MTD: How to sign-up for the pilot

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Wendy Bradley listened to the HMRC webinar: “Making tax digital: signing up to the income tax pilot", but she was left with a lot of unanswered questions.

I signed up for this webinar as an unrepresented business, rather than as a tax agent. I wanted to see what support HMRC were offering to a one-woman unincorporated business, to get on to MTD. The answer was disappointing.

Opening waffle

The webinar began with an explanation of the benefits of MTD: the presenter argued it would be more efficient and simpler to keep business records electronically, and that you would capture your transactions electronically, asserting that: "there are tools and apps" you can use for this.

HMRC's view is that poor record keeping equals "failure to take reasonable care", which is one of those statements that makes you want to explore what is meant by "poor" and who determines the standard.

Businesses not landlords

The sign up for the MTD trial for unrepresented businesses seems fairly simple, there are just three criteria:

  • Start keeping digital records
  • The digital records have to cover the whole accounting or tax year
  • The minimum information required is: the amount, date and category of each entry

The sign up process for landlords is not yet live.

At this point we were told to search for "record keeping applications" on gov.uk. and, crucially that a spreadsheet was an adequate form of digital record keeping.

Poll

A quick poll of the webinar attendees checked to what extent we already kept our records digitally, and the results were:

  • Totally:  25%
  • Mostly:  34%
  • Partly: 26%
  • Not at all:  15%

From a self-selected group at a webinar about joining a trial of a digital records system, this was not an impressive percentage.

Benefits

The presenters told us about the benefits of digital record keeping. There would be less manual effort (as we all know, entering something in a computer is always easier than jotting it down on a piece of paper). The automatic prompts in the system (because having a computer ask you if you really want to click that is never annoying). Also you can see your financial affairs at a glance (because no-one in business has any idea whether they're making a profit or not).

I'm afraid I was unconvinced. The MTD "service" is available now and by joining it you can, we were told, get estimates of tax due (if you send in a quarterly summary) and you can "even" choose to make voluntary payments in advance. Oh, and you "may not" need to complete a separate SA return at the end of the year. "Joining now will help shape the service" we were told, although it wasn't quite clear to me how.

Good intentions

The webinar appeared to be well intentioned, and it is a good thing that HMRC will be trialing the system before MTD goes live, for those of us below the VAT threshold.

The problem lies in the availability of software. HMRC are not issuing any basic free software themselves and there is no indication of the market developing any.  

Where to find MTD software

The instruction to search for "record keeping applications" takes you to a landing page and onward to a guidance page which has a link to a list, updated last summer, of suppliers of commercial software.

Unfortunately, this is no use at all in determining whether your software is capable of delivering MTD – which requires not only that you keep your records electronically, but also that you can transmit them to HMRC via an API.

The sign up page for the MTD trial tells a different story: the page titled: "software for sending income tax updates" lists exactly four suppliers, one of which is only for agents.

Outstanding questions

How can you trial a system when the software to make it work is unavailable?

How can you get reliable results from a trial when the smallest businesses are excluded because there are no free products for them to use?

Here is a chicken and egg question: Why don't self employed people keep their records electronically? Because there are no free apps for them to use.

Why doesn't the software industry develop free apps for the self employed? Because no-one uses them so there's no way of monetising them.

Why doesn't HMRC put together a stripped down app that does the basics free of charge? That, to me, is still the sixty-four thousand dollar question.

About Wendy Bradley

Wendy Bradley is a retired tax inspector, now working as a freelance journalist.

Replies

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17th May 2018 18:13

Thank you. This sums up a lot of our thinking. We have waited 28 days for help from HMRC technical services. Our experience confirms our suspicion that MTD is a flawed project which will be forced through to save the faces of those who cannot accept the blindingly obvious - people will migrate to a digital format when it is to their advantage. HMRC have not made any positive case for MTD and as a result the programme will never be willingly accepted by the majority.

Thanks (11)
to Open all hours
18th May 2018 16:03

I've said all along that MTD should have been introduced as a customer service initiative - build something that works and is easier to use, and it will BE used. But sell it to the Treasury as a way of extracting millions out of small firms who are allegedly squirrelling away money? Bad mistake.

Thanks (9)
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21st May 2018 21:07

Essentially HMRC is run by a bunch of losers who would be stumped to run anything in a brewery. My main hope is that the MTD embarrassment will get this fact a much wider exposure, so finally politicians will have an incentive to sort out the HMRC numpties.

Thanks (8)
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25th May 2018 11:12

MTD is well on its way to becoming on of those projects that were obsolete before implementation, nearly happened or were not fully implemented:
Bristol Brabazon
TSR2
Advanced Passenger Train
London Ringways motorway box
NHS national medical record database

The income tax pilot will sputter along but the project will be superseded.
Don't waste your time.

Thanks (5)
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25th May 2018 11:24

What we know so far:

It will be a complete mess.

Most self employed people have zero interest in recording everything electronically and even less interest in learning what category expenses are supposed to go into. It's why they employ us in the first place.

Users see no benefit in switching to the system.

Software isn't there for them to easily use.

Agents are being shunted aside by HMRC in their rush to bring out this failure of a system.

Will HMRC force us to switch software suppliers if my preferred supplier doesn't link up with MTD?

What will people do who haven't got a clue what an API is and could care less?

How will HMRC enforce it when people will just not comply?

Thanks (8)
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25th May 2018 11:28

At Accountex I picked up:

1. There are only 4 software packages approved. What is not approved(yet) SAP Sage Xero QuickBooks....

2. Big companies collate their 600 subs VAT into a spreadsheet and send in the result of the consolidation. Its impossible to be done any other way. There will therefore be an API you can add to your spreadsheet to submit the vat return.

3. So if you have clients using spreadsheets it seems to me they dont need to buy software you pop an API on it rather than just manually entering it into HMRC.

4. Although they said there is only one API available and HMRC wont publish this alone as then it will become market leader and they need some competition... Because this one costs £10 per vat return to use. Now do the sums ... just impagine if you got £10 off everyone sending vat returns in forever.... Rodney this time next year we will be millionaires....

So all I need now is an API.... But when will this come out? What if it gets to December and January and there are none, what do I tell the clients. What if it gets to April and there are still none....There will be some FTSE companies without any paddles and HMRC with no vat returns sent in.

Thanks (4)
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By DMBAcc
25th May 2018 11:45

I did say in an early conversation that I only have one VATable business I currently complete the returns for. Their current system works fine but for various reasons not least MTD I have moved them onto Clearbooks. This has the advantage that I can correct entries remotely (yes that's part of the contract I have with them). Clearbooks assures me I will be able to submit a quarterly VAT return when needed next year June 2019. Anyone else had the "assurance" that all will work well next June? From what I understood HMRC don't still have software ready to take VAT returns electronically or am I wrongly informed. Does anyone KNOW where HMRC are at presently?

Thanks (2)
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By tedbuck
to DMBAcc
25th May 2018 11:59

Well you could write to HMRC and ask where they are with this. On the basis that it takes them 3 months to respond to a letter about something they do know about (or are supposed to know about) you should get an early response in about 12 months or so which will say "We have received your enquiry and we will respond as soon as our IT department return from their training session"
Or, you could get an honest reply saying "Sorry, we haven't a clue!"

Thanks (2)
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By djtax
to DMBAcc
29th May 2018 16:51

..er .. the answer to where HMRC are at present is presumably Cloud Cuckoo Land!

Thanks (0)
25th May 2018 13:35

'it is a good thing that HMRC will be trialing the system before MTD goes live'

It is more than a good idea, it as something that HMRC accepted from Lord Carter's report (see http://webarchive.nationalarchives.gov.uk/20060719043117/http:/www.hmrc....). The report mentions various timescales including a 12 month trial. HMRC accepted the report in full and as far as I know have never since said they are no longer applying Carter's recommendations. in which case, HMRC have committed to a 12 month trial, but the software is not fully functional so HMRC will have to delay MTD until 12 months after the pilot is fully operational.

Thanks (3)
25th May 2018 13:38

'A quick poll of the webinar attendees checked to what extent we already kept our records digitally, and the results were:
•Totally: 25%
•Mostly: 34%
•Partly: 26%
•Not at all: 15%

From a self-selected group at a webinar about joining a trial of a digital records system, this was not an impressive percentage.'

I listened to the webinar on 10/05/18 when the figures were identical. I have kept a screen shot to prove it. How strange. Something odd going in here?

I agree with Wendy's conclusion. Factor in the digitally excluded and the digitally less able and the level of digital readiness will be much lower.

Thanks (2)
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to kevinringer
27th May 2018 10:50

Perhaps the same people listened on 10/5/18 and just, maybe just, thought there might be an update to the MTD is wonderful and will cost next to nothing and let you make less errors and tell you what your tax bill will be scenario.

Thanks (0)
25th May 2018 13:40

'Why doesn't HMRC put together a stripped down app that does the basics free of charge?'
I feel HMRC cannot force a declaration system on taxpayers without supplying the means of doing it. It is like HMRC telling taxpayers to complete a Tax Return without sending them a blank one to complete. But I also know the quality of HMRC software. Anything HMRC produced would be as user-unfriendly as PAYE Basic Tools.

Thanks (3)
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26th May 2018 10:13

And we all know the response from the cockpit pilot will be a belly up landing

Thanks (1)
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By Peter-S
29th May 2018 11:41

"The minimum information required is: the amount, date and category of each entry"

So basically this is the information that I glean from the receipts that many small businesses provide annually. How do I convince people that giving me the receipt with this info is 'poor' record keeping but if they photograph it on their mobile it becomes 'good' record keeping.
There's no fundamental difference except for one you need a 'digital device' and a little effort and the other you just need a box file and no effort. Until HMRC can show how their version is better then the really small business is not going to embrace MTD and I'm going to struggle to sell the idea for them.

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to Peter-S
29th May 2018 12:00

Unless you're a brilliant salesperson then in order to sell the idea to your client you would have to believe in MTD yourself. Does any Accountant believe in it's authenticity? I doubt it.
Why don't HMRC just come out and say "we want to be able to know every transaction your business is making and we are developing software to enable us to do it" instead of trying to con us, which is making them look like idiots.

Thanks (1)
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29th May 2018 12:34

I totally agree the last point, except for the word "look" in the last sentence. See my previous points, only when you view HMRC top brass as a bunch of over-promoted clueless numpties who would not last 3 months in any well-run FTSE business, can you make sense of what they do.

Thanks (1)