MTD for VAT first main submission: How was it for you?

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The first MTD for VAT return deadline has now been and gone. Jennifer Adams examines the issues raised in the first tranche of submissions and asks what lessons have been learned.

Nearly four years have passed since we first heard the phrase 'Making Tax Digital'. When George Osborne announced in the November 2015 Autumn Statement that annual tax returns were to be abolished, he was met with cheers. It’s fair to say a lot of water has passed under the bridge since then.

There have been webinars, beta testing, comments, blogs, monthly reminders on social media, Youtube videos and letters. However, many taxpayers still remain unaware and only know that 'HMRC is changing the way you file your taxes' via the QuickBooks advert on TV.

Whether the effort has been money well spent will only be gauged by the number of letters for non-submission of VAT returns and/or non-submission via MTD that HMRC will be posting to those who did not submit in the proper way for the first stagger.

It would be interesting to learn how many of those taxpayers were represented or not: unfortunately, a figure we will never know.

Again, it would be interesting to find out how many submissions were made via the larger software providers and how many via the linked spreadsheet ‘bridging software’ option so that the effectiveness of each could be gauged.

Relatively trouble-free

For AccountingWEB members and their clients, the first stagger submission on 7 August appears to have been relatively trouble-free and for those who had issues, it is a relief that no penalties will be levied.

Problems that did arise appear to fall under one of three headings:

  • The fault of the agent (or rather the agents' client not clicking the link sent to authorise – there is no way of knowing without actually asking the client).
  • Where clients who pay by direct debit signed up in the seven working days before their filing deadline or the five working days after.
  • HMRC's fault where the VAT return 'obligations' were not populated on their side rather than being the fault in the submission software itself.

Obligations

Accountants like to know the reason why things work the way they do and so rather than just listing what needed to be done to join the system, more explanations would have been helpful around the use of ‘obligations’, the non-working of which produced the third set of errors.

It would possibly have been useful if there had been a way of testing that a submission was OK to go through, testing that obligations were in place for each submission so that could have been sorted before the first stagger (but that obviously would have been a nicety). 

An obligation is generated on the first day of the VAT period, whether the previous obligation has been fulfilled or not. HMRC sends a period to the software provider on request via the authorisation provided by the Agent Service Account. Once this is done a list is generated and placed on the site of the submitter as VAT returns to file.

In some instances for this first submission, HMRC was not sending over any dates and as such, the software was unable to populate the list.

MTD-compliant software allows the software to search for obligations based on a start and end date range and an obligation status: O for open, F for fulfilled or blank for both.

Software can search for previous open or fulfilled obligations within a 366-day date range but can only call the next obligation.

The use of obligations can be viewed in a useful flow diagram plus other useful information can be found here.

Incidentally, the setting up of an Agent Services Account can be viewed in diagrammatic form (click here or see below):

ASA diagram flowchart

There is also a video that explains the step-by-step process for creating an agent services account:

Annoyingly, when ‘lack of obligation’ errors occur, some software providers just state that there is an error and advise getting in touch with HMRC. Others actually give you the error code number generated so you can delve further into the problem.

Helpline constantly engaged

Contacting the VAT helpline has been impossible for some weeks now as the phone is constantly engaged. While HMRC has increased the number of staff taking calls, the hours of opening have not lengthened, which is very unfair to those 'customers' who are in need of advice.

Clients who have tried phoning themselves have found it confusing as to which number to ring, going through the usual questions only to find that they have been transferred to the main helpdesk rather than any specific MTD helpline.

Check missing obligations

AccountingWEB members RedFive and John Hemmings have suggested a couple of ways agents can check whether accounts have been signed up or which clients might be missing obligations. You can either open a Business Tax Account for each client and check the obligations listed there or download free software such as Easy MTD VAT which details the types of error.

Either method enables the user to distinguish between accounts which are not signed up (error 403) and those which have obligations missing (error 404).

John Hemmings has produced an excellent video which should be viewed by all accountants wishing to understand the 'obligations' system in more detail and the error codes being generated.

Again, to be fair to HMRC, they have included agents in their project as far as possible, including issuing specially targeted notices (although these can easily be missed amongst the flood of emails received every day from www.gov.uk.). The current update for agents being the 'MTD Update for Agents #8'.

Second stagger

Hopefully, by the next second stagger, such issues will have been ironed out and attention can be turned to the more complicated problems such as the ones encountered when setting up for clients who had previously submitted themselves but now want an agent to take over.

If anyone has encountered problems other than those given above or have any suggestions as to how the process could have been handled more effectively please comment and we will submit to HMRC on members' behalf.

It will be interesting to learn how much clients have depended upon agents to make the first submission, which might give some indication as to future client needs when the 'real' MTD happens (if it does, of course). 

It will also be interesting to hear how accounting firms have fared in the process. For example, AccountingWEB member keninringer commented that MTD4VAT has cost his firm 200 + hours already.

Everyone who was required to submit by 7 August will now hopefully have learned from the problems of the first stagger. Let's just hope that what appears to be the relative success of the first MTD for VAT submission has not lulled HMRC into a false sense of security that the same relatively smooth process will happen when MTD for other taxes is implemented.

About Jennifer Adams

Jennifer Adams

Jennifer Adams is Consulting Editor of AccountingWEB and is a professional business author specialising in corporate governance and taxation. She runs her own accounting and consultancy business with offices based in Surrey and Dorset.

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14th Aug 2019 10:52

Has anyone discovered a way of checking whether the return has been received by HMRC without signing the client up for tax. There used to be a receipt that you could print on the old system. Some of our clients only use us for VAT and not as full accountants.

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to michellelondon
14th Aug 2019 11:07

How are you submitting the returns, Michelle?

We use Iris VAT filer for some of ours which gives us a submission receipt.

If the client has their own gateway login you can view submitted returns in there. However from what I can see it's not available from the Agent Services Account.

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to michellelondon
14th Aug 2019 13:07

You should be able to use your software to retrieve previous returns and obligations. As standard we return a confirmation receipt into the workbook, all retrieved from HMRC confirming filing status and reference.

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14th Aug 2019 10:54

Touch wood!, relatively painless. All the clients we submit for are on agent portal, so spend a day registering via my new ASA (this did takes days of time with issues, but a few months ago, so distant memory) and sure enough 72 hours later email confirming signed up. All returns seemed to go smoothly, so unless a barrage of rude HMRC letter on the way, no issue.

Only problem was with the ones who do it themselves calling up on the 7th to ask 'was I supposed to do something?'

Mentioning the 3 emails and 2 conversations we had in the last month put there gas at a peep and eventually they are now sorted (thankfully no fines as this would indeed be our fault!)

Although painless, it did take up an extraordinary amount of time and discussions with clients over the month that may well be hard to recover (as anything is where the agent cannot simply do it for the client). When will HMRC learn that making it easier for agent will lead to better compliance ??

Thanks (2)
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14th Aug 2019 10:54

I am still waiting for a response from HMRC to enable me to set up one of my clients for MTD for VAT as every time I tried to sign them up an error message stated " Sorry we are experiencing technical difficulties". That was on the 25th July and I am still awaiting their feedback.
So no, MTD not a success for me.

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14th Aug 2019 11:10

I've had the same issue with some sole traders. After several weeks of being told to clear my temporary internet files I finally got someone at HMRC who acknowledged there was an issue with some VAT numbers which they are currently working to resolve. He just told me to file the old way and that it should be sorted for the next quarter.

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14th Aug 2019 11:07

well, where to start.
Some clients we still submit using the old system (under the VAT threshold). Some we submit via new software (Taxfiler) Some now submit themselves as they have software (QuickBooks).
One uses Quickbooks but has two separate files, so we will file using Taxfiler linked to an excel spreadsheet (July quarter).
All of these we used to file as agent using the old tried and tested system. Oh, and no I've no idea whether the Taxfilr submissions have actually been received at HMRC or whether the DD's will be/have been collected.
A complete and under waste of time and effort!

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to memyself-eye
14th Aug 2019 11:15

Taxfiler allows you to view/download a submission receipt which confirms HMRC have received it and how they will collect the VAT

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14th Aug 2019 11:18

We decided to set up all our vat for MTD clients under their personal log-ins but using our computer as opposed to setting up Agent Services Account (which seems to be not up to scratch at present). Everything ran smoothly using VT.

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to johnjenkins
14th Aug 2019 11:32

I can understand why you did it as it gives you much more info. However was it not a bit tricky with the two factor authentication text messages?

From what recall when logging in to the gateway you can choose to have the text sent to an alternative phone. However when granting authority for your submission software it only seemed to go to the primary number.

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to chorleyboy
14th Aug 2019 13:11

With clients permission all text codes come to us. We also have clients that do it themselves. We put all our clients on VT over a year ago (some have their own software QB etc.) so the process of MTD has been painless. We did this as (even if it is a few years down the line) a precaution that all transactions will be tagged in the next couple of years.

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14th Aug 2019 11:21

Given the entire point of this farce is alleged to be raising revenue, the key question for me is,

"how much more VAT revenue has been raised due to the reduction in errors?"

That must be the key point that is pressed hard from the profession.

Thanks (3)
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to ireallyshouldknowthisbut
14th Aug 2019 14:19

clients filing by software were already using the software pre-MTD. Error rate pre and post is the same. Clients using spreadsheets use the same pre-MTD spreadsheet and import the figures to bridging software. Error rate pre and post the same. Could not agree more that the profession needs to press hard

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to ireallyshouldknowthisbut
14th Aug 2019 15:14

I won't hold my breath, I think we all know the revenue raising was just a ruse for big brother to get their hands on the full transaction data in the long run.

Also, from the article:

"Again, to be fair to HMRC, they have included agents in their project as far as possible".

My memory is, to be fair, a bit longer than 5 minutes. I remember the last couple of years and HMRC were planning on rolling out this whole system without agent support even ready. God knows how they thought that would have worked.

The only reason agent access was ready at time of launch was HMRC had to delay the whole project because the system wasn't ready. Coincidentally, agent support happened to then be ready at time of launch.

So no, I will give no credit to HMRC!

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By NLB
14th Aug 2019 11:37

All went smoothly for us but we learnt a whole bunch of stuff around how HMRC have delivered this which is laughable including:

Agent Services Portal - can't see VAT cert, can't amend VAT quarters, can't see submitted returns, can't do other admin you could pre MTD

VAT DD - most clients had these setup, randomly some clients portals showed this is setup others with no payment service, all clients with a previous VAT DD had MTD return taken by new DD. Go figure.

If HMRC were a software company they wouldn't have a viable MVP or any paying clients and would currently be raising some seed capital to fix it all but lucky for them the taxpayer is providing this capital.

The long outages of service (another one this weekend through to Monday) are to release technical updates and bug fixes to get things working properly so it's all hand to mouth over there!

Thanks (1)
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14th Aug 2019 11:48

Signed up three clients for MTD with no difficulty (we already had an ASA set up to register Trusts).
Used VT to prepare and file the returns and again had no problems. The MTD link was confirmed within seconds and the VAT returns filed straight away.
The only problems I had were that I can no longer send the client a receipt issued by HMRC (one client was reluctant to pay without this) and we had no idea in advance if they were going to collect the direct debit.

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By GW
14th Aug 2019 12:55

We didn't have any particular problems filing returns. In some cases the "72 hours" to sign up to MTD was overnight, in others 5 days.

The biggest problem we had was a client (plumber not named John!) with sales just over the VAT threshold, his wife had kept very good manual records but refused to touch a computer, so after several lesons from us he keeps his own computerised records, unfortunatly the resultant mess took significantly longer to sort out than preparing a return from the manual records and we need to devote more time to show him what to do yet again. The perfect example of why MTD is a waste of time.

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By NH
14th Aug 2019 13:13

No major issues for us, the odd glitch. Whilst I am still very happy that we went through a very lengthy exercise over a 3 year period to move clients over to software and see that as a move forward, we could have left them all on excel and still been MTD compliant.
So as far as I can see nothing has really changed other than the more long winded mechanism for giving HMRC the same figures that they have always had.
I have to wonder what the point of it all was and are we going to see a ramping up of obligations?
Software companies producing ads that imply that HMRC changes mean you should now use software such as ours is at best misleading.
In addition to that one has to wonder how many VAT registered traders there are out there that are still unaware of MTD, most of our clients did not receive communication from HMRC or at least they said they had not.

Thanks (1)
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By Dandan
14th Aug 2019 13:19

Quote from article wrote:

when the 'real' MTD happens (if it does, of course)

It won't happen; at least not the way people expect.

I find it hard to believe that tens of thousands of people out there still think that HMRC will upgrade the MTD-VAT to pull ledgers .

Two clients I spoke to were shocked when I said to them that sending 9 figures through bridging software was all they were required to do. They asked : "What about the ledger ?". Then, the next predictable question from them was : "So, what is the point of MTD ?"

There has been so much disinformation spread about by software companies that nobody understands where MTD is going.

I do understand where it is going. Sadly, most accountants have still not caught on to the fact that HMRC is in the process of building a strong relationship with software companies; the latter being progressively engaged in educating the taxpayer and replacing the accountant as tax adviser.

Thanks (1)
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to Dandan
14th Aug 2019 13:26

MTD was never a mode to stop errors. It was and will be a ruse by which HMRC can have access to every transaction every business makes without having to open an investigation. The first step of this was many years ago when it was decided that HMRC didn't need a reason for opening an investigation. So in the next few years chaos galore as non Accountant type HMRC officers start querying transactions.

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By Dandan
to johnjenkins
14th Aug 2019 18:39

What they would like to do is very different from what technology allows.

There is a misconception that accounting software only means Xero, Quickbooks , Sage ,etc. From that misconception comes the idea that HMRC can pull ledgers and go beyond the nine figures.

APIs cannot pull ledgers or large amounts of transactions. In fact there is no way that ledgers and underlying transactions can be "automatically" uploaded to HMRC, unless the whole country uses basic, amateurish software as those cloud ones and HMRC reached a deal with them.

The truth is that there are hundreds of different accounting software being used. Recently I help larger clients who use non MTD-compatible software that handle large volumes of data and are extremely complex but essential for their business. One of them generated over 200,000 lines of sale transactions for the quarter and similar amount of purchases. Bridging software worked fine. How would HMRC be able to get so many software companies to build an intergration in order to pull ledgers. Many of them are foreign software companies and without them the business cannot survive since the software is the only one that works for them.

The truth of about MTD is very different to what people think. Yes, they want to get their nose into your ledger but it will not be how you think.

It will start like Italy and Brazil where a sales invoice must be approved by the tax authority before going out.

MTD is only to get software companies to push the accountant out. Already some of these "cloud" companies have their permanent tax adviser on board. HMRC expects them to put links in the software to educate the taxpayer and teach tax and accounting .

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to Dandan
15th Aug 2019 09:16

I understand where you're coming from. I'm sure the idea was to start with the smaller business (under £85K) doing quarterly updates so that HMRC could see what does and doesn't work. From 1/4/2020 HMRC are hoping that all transactions that make up the VAT return can be "tagged" so that they have access to them. In reality it will be more difficult, however if the money dries up (Boris has committed billions to other causes) HMRC will have to wait a few more years (technology would have progressed by then) before achieving their ultimate goal. My view is that Accountants will be needed on a much larger scale because of the ineptness that the new breed of HMRC officers will have. Anyone who has dealt with an aspect enquiry will know exactly what I mean.

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to johnjenkins
15th Aug 2019 11:45

I agree with John in that we will be needed more and not less in the future.

Simple things like changes for landlords who previously filed themselves now come to me as they don't understand the new interest rules.

In NZ and Oz when they digitised their tax systems 5/6 years ago more businesses were pushed towards accountants.

Personally MTD has worked without too many problems for me.

I left the HMRC side of things to the very last minute, to hopefully let all issues get ironed out and it worked remarkably without issue. it felt like it was too smooth and I am waiting for something to come back and bite me.

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By Dandan
to Glennzy
15th Aug 2019 12:54

Glennzy wrote:

I agree with John in that we will be needed more and not less in the future.

Simple things like changes for landlords who previously filed themselves now come to me as they don't understand the new interest rules.

As a landlord myself, I have received approximately 300 emails from HMRC offering webminars, guidance notes and all practical knowledge about what I can claim etc.

The move is towards making the taxpayer knowledgeable about tax. No need for tax advisers. Laws will also be changing to "simplify" tax which will make the interaction between HMRC and taxpayer more direct.

The tax system in OZ and NZ are not comparable. There is a tradition in OZ where everyone has a tax adviser ( a bit like americans having a shrink)

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By Dandan
to johnjenkins
15th Aug 2019 12:55

Quarterly updates is no problem for existing technology; just a couple of dozens of figures (mainly nominal a/c balances). For example iXRBL already exists.

Ledgers ? Impossible. Joe blogs my run a small family business on Quickbooks or xero and with two dozen transactions but XYZ ltd may run non-mtd ERP systems with 200k transaction a month. If HMRC tries to force the larger companies including household names to move to Quickbooks or Xero, it would be the joke of the century.

The way HMRC will get into the ledger is through a big brother approach; simply requesting businesses to send a copy of their ledgers (pdf, excel or whatever) and enshrining it into law.

I still think that MTD is about getting rid of the tax advisers. Cloud companies will be providing more advanced tax informatuion through links in their software. Soon the taxpayer will know more about things such as loss reliefs than the tax semi-senior.

The tax system is changing. There will be three role players : the taxpayer, HMRC, the cloud software company. The accountant is outside the circle and left behind.

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By NH
to Dandan
15th Aug 2019 12:59

No, the average taxpayer a) will never be able to understand the various complications in tax law or b) will ever want to know. Why would they when they can pay a reasonable fee to someone who is an expert and get on with doing what they know?
Tax has not become easier it has become more complex if it wasn't for us 90% of our clients would not even have been able to file a VAT return last quarter nevermind understanding tax law!
The only way your scenario would ever come about is if tax law was massively simplified.

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By Dandan
to NH
15th Aug 2019 20:11

NH wrote:

The only way your scenario would ever come about is if tax law was massively simplified.

Yes, I think it will be massively simplified for the small family businesses.
Whilst ,for us accountants , it may seem a recipe for disaster when we see those adverts where small business owners are encouraged to "click" on a mobile app and "tax is done", it could work in the context of a simpler tax system.

The main concern regarding quarterly filing by a small business owner (with no accounting knowledge) would be a lack of understanding of accruals, prepayments, deferred income, etc. They could end up massively over or understating income. However, it all comes out in the wash in the end. Over-stated income in one year leads to smaller income in the following year. In any case , they will all catch on and understand the "matching" concept in the end.

Only the bigger businesses ,or the ones with tax complexity, will still require tax experts .Hence, It is the accountancy practice with the smaller clients that is most at risk from cloud software that are hmrc-friendly.

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By 0620115
to Dandan
14th Aug 2019 15:09

I agree with Dandan.
HMRC's strategy must be to dispense with agents - as both tax advisers and accountants. Only question in my mind is how long it will take.

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to 0620115
16th Aug 2019 09:00

I agree that HMRC want to get rid of not only Accountants but all small business. As I said before they are going to catch a big cold and get an even more massive shock. The problem with HMRC is that they don't get up at 5 in the morning to negotiate the M25 (or similar in other parts of the country) to do a days work (if not rained or winded off) then have the reverse traffic problems on the way home or back to the office. Then to do quarterly updates. It's never going to happen or if it does Accountants and Bookkeepers will have a field day. As all business will be in the same boat, prices will go up to pay for the extra record keeping.

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14th Aug 2019 13:39

Speaking as "The Client" it was relatively simple but then anyone who's had experience submitting online RTI and CIS returns through Sage would have been thoroughly familiar with the procedure. Couple of points though:

1. We registered half a dozen companies a month ago but received differing responses from HMRC. Clearly the initial responses meant the registrations hadn't worked even though we received emails to the contradict this. When the Sage submission failed it was clear we had to re-register and wait 48 hours but then it went through smoothly.
2. We upgraded with Sage at the same time but when we came to make the submissions the software told us we didn't have the correct version. Another phone call to Sage and a new authorisation code solved the issue.

Maybe the one man companies with bag of receipts may struggle but for everyone else it's the equivalent of the Y2K bug i.e. no one noticed....

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14th Aug 2019 13:40

I submit 35% of my clients' VAT returns using VT Cashbook which is a very straightforward and a good intro for when (and if) they start using software themselves. Will wait for VT to tweak their program to print the submission receipt but not that important

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14th Aug 2019 13:53

And all for an EU tax which may, or may not, be replaced in the coming years!
Perhaps HMRC should wake up & smell the coffee.
That said, I started signing up my clients in the 3 months prior to the deadline getting them all set up before I prepared that return so I could use it as a trial run. I set them all up with separate Gateway logins rather than through an agent portal as this has proved better in past experience. The main problem was getting confirmation of the sign up's the next day with no mention of which client it was for despite me changing all names to be visible on emails to me.
There were a couple of glitches early on with HMRC not having transferred the Direct Debits correctly but all soon sorted.
Bit annoying when I couldn't get through on the helpline particularly the 'we are very busy right now, phone later' & the line going dead experience, always AFTER you had gone through all the silly security questions.
I must confess to being one of those who believe that this will, indeed, move on to HMRC being able to pull in the details at a later stage...it is an obvious next step so they can check VAT has been paid in 1 entity before being reclaimed in another. Of course, the chances of HMRC being able to set this up any time soon is rather remote!

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14th Aug 2019 13:57

We have so far had no issues, all clients for all quarters now signed up with relative ease.

The only thing that has annoyed me is the sheer amount of time involved/wasted from writing letters to clients to advise them, meetings with them to explain, gathering all information that was required for signing them up! all to submit the same figures (for now at least).

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By GMacK
14th Aug 2019 14:35

Submission of a VAT return through VT+ was very easy - once the sign-up for MTD and Grant Authorisation routines had been achieved. However, submitting through VT+ for Excel was a pain. The digitally linked boxes 1 and 4 included VAT calculations (e.g. one sixth of VATtable takings) that were not exactly to the penny. Couldn't submit the return until I had fiddled around with tiny corrections of around £0.000067.

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14th Aug 2019 15:27

Once the teething problems of setting the ASA up were overcome, registering the clients was reasonably painless. It's good to see that we can at least see a list of clients on the ASA now, albeit only the ones where a VAT return has been filed. It's immensely frustrating that they're all identified by VAT number but as it gives you the facility to give each client a reference, I have used the company name as the reference. A pain that doesn't appear to have been necessary but I have few enough clients that it has been relatively easy.
All of those that we do for clients have been successfully filed through Sage or QB.
Some clients, despite all of our communication with them, have filed through the old system believing that they were submitting through MTD 'because the software says it is compliant'. Some I have really struggled to persuade that they aren't complying if they haven't had to go into their software, enter a new Govt Gateway ID and tick the box to say file through MTD. Some swear that they've done it right but just haven't ticked the right boxes.

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14th Aug 2019 17:17

In summary...

(1) No obvious benefit - nothing has really changed!
(2) Process for the main part time consuming (see (1))
(3) A measure of a business is how they deal with problems....nothing more to say.

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14th Aug 2019 19:12

Pre MTD DD that should have been transferred - didn't work. The client had to do a bank payment instead.

Apparently HMRC is aware of the issue and DD will restart from the next quarter.

Has anybody experienced the same problem?

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15th Aug 2019 08:45

I am going to be frightfully rude out this

A F***** Disaster

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By NH
15th Aug 2019 12:38

Yep agree with Glenzy and John, there is just no possible way that our clients would be able to manage to do VAT, Payroll, accounts and for probably 75% of them the book-keeping either. Even the ones that are technically savvy and do their own book-keeping they still rely on us to answer all kinds of questions related to tax and accounting and for business advice.
And for those that have suggested that software companies will takeover the accountants role you have clearly had very little interaction with Sage or QBO support staff. Granted, Freeagent sort of do some things like payroll but even that is a basic product very limited in scope. If there is one thing MTD has clearly shown so far, without the agents taking the time to learn how to file correctly, HMRC would have had no chance of getting this off the ground.

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to NH
15th Aug 2019 12:51

as part of the roll out a guy from HMRC came out to a practitioner group I am apart of locally.

He was quite senior in the roll out team, (not policy maker) but at the sharp end and was very clear the roll out was impossible without accountants on board to make it happen.

All the DIY filers will be pushed towards finding agents so will a more clients, that we will just work with in a different way

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to NH
15th Aug 2019 12:51

as part of the roll out a guy from HMRC came out to a practitioner group I am apart of locally.

He was quite senior in the roll out team, (not policy maker) but at the sharp end and was very clear the roll out was impossible without accountants on board to make it happen.

All the DIY filers will be pushed towards finding agents so will a more clients, that we will just work with in a different way

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By Dandan
to NH
15th Aug 2019 13:13

NH wrote:

Yep agree with Glenzy and John, there is just no possible way that our clients would be able to manage to do VAT, Payroll, accounts and for probably 75% of them the book-keeping either. Even the ones that are technically savvy and do their own book-keeping they still rely on us to answer all kinds of questions related to tax and accounting and for business advice.
And for those that have suggested that software companies will takeover the accountants role you have clearly had very little interaction with Sage or QBO support staff. Granted, Freeagent sort of do some things like payroll but even that is a basic product very limited in scope. If there is one thing MTD has clearly shown so far, without the agents taking the time to learn how to file correctly, HMRC would have had no chance of getting this off the ground.

I need to quote your full post. The flaw in your argument is that you assume that the business does not have a competent inhouse bookkeeper or accountant.

That is the basic assumption that too many people are making.

It is the tax agent and external accountant that is being targeted and pushed out. The internal accountant is still a requirement.

Most people on Aweb that have praised cloud software companies are firms that have small clients where there is no inhouse accountant. Just employees with no accountancy background trying to do the books on QBO or Xero or Freeagent and requiring the help of the external accountant. That gives the false impression that external accountant have more work thanks to MTD and cloud software.

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By NH
to Dandan
15th Aug 2019 13:24

well, its not a flaw in the argument as none of our clients have an in house accountant, they do not need one and could not afford one - that is our job!

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By Dandan
to NH
15th Aug 2019 13:34

NH wrote:

you have clearly had very little interaction with Sage or QBO support staff. Granted, Freeagent sort of do some things like payroll but even that is a basic product very limited in scope. If there is one thing MTD has clearly shown so far, without the agents taking the time to learn how to file correctly, HMRC would have had no chance of getting this off the ground.

Perhaps you are not aware that Freeagent have their qualified accountant on board who sends regular notifications to the users to read their blurb on various aspects of tax. Very detailed and advanced stuff , I would say.

As for Sage and the others. They need not worry. They just have to put links on their software. Links likely to go to HMRC's own detailed tax guidances which they will have ready soon. They already have all the information a small Landlord would need without ever having to consult an accountant. I know this as I get hundreds of emails from HMRC (in my landlord capacity) pointing me to their webminars and guides to tax on properties. If I was not a accountant myself , I would find all information there and more.

Don't get me wrong, I am only trying to protect my profession and open the eyes of practioners who cannot see what is coming.

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to Dandan
15th Aug 2019 14:37

What is coming is a big shock for HMRC. Firstly with all the spending Boris has promised there won't be enough money to continue MTD in its entirety. Secondly Tax officers leave to go into Accountancy, not the other way around. So, in effect, you are always going to have people in HMRC who haven't got a clue about how accounts are put together and how tax law (not HMRC's interpretation) is operated in reality. HMRC are losing cases hand over fist (IR35 is just a joke). That should really tell them something shouldn't it.

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15th Aug 2019 14:58

If a client of the smallest size uses an Accountant to check their VAT and then with a system of manual and computer processes gets the correct tax form filed and paid to HMRC why on earth should that system be put at risk. One would assume in that case scenario and Exemption may be due.

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16th Aug 2019 08:36

I don't like the idea that you do not receive an HMRC confirmation you have paid the VAT. I haven't bought bridging software yet or moved from my paper records as being a sole trader I don't have much time and HMRC won't be paying me for that time nor providing me with free bridging software.
I am sure it will go extremely badly when I do move over and I will certainly have to keep the impeccable paper records alongside to feel safe about it all.
It seems a lot of effort to give HMRC the same information as now and a bit silly to have to register yet again with HMRC and have a special HMRC log in just for VAT rather that as now - one for VAT, income tax etc

I have had one letter from HMRC (I don't watch online videos and that kind of thing) which was not very helpful. I would prefer they would give me the name of one product not over 100 and that HMRC would underwrite it and indemnify me if their forcing me into all this causes me loss. No chance. I would never use cloud storage for anything.
I hate excel. Even just having to use excel for MTD is going to a huge and horrible thing.

I recently scanned my grandfather's tax records and some accounts from about 1909. I wonder if MTD records will last as long. Paper is very safe.

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By NH
to EnglishRose
16th Aug 2019 09:07

EnglishRose wrote:

I recently scanned my grandfather's tax records and some accounts from about 1909. I wonder if MTD records will last as long. Paper is very safe.

haha, yeah right paper is really safe, its not like it could be burnt in a fire, lost or swept away in some storm or flood or something, damaged when you spill your coffee all over it, accidentally thrown away or like a lot of paper receipts that fade in time and are no longer readable. Compare that to the nasty world of digital storage where you can keep multiple copies in multiple locations, not to mention the time saved in using digital systems.
But yeah, computers bad, paper good!

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to NH
16th Aug 2019 09:48

Yeah, but think about all the scams and hacks. You don't know whose got your personal information. Any company can transfer your BT phone line to theirs without you even having a say. Oh yes BT send you a letter giving you 7 days notice. So your away or don't get the letter for some reason.
Yes computers are amazing and phone technology etc. but the problems are still there, they don't go away. Their just different. We certainly need to play catch up before we even think of going further.

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16th Aug 2019 09:24

I was told of a (VAT) officer, old school fellow- who sent emails then printed the email and posted it to the recipient. So, both computer AND paper eh!

He's probably still doing that

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