadsheets.

It will be relatively simple to created and extract of the the data needed for reporting and then use this as an input the the software used for communicating with HMRC

This greatly simplifies the scope of the change for my main business and my buy-to-let activities which are both run from spreadsheets that currently give me all the data I need for MI, tax, and forecasting

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By Matrix
31st Jan 2017 20:40

I don't understand how HMRC can estimate your tax liability from a 3 line submission. Or are the expenses only tax deductible expenses. And what are these savings after year 1?

My clients will not be making any savings if I have to give them a figure for allowable expenses 5 times a year.

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By cstwragby
31st Jan 2017 21:12

They've not listened at all apart from tinkering around the edges.
Time to look for something else to do. I'm not having a repeat of the January rush 4 times a year and losing time in the summer especially

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Replying to cstwragby:
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By steve 12321
31st Jan 2017 21:29

cstwragby wrote:

They've not listened at all apart from tinkering around the edges.
Time to look for something else to do. I'm not having a repeat of the January rush 4 times a year and losing time in the summer especially

You are not alone.

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Tornado
By Tornado
01st Feb 2017 00:42

"Middleton confirmed that HMRC has been working with 18 software companies in the initial private testing beta phases of the project. Five of these firms hope to have a product available before April – at least one expects to have a product available during February. Middleton believes these will be a mixture of free and paid-for tools."

The Government seem to be basing their whole MTD project on vapourware, and we all know about vapourware. Still perhaps the 400,000 people who are going to test this vapourware will have some sort of virtual success. (Where do they get these figures from? Who in their right minds is going to waste their time with this sort of testing).

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Sparkly Orange
By Sparkly
01st Feb 2017 14:29

An earlier poster has hit the nail on the head - what on earth are we supposed to do with this when we still aren't being told the threshold? I want to embrace this I really do, I loved the idea of SA when it came in, no more endless estimates/appeals/commissioners hearings/determinations and I was an early advocate of ELS and later FBI. I hate the stress of November, December and January so I like the idea that this annual cycle will be gone - it's human nature to leave everything to the last minute regardless of how short the deadline is. But to do a repeat of today four times a year - omg! I feel quite ill thinking about it. How do we go about training our IT illiterate clients in such a short timescale if we leave it until this summer to start trying as well as dealing with the 2017 Tax Return workload. Is the alternative to go through our client list now and disengage(by post of course as they "don't do IT) with all those that we know we won't be able to give us the information we need quarterly , won't be able to pay our fees, and won't be able to simply photograph all of their receipts and invoices. When is HMRC going to make the general public aware of this massive change? Or are they expecting us to try and do that - for free of course?! As an aside I have to say I'm really disappointed at the number of e-mails hitting my Inbox from Accounting web on MTD that mostly tell us absolutely nothing new, in our busiest month and the flood of downloadable reports on here that are just a blatant sales pitch for software providers and don't get me started on the hugely patronising one that came in today telling us just to breathe through it and relax! To be fair I had time to read it, I was managing to breathe and I was lucky enough to be able to grab lunch but I didn't the last few years and I know others would've been worse off!
Edit - prompted by a later thread on this post from David I've found a government petition - if it can get 100,000 signatures it has to be debated in Parliament - time to blow the lid of this stupidity from HMRC?! https://petition.parliament.uk/petitions/167738

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Replying to Sparkly:
By Tom Herbert
01st Feb 2017 11:15

Thanks for the comment Sparkly. Apologies if you feel the timing or the tone of our coverage hasn't helped you.

In our defence we didn't choose when the responses were released, and as it is of importance to practitioners and businesses we are trying to get as much information and analysis out there as we can.

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Replying to Sparkly:
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By gemmalambshead
01st Feb 2017 17:41

Petition signed by husband and myself. We can't do Self Assessment five times a year! Once a year is enough for us. Our clients are definitely not technically savvy.

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By cstwragby
01st Feb 2017 07:55

As I've seen in other posts, is it really correct we can "bang in" 3 line estimates the first three quarters then adjust in the final quarter when we prepare actual accounts?

Because we'd all love all our clients to give us their paperwork every month/quarter but if that happened, none of us would have manic Januarys

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Replying to cstwragby:
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By Eric T
01st Feb 2017 08:07

One of the issues is that agents can't "bang in" anything. At the various talks I've attended, HMRC seem to be insisting that all submissions have to be made directly by the taxpayer - not the agent.

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Replying to Eric T:
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By cstwragby
01st Feb 2017 08:30

In that case the system is a nightmare waiting to happen

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Replying to Eric T:
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By MM Bookkeeping Services
01st Feb 2017 08:58

Eric T wrote:

One of the issues is that agents can't "bang in" anything. At the various talks I've attended, HMRC seem to be insisting that all submissions have to be made directly by the taxpayer - not the agent.


Are HMRC that naive that they think clients will be able to do this? Obviously they are!
None of my clients want to do this or in some cases are not even able to do it - hence the reason they engage me
to do it.
Why is this all being kept quiet in the press and media?
I am totally p-ssed off with the UK and my home country (Scotland) and don't even get me started on Nicola Sturgeon!
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Replying to MM Bookkeeping Services:
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By Eric T
01st Feb 2017 09:32

The mainstream media is being very neglectful in not running this as a major story. The news agenda is dominated by Trump and Brexit at the moment - which, although important issues - are likely to have less of a direct impact on UK citizens than Making Tax Digital.

The only broadcast media outlet that is affording MTD any coverage at all is BBC Radio 4 through its Money Box and Money Box Live programmes.

Money Box live will be covering MTD today at 3.00 pm if anybody is interested.

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Replying to Eric T:
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By Echo761
01st Feb 2017 11:13

If the media were to report on this people would think it was "Fake News" as it is so ill thought out and ludicrous!

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Replying to Eric T:
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By RobertD
01st Feb 2017 09:58

Eric T wrote:

One of the issues is that agents can't "bang in" anything. At the various talks I've attended, HMRC seem to be insisting that all submissions have to be made directly by the taxpayer - not the agent.

They had better re-write the charter then.

1.5 Accept that someone else can represent you

We’ll respect your wish to have someone else deal with us on your behalf, such as an accountant or a relative. To protect your privacy, we’ll only deal with them if they have been authorised to represent you, and we’ll deal with them courteously and professionally.

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Replying to RobertD:
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By Eric T
01st Feb 2017 10:07

Any mention of the Taxpayer's Charter is curiously absent from anything issued by HMRC on MTD.

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Replying to RobertD:
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By Echo761
01st Feb 2017 11:17

Don't get me started on the 64-8 system.... one day HMRC accept an e-mail copy, the next they demand a "wet copy", it takes months for the 64-8 to hit their system - even then they sometimes still refuse to speak to you!

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Replying to Eric T:
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By dhughes1975
06th Feb 2017 15:39

I was under the impression that we would have access to the clients accounts and could make the submissions from there. If this is not the case then I really am calling it a day!

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Replying to dhughes1975:
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By johnjenkins
06th Feb 2017 15:56

As I understand it. The client has special software. The Accountant has special software. The client says to HMRC I would like Accountant to submit. If HMRC agree then code given to client so that client and Accountant software can talk to each other. Then I could be wrong.

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By Cloudcounter
01st Feb 2017 09:36

I'll add another voice to express dismay that we still don't know the turnover threshold. Our plan is to convert included clients to bookkeeping software from April 2017, so that they have a full year to get used to it and iron out the glitches before MTD goes live. Most of them aren't going to like it at all - if they'd wanted to "go digital" they'd have done so by now and HMRC's contention that they'll save money through all of this is delusional.

It is a complete disgrace that months after the consultation closed they are still "thinking" about this. After all, not all responses would have come in on the last day and shocked them with the viewpoint that £10k is stupidly low

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By Vaughan Blake1
01st Feb 2017 09:47

I feel like the concept is still "the King's new clothes", until someone tells us how this is actually going to close the £8bn tax gap apparently caused by errors. Errors, as opposed to evasion, are by nature accidental and as a result of carelessness or lack of technical knowledge. Some will therefore be in HMRC's favour and some not.

The idea of pre-populated online tax returns using info already in HMRC's domain is without doubt a great idea. This is a huge step and will clearly help taxpayers avoid errors/omissions provided that HMRC's data is correct. Let's get this bit up and working properly and see if quarterly reporting actually needed.

My pet hate is the way these figures are banded about £8bn here £4bn there etc etc. please can we see some workings? How much of the tax gap is caused by the "black economy" who won't be affected by MTD? HMRC estimates of tax lost through not taking reasonable care was only £4.3bn in 2012!

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Replying to Vaughan Blake1:
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By Eric T
01st Feb 2017 09:59

Mt fear is that the black economy will actually grow as a result of MTD. If the reporting requirements are perceived to be too onerous, many smaller traders will just decide it's just not worth the effort.

In other words, MTD may well exacerbate that problem rather than solve it.

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Replying to Eric T:
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By rockallj
01st Feb 2017 13:45

Exactly! Again, HMRC in their arrogant "wisdom" have completely missed the point.

Eric T wrote:

My fear is that the black economy will actually grow as a result of MTD. If the reporting requirements are perceived to be too onerous, many smaller traders will just decide it's just not worth the effort.

In other words, MTD may well exacerbate that problem rather than solve it.

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Replying to Vaughan Blake1:
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By Echo761
01st Feb 2017 11:20

Definitely creative accounting going on with HMRC's figures... open an enquiry!

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By miltonbank
01st Feb 2017 10:04

Now that we have a bit of spare time I'm going to make my submission to the House of Lords economic committee as they are looking for submissions by the 3rd February. http://www.parliament.uk/finance-bill-2017-sub-committee-submission-form. I feel bad about not having made a submission last year and feel that I must do so now as if we haven't voiced our concerns with this we cannot complain in the future, not just how it affects us as accountants, but more importantly represent our clients, most of whom know nothing about it and who it will hit hard, especially the smaller self employed.
I cannot see how many of the smaller businesses, especially the less computer literate will manage. It will put people off from being self employed.
I don't know what to tell my clients now, as those under the VAT threshold may/may not be affected depending upon the threshold the Revenue chose, and we are not able to recommend any software yet to those that will be affected. The timescale is far too tight. I appreciate that there will be a digital future and we must start to embrace it, but with technology changing so fast, how do we know that what is put in place will not be out of date in a few years time?
If the Revenue are aiming for the self employed to submit the details themselves and bypass the agents, will they next be expecting everyone to do their own MOT tests for their cars and bypass garages and our own medical tests and bypass the NHS? It's not that different!

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By RobertD
01st Feb 2017 10:08

The real problem lies with the government's attitude to tax. Instead of pinpointing areas where tax is wasted they concentrate on squeezing businesses dry. If millions weren't lost on middle eastern Spice Girls and health tourism they wouldn't feel the need to make up fantasy tax gap figures and make everyone's like a misery.

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By SteLacca
01st Feb 2017 10:09

A pilot to start in April 2017, for a maniacal system that won't be legislated for until July 2017 at which point limits will be determined?

[***] end upwards approach to the worst idea I've heard in more than 30 years.

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Tornado
By Tornado
01st Feb 2017 10:25

I will be brief.

Ms Middleton says that they have listened to Stakeholders but all I see is continuing misunderstanding of how the current systems work. We have revisions that partly address the problems raised but then go on to beg even more questions.

I believe that Ms Middleton and her team are verging on the incompetent and that they do not really understand what they are doing.

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By farrcorfe
01st Feb 2017 10:43

With the Revenue using 'customers' instead of taxpayers and 'engaging with stakeholders' instead of 'imposing our diktat' we are yet another step closer to a totalitarian state by stealth. The culture of penalties to fill the Treasury coffers will continue unabated so God help all small businesses which underpin the economy of this country

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By Ian McTernan CTA
01st Feb 2017 11:01

This:

a full end-to-end MTD-enabled product will be able to keep your records digitally, categorise expenses for you,

Yeah, right. Dreamland. Every one of these products that try to categorise expenses fails miserably, and leads to twice as much work. A fine example is 'travel and subsistence', where hotels charge VAT, but TFL don't. People will click 'accept' on all T&S identified expenses and either claim too little or too much VAT.

Don't think they have listened to use at all- they have listened to the software companies who see a huge £££ and large companies/accountants who won't have to deal with the lower end of the market.

The comment on spreadsheets sums it all up- you can still use them, but then have to transfer it to some software...

As they won't be able to monitor it without thousands of extra staff, I recommend the 3 line method for everyone, or the 4 repeats of last year's figures then one set of actual after the year end.

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Replying to Ian McTernan CTA:
Tornado
By Tornado
01st Feb 2017 11:32

"The comment on spreadsheets sums it all up- you can still use them, but then have to transfer it to some software..."

This is apparently going to be easy peasy. The data is going to be transferred digitally.

Despite the fact that every spreadsheet is created in a different way, yet still does the intended job, what sort of program is going to be able to magically extract the necessary information from any spreadsheet and send that to MTD compliant software. They also probably assume that all spreadsheets are created in Excel when of course this is most definitely not the case.

The most logical and efficient default situation is for human beings to extract the relevant information from their accounting records, spreadsheet, book, pieces of paper, etc, and enter that information into a template provided by HMRC, much like the already successful way in which many people complete VAT Returns.

As I said earlier, the MTD team do not understand what they are talking about and, in my view, demonstrate near incompetence in the handling of this project.

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Replying to Tornado:
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By adjadj
01st Feb 2017 13:19

As someone who uses spreadsheets I do not think there is an issue here for those people comfortable with creating/modifying spreasheets.

The build solution is a) define the content of standard CSV file that the software will use to import the data. b) create a new worksheet collated data between dates 1 and 2 with columns in the CSV format

There will be a one off activity to configure the MTD software with the personal ID information needed to logon

After that the quarterly activity will be
- enter data into spreadsheet
- enter control dates needed which will populate the worksheet with the required data
- copy the worksheet to a new file
- use the MTD software to import the file for onward transmission
- login to HMRC and transmit the file

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Replying to adjadj:
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By booksy
01st Feb 2017 14:25

Ha ha ha ha rofl! Will that be for your one client then?

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Replying to Ian McTernan CTA:
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By Homeworker
01st Feb 2017 12:00

Ian McTernan CTA wrote:

This:

a full end-to-end MTD-enabled product will be able to keep your records digitally, categorise expenses for you,

Yeah, right. Dreamland. Every one of these products that try to categorise expenses fails miserably, and leads to twice as much work. A fine example is 'travel and subsistence', where hotels charge VAT, but TFL don't. People will click 'accept' on all T&S identified expenses and either claim too little or too much VAT.

Don't think they have listened to use at all- they have listened to the software companies who see a huge £££ and large companies/accountants who won't have to deal with the lower end of the market.

The comment on spreadsheets sums it all up- you can still use them, but then have to transfer it to some software...

As they won't be able to monitor it without thousands of extra staff, I recommend the 3 line method for everyone, or the 4 repeats of last year's figures then one set of actual after the year end.


I am already experiencing problems with a client who wanted to take on an accounting package without fully understanding the rules. Having checked on the set up early on, when I went back later to review the entries (they do their own VAT) I found several where VAT had been incorrectly dealt with and as the VAT returns have been filed, it is proving to be a nightmare to sort out... and this is a client who is large enough to be VAT registered!
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By Echo761
01st Feb 2017 11:05

“Free software will be available to small businesses with the most straightforward affairs – in broad terms we are talking about people below the VAT threshold, not employing anybody and using the cash basis.”
Question - What if they are below the threshold and have voluntarily registered for VAT? Or is it just the financial limit that is important.

There are also to be new quarterly reports for VAT, but what is you are on monthly returns? Annual returns?

In the words of the song... there are more questions than answers.

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Replying to Echo761:
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By leon0001
01st Feb 2017 12:33

Don't forget the maximum limit for Annual VAT returns is £1.35m.
Could they not just harmonise the threshold with this?

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Replying to Echo761:
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By johnjenkins
01st Feb 2017 13:06

I know Echo and the bunnymen were a rock band but perhaps a bit of reggae. Are you that Echo? (joke I know there wasn't an echo, echo, echo.
Stupidity is the only thing I can come up with when I hear HMRC have LISTENED.

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