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MTD faces growing delay demand

28th Sep 2016
Editor AccountingWEB
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Professional bodies have added their voice to accountants’ concerns about the Making Tax Digital timeline for implementation, with many still believing that a delay does not go far enough.

In a letter to Chancellor Philip Hammond, Treasury select committee chair Andrew Tyrie suggested a pilot scheme. “From this,” he writes, “the lessons from customer’s experiences can be learnt, and well before digital reporting is made mandatory.”

He concludes: “Better to get it right than stick to a rigid timetable.”  

In the letter Tyrie outlines his concerns over the availability of free software and how long it will remain free, how the quarterly reporting will align with universal credit, and the impact of the £10,000 exemption, especially for business whose turnover is just over the threshold. 

Profession supports delay

Joining the dissent, the CIOT's president Bill Dodwell told the Treasury committee during a hearing on the UK's tax policy on 6 September that the groups view is that [MTD] is “too rapid” and making it compulsory is going to make the rollout “very challenging”.

The ATT is also urging the government to listen to Tyrie’s advice. ATT president Ralph Pettengell said: “It is in no-one’s interest to rush the introduction of MTD and end up with a range of problems for both businesses and HMRC when proper consideration of suggestions and further detailed consultation could assist the achievement of making HMRC into one of the most digitally-advanced tax administrations in the world by 2020.”

It wouldn’t be the first time the government took a more measured approach to introducing a digital change. AccountingWEB's consulting tax editor Rebecca Cave cites the gradual move from paper to online filing for PAYE as already setting a precedent from 2004 – 2009. Online filing for VAT returns was also introduced gradually before it became compulsory from 1 April 2010 for businesses with turnover over £100,000.

Backing a delay in a previous article, Cave wrote: “It would give the software companies the time to develop low cost or free apps to be used by this tier of businesses. The delay will also allow accountants more time to introduce their clients to digital methods of keeping business records (the exact format of which is another detail to be decided).”

A delay doesn’t go far enough

However, ACCA’s head of taxation Chas Roy-Chowdhury tells AccountingWEB that a delay is “just kicking the can down the road” and not dealing with the real problem, which he says is mandation.

“We can defer it as much as we want, but we need to get to the heart of the problem, and the heart of the problem is the additional admin burden that the new system is going to bring… The whole mandation issue is ill-conceived.”

Roy-Chowdhury argues that small businesses are already fearful of what a post-Brexit world might bring, and the MTD mandation would impose an additional burden on small businesses.

He adds: “Our members are going to have to incur costs which they will not be able to recover in fees, and the whole framework is completely unnecessary. It's not there to help small businesses as the spin the government puts out on this - it's there to try and fill the tax gap.”

The consultation documents themselves were originally supposed to have been published in Spring 2016, but were knocked off schedule thanks to the EU referendum campaign and the Panama papers fallout. 

What do you think? Should MTD be delayed to fit a more realistic timeline or will that just prolong the inevitable? 

Replies (62)

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By North East Accountant
30th Sep 2016 08:47

My wife is sick of MTD already (me moaning about it) and said if it's so bad why are the Chartered Institutes not doing anything about it. Indeed, said I.

Come on ICAEW and the rest start representing the best interest's of the public and your members and just say NO. You should be fighting this tooth and nail, not cosying up to HMRC.

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Replying to North East Accountant:
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By DMGbus
30th Sep 2016 09:17

Interestingly the Chartered Institute of Taxation reports that 84% of their members report that this change will create an additional burden for their clients.

However ICAEW might have member firms who will make many millions of pounds through their consultancy arms or subsidiaries through MTD's implementation, so don't expect ICAEW to criticise the MTD proposals too much. It might even be the case that the concept of MTD was sold to HMRC by one of these consultancies to feather their own nests and gullible head of HMRC and/or the Gauke fell for it.

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By Vaughan Blake1
30th Sep 2016 10:19

It has been announced that there will be a delay for businesses with a turnover over £10K but less than £X.

What's the betting that X = the VAT registration threshold?

HMRC can then say that quarterly reporting is not a new concept to them and that the submission is really just a beefed up 21st century VAT return.

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Replying to Vaughan Blake1:
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By kdbr
30th Sep 2016 11:22

That just might be acceptable, so long as the 'delay' was indefinite...

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By accountright
30th Sep 2016 12:28

My MP wrote back to me as follows:

Many thanks for coming back to me.

"I’m more than happy to feed this into the Treasury team, using my cover as your MP, and will action this shortly so they can see the strength of feeling on this.

I hope this is helpful"

I have a feeling this is now on the "merry go round".

Thanks (1)
Replying to accountright:
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By RobertD
30th Sep 2016 15:40

accountright wrote:

My MP wrote back to me as follows:

Many thanks for coming back to me.

"I’m more than happy to feed this into the Treasury team, using my cover as your MP, and will action this shortly so they can see the strength of feeling on this.

I hope this is helpful"

I have a feeling this is now on the "merry go round".

I would ask your MP his views. If hasn't got any, why not? It will affect all small businesses in his constituency. He is accountable too. If he doesn't have views, then it's because he probably doesn't understand the effects this will have. I would suggest he needs to understand. Perhaps a meeting is required.

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Replying to RobertD:
Tornado
By Tornado
30th Sep 2016 16:11

There are still a number of HMRC face-to-face events throughout October. I think I will ask my MP to attend one of these so he can see first hand what the problems are and how HMRC are handling this.

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Replying to RobertD:
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By accountright
30th Sep 2016 17:07

I have asked the question of my MP and await a response from him! I have also given him an example of one of my clients who is in his 70's, runs a small gardening business to supplement his pension, keeps accurate manual books, has no idea how to use a computer and wouldn't know what a mobile phone "App" was!

The worrying issue here is that the Rt Hon David Gauke is probably heading up the Treasury Team and so will ignore any protest or suggestions for reforming / delaying / scrapping MTD.

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Julie Stacey
By Pingsquitch
01st Oct 2016 12:30

I feel very threatened by the proposed MTD scheme. I run a small part-time bookkeeping business in order to supplement my income. I am very worried that I will not be able to meet the deadlines imposed in the time I have available to work on my clients' accounts. Again, I feel the government are punishing the majority for the short-falls of the minority! I am seriously considering retiring if this goes ahead so at least they won 't be getting so much tax from me!

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Chris M
By mr. mischief
05th Oct 2016 18:30

Utterly utterly utterly utterly clueless. That is HMRC with their Making Tax Diabolical proposals. We already knew that at all levels of HMRC they have not got the faintest idea how businesses, especially small businesses work.

MTD just emphasises this with knobs on. the clueless idiotic comments HMRC staff spout in the webinars and so no have made me totally sick, to the point I have stopped even bothering to log on to them any more.

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By johnjenkins
10th Oct 2016 15:18

The problem with MP's is they will be given the standard format reply and then. of course, forward that on to you.
There is only one way to stop (not delay) this and that is to get a figure head, perhaps Mr Sugar might be interested. I've asked Nigel, but he's fannying around with Don. HMRC know the position and so do MP's, yet still this shenanigan goes on.

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By BryanS1958
12th Oct 2016 23:19

There seems to be apathy in the profession. The Society of Professional Accountants has only had a 17.5% response rate to its survey sent out on 14/9/16. I hope this is because members of the profession have been to busy writing to their MPs!

As far as I’m concerned there should be no negotiation, just a straight NO. Why do we need it? It’s a stupid ill thought out and impractical idea and the more clearly this is voiced the better. If you haven't already had your say please write to your professional bodies and let them know what you think.

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