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MTD income tax: Big bang start in April 2023

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It appears that all self-employed taxpayers will have to start reporting under MTD for income tax (MTD ITSA) from 6 April 2023, which is an acceleration of up to 12 months for mandation into MTD for many unincorporated businesses.

6th Aug 2021
Tax Writer Taxwriter Ltd
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The announcement of the abolition of basis periods from 6 April 2023 has created a good deal of confusion around when exactly unincorporated businesses would be mandated into MTD for income tax (MTD ITSA), and thus when they will have to start filing quarterly submissions using MTD compatible software.

As raised on AccountingWEB’s MTD Bootcamp webinar, many businesses and accountants were planning for the transition to MTD ITSA based on the draft regulations (found in this policy update), as explained in MTD webinars run by HMRC and others.

The basic rule (set out in draft reg 4) is that a taxpayer must join MTD ITSA from the beginning of the accounting period that starts on or after 6 April 2023. Thus, if the accounting period starts on 1 April, the business would be mandated into MTD from 1 April 2024, being the first accounting period that starts on or after 6 April 2023.

Basis period change

The draft provisions that will bring into effect the shift to the tax year basis of assessment, treat an accounting period that ends on any of 31 March, 1 ,2, 3 or 4 April, as if it ended on 5 April, with effect from 2023/24. Any income and expenses arising in the few days after the end of the accounting period and before the end of the tax year will be treated as if they arise in the next tax year.

In the transition year (2022/23) taxpayers will have to report all the expenses and income of the trade that arise between the end of the accounting period that was assessed in 2021/22 and 5 April 2023 (or 31 March if that is the accounting period end). The following basis period for tax purposes to be assessed in 2023/24 will be deemed to start on 6 April 2023.  

Example

When Peter started his self-employed business he made up his accounts to the tax year: 5 April. As his business grew, he engaged an accountant: Bill, who advised him to change his accounting period to end on 31 March. Bill said it would be easier to track income and expenses to the month end, and this change would also give Peter an extra year to prepare for MTD filing. 

Peter was expecting to have to start reporting under MTD ITSA from 1 April 2024, being the first accounting period starting on or after 6 April 2023.

Under the new tax year basis Peter will have to report his business income and expenses in the following years: 

  • 2022/23: 1 April 2022 to 31 March 2023
  • 2023/24: 1 April 2023 to 31 March 2024 – tax year basis.

Peter will be required to report under MTD from the quarter starting on 6 April 2023, as the period 1 April 2023 to 31 March 2024 is deemed to be: 6 April 2023 to 5 April 2024 for tax purposes. This brings forward his start date for MTD ITSA by nearly 12 months.

The CIOT agrees this is a result from the switch to the tax year basis. Pete Miller, chair of the CIOT’s Owner Managed Business Committee, said: “Formally deeming 31 March as equivalent to 5 April is, we believe, also likely to mean that unincorporated businesses will need to follow the rules for MTD ITSA from their next accounting period starting on or after 1 April 2023, rather than 6 April 2023.”

Updated MTD regulations?

The MTD income tax regulations will have to be amended to reflect the change to the tax year basis.

Delay MTD?

The CIOT is concerned about the very tight time frame in which the switch to the tax year basis will take place.

Pete Miller commented: We would have preferred the start date for MTD ITSA to be deferred in order to accommodate a more thorough consultation process and give businesses more time to absorb the impact of the change in the basis period rules before they transition into the MTD regime.”

The ATT is more direct in its recommendation to delay the change in basis period as the pace of change may overwhelm many businesses.

Jon Stride, co-chair of ATT’s Technical Steering Group, said: “Pushing back both the start of MTD for Income Tax and this new proposal would give time to ensure that the basis period change works as smoothly as possible – and it would also allow a full 12-week consultation period.”

Discussions

We understand that discussions are ongoing between the professional accounting/tax bodies and HMRC to resolve this issue.

In response to our questions HMRC has provided this revised statement: “The government announced its intention to explore basis period reform as part of the tax administration framework review and in its consultation on basis period reform published on 21 July. Over the last few months we have been informally consulting with the tax community.

We invite further views through responses to the consultation, including on the reform’s interaction with other aspects of the tax system like Making Tax Digital. The consultation closes on 31 August and the Government will then consider all of the responses in full and will publish its conclusions in due course."

Separately we received confirmation from HMRC that mandation date for MTD ITSA is 2023.

If 6 April 2023 is to be the big bang start date for all self-employed taxpayers to commence reporting under MTD, this will have huge implications for all accountants who act for small businesses, and for tax software providers. 

Feedback

If you have views on how or whether the proposed change to basis periods should be introduced, please respond to the consultation on this issue to: [email protected] or post your comments below, and AccountingWEB will respond on behalf of the community.

The consultation closes on 31 August 2021.

For more practical tips on getting clients ready for MTD, join John Stokdyk and a panel of accountants for the next installment of the MTD Bootcamp on Wednesday 11 August.  

Replies (119)

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Replying to AdamMurphy:
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By GHarr497688
09th Aug 2021 16:26

You mean [***] the wonder dog lol

[***] · [***] (name), a feminine given name or a nickname, often for Frances

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Replying to jondavies:
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By tedbuck
09th Aug 2021 15:31

Well I don't know about your clients but a good 40 - 50% of mine wouldn't manage to get the simplest digital system to function correctly. One client on the most talked of new wonder system which he started before he came to us managed to get a VAT underpayment of £1500 in the space of a year on a turnover of about £90K. Old story - GIGO.
Notable also that HMRC are able to make the same sort of errors processing paper returns which couldn't be submitted online
The other old story, bookkeeping isn't a valued service in most cases so Joe Public can't see the need to put too much effort into it, leave it to the accountant - but with all the hats being hung up one has to wonder who will be there to do it and whether it will be worth their while.
I should think 'Back to Cash' will be the order of the day as HMRC can't see the point of chasing little people as it isn't cost effective. But the little people know better - cash = no tax = no nic = able to claim benefits = let someone else support me. But HMRC just don't care. They might have to get their hands dirty so better to sit at home on WFH terms having a relaxing nap.
'Disgusted of Tunbridge Wells!'

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Replying to jondavies:
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By tedbuck
09th Aug 2021 15:32

Well I don't know about your clients but a good 40 - 50% of mine wouldn't manage to get the simplest digital system to function correctly. One client on the most talked of new wonder system which he started before he came to us managed to get a VAT underpayment of £1500 in the space of a year on a turnover of about £90K. Old story - GIGO.
Notable also that HMRC are able to make the same sort of errors processing paper returns which couldn't be submitted online
The other old story, bookkeeping isn't a valued service in most cases so Joe Public can't see the need to put too much effort into it, leave it to the accountant - but with all the hats being hung up one has to wonder who will be there to do it and whether it will be worth their while.
I should think 'Back to Cash' will be the order of the day as HMRC can't see the point of chasing little people as it isn't cost effective. But the little people know better - cash = no tax = no nic = able to claim benefits = let someone else support me. But HMRC just don't care. They might have to get their hands dirty so better to sit at home on WFH terms having a relaxing nap.
'Disgusted of Tunbridge Wells!'

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Replying to tedbuck:
Morph
By kevinringer
09th Aug 2021 17:20

tedbuck wrote:

Old story - GIGO.


Given the rubbish I have seen submitted through MTD VAT, as long as it is digital garbage, HMRC seem quite happy. So maybe GIDGO is more correct (Garbage In, Digital Garbage Out).
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7om
By Tom 7000
09th Aug 2021 11:11

So what happens if your year end is say September
and in 23/24 your year is to 30/9/23?

I am not sure what everyone's groaning about. There's going to be a heap of extra work so all you have to do is charge accordingly, hire more staff and shrug your shoulders at the clients and say what can we do.... as you increase the fees...and they can't go anywhere else because we all will.

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Replying to Tom 7000:
RLI
By lionofludesch
09th Aug 2021 11:31

Tom 7000 wrote:

So what happens if your year end is say September
and in 23/24 your year is to 30/9/23?

I am not sure what everyone's groaning about. There's going to be a heap of extra work so all you have to do is charge accordingly, hire more staff and shrug your shoulders at the clients and say what can we do.... as you increase the fees...and they can't go anywhere else because we all will.

I interpret it as you being mandated from April 2023 whenever your year end is.

Which is a change from what was originally said and a change from MTDfVAT.

What slightly confuses the issue is that HMRC (apparently) said "from 2023". So were they just referring to the March 31st dodge ? Would a February 28th year end mean you need only start from March 1st 2024 ? It's still not crystal clear.

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Replying to Tom 7000:
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By jondavies
09th Aug 2021 12:46

I think that question was raised and answered in last weeks AccountingWeb MTD webinar but HMRC's consultation document mentions both apportionment and mandatory changes to financial year ends as possible options.

If this were my client I would advise them to consider changing accounting year and having a "short year" of Oct 2021 to March 2022 to bring them in line with MTD.
Just my opinion though.

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Replying to Tom 7000:
RLI
By lionofludesch
09th Aug 2021 13:34

Tom 7000 wrote:
.... hire more staff .....

I'm not sure there are enough about.

That might be the problem.

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Replying to lionofludesch:
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By Paul Crowley
09th Aug 2021 14:58

And only needed 24 hours a day for 3 weeks each quarter

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By chronus
09th Aug 2021 11:21

When MTD was first announced back in 2015, no one had even an inkling about COVID-19. So much has has changed since then and changing now towards an unknown and unpredictable future. To now
enforce such a burden as full MTD on the business community is foolhardy to say the least.

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By Ian McTernan CTA
09th Aug 2021 11:45

It's a shame our Institutes just bend over and accept these things then tinker around the edges (which HMRC then ignore anyway).

MTD for anyone over 10k turnover is a waste of everyone's time and just an excuse for HMRC to impose lots more automatic penalties.

Maybe instead of bending over every time HMRC say so, they could say enough is enough, sort out the tax system so that one bit talks to the other, and sort out the multiple reference numbers each client has and sort out being able to pay into one account for all taxes (like Ireland has had since forever) and maybe after that we might be willing to look at bringing in some sort of quarterly reporting system designed with the help of the people who will have to deal with it, ie us accountants.

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Replying to Ian McTernan CTA:
rebecca cave
By Rebecca Cave
20th Aug 2021 11:47

The institutes are certainly NOT "bending over" . Look out for article coming soon reporting the joint representations made by five bodies to HM Treasury on this issue.

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Replying to Rebecca Cave:
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By North East Accountant
20th Aug 2021 12:58

I will look out for this but do leopards change their spots?

ICAEW and all the other Institute's need to declare all out war against HMRC, fighting tooth and nail for the public and their members interests.

No chance of this happening, far to easy for HMRC to just tweak a bit and carry on regardless.

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By sammerchant
09th Aug 2021 11:59

HMRC is quick to penalise taxpayers who are slow to respond or make a mistake. When will the same conditions apply to HMRC?

Wouldn't it be something if we set up a petition on the Gov.uk website asking that HMRC be subject to the same rules that they set for us!

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Replying to sammerchant:
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By johnjenkins
09th Aug 2021 12:04

HMRC, although run by the treasury, is supposed to be unbiased and independent. Wow how things have changed.

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Replying to johnjenkins:
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By sammerchant
09th Aug 2021 13:16

They also revised The Taxpayers' Charter by stealth. I had downloaded the older version and there is a marked difference. It is frustrating when you know we can't do anything and HMRC are immune.

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Replying to johnjenkins:
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By tedbuck
16th Aug 2021 10:42

For those of us old enough to remember HMRC or the Inland Revenue as it then was was an organisation filled with helpful people trying to do a job properly. (There were exceptions but they were few). You could speak to them by name, meet them personally to discuss problems and deal with them as human beings in enquiry cases. As a system it worked well. I knew the names of most of the local HMITs as I had dealings with them. They had local knowledge so could look at businesses with a bit of local emphasis.
The only name I now know is Jim Harra. The only office I know is a Postcode. The only telephone number I now have is up to an hour's wait before I give up. I haven't seen an enquiry case for about 4 years and the last one was a training exercise for a new Inspector. Letters are unanswered and I am getting back to thinking that I should charge HMRC for undue delays costing the client money and our time in trying to get an answer. None of this suggests that digitalising tax has helped matters - quite the reverse in fact. It worked before. It doesn't work now.
HMRC are so mentally attached to computers that they think they are the answer to all their problems. They are too simple minded to actually stop and think that the guy or gal who pockets the cash now will do the same with a computer. Why would he not? If you have a computer record it must be right say HMRC. How simple minded can they possibly be?
If I were in HMIT I should be sitting at my computer with a list of low earners wondering how their post code could be afforded on earnings of £10k a year. The system is rubbish and will be more so if the people at HMRC actually believe that MTD for ITSA will make things better. Still I suppose it might do good for the cash merchants as they will be believed because it's digital!

Even more disgusted of Tunbridge Wells.

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Replying to tedbuck:
7om
By Tom 7000
16th Aug 2021 11:00

....If I were in HMIT I should be sitting at my computer with a list of low earners wondering how their post code could be afforded on earnings of £10k a year....

What makes you think they dont?

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Replying to Tom 7000:
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By Winnie Wiggleroom
16th Aug 2021 11:07

Tom 7000 wrote:

....If I were in HMIT I should be sitting at my computer with a list of low earners wondering how their post code could be afforded on earnings of £10k a year....

What makes you think they dont?

Finding it difficult to remember the last tax enquiry we had, a few years ago now, going back probably 10 years plus, we used to get a couple a year on average maybe more

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Replying to Tom 7000:
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By tedbuck
16th Aug 2021 12:27

Because if they did they would get off their butts and look at the people in those circumstances which they don't to my knowledge. It doesn't matter that those people are probably also claiming benefits which Joe Public has to pay for.

I cannot even remember the last time I saw a 'small' enquiry case but a conversation with an HMRC bloke a few years back said that they didn't bother because it wasn't cost effective. Might be if they hit hard and publicised it! Especially if they got back all the benefits wrongly claimed.

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Replying to tedbuck:
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By johnjenkins
16th Aug 2021 11:08

It's gone back in time for us and our clients, but has it actually moved forward for HMRC? Certainly they see it as it has.

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Replying to tedbuck:
Morph
By kevinringer
16th Aug 2021 11:48

tedbuck wrote:
If I were in HMIT I should be sitting at my computer with a list of low earners wondering how their post code could be afforded on earnings of £10k a year.

This won't be addressed by MTD or change of basis period. HMRC already have a mechanism for dealing with this: SA enquiry. But how many enquiries do we get. I've not had a full enquiry for about 15 years. Having said that, I do have plenty of clients with profits of less than £10k who survive because they have other income and their self-employment is just a part-time activity, or they've got a pension and their self-employment is more akin to an interest or hobby.
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Replying to tedbuck:
Tornado
By Tornado
16th Aug 2021 12:20

"If I were in HMIT I should be sitting at my computer with a list of low earners wondering how their post code could be afforded on earnings of £10k a year"

I suspect the reality is that some sort of AI is finding hundreds of thousands of anomalies in masses of data submitted,but who is going to deal with any of them. The Government is always fire-fighting for one reason or another and all available HMRC staff are called to man the pumps and have no time for anything else. Also, you cannot really do a proper investigation (digital or not) from your Kitchen Table (where most HMRC staff still seem to be) o no one wants to do this gutsy work, even when it becomes necessary.

By continually side-lining Accountants and other professionals and trying to do it all themselves, it is inevitable that H M Government will descend into a state of depression and lethargy when it comes to taxes and the economy and will need a good few sessions of therapy before they realise that they need our help.

Apparently 4 million businesses (Trading and Landlords) will require to operate MTD for ITSA and I find it difficult to stop smirking at this impossible task they have set themselves.

All I can say is ...... Good Luck HMRC ...... after all it is your problem and not ours.

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Replying to tedbuck:
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By sammerchant
18th Aug 2021 10:52

I too remember it was as you say. I knew all the local Inspectors by name, and their specialties, and could ring a particular person to seek advice or clarification on matters.

What changed, of course, is that the staff within HMRC no longer had 'ownership' of a particular taxpayer or case, with the result that we see today. It takes them too long to familiarise themselves with the case/query with the result that they go off at a tangent and one has to start all over again.

I believe the blame for this should rest with Gordon Brown and his advisors.

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By chronus
09th Aug 2021 12:10

I wonder whether any of the readers may recall the 1974 three day week and the power cuts. I was a lowly articled clerk then, working in Dickensian offices, ticking and vouching all day and night on ledgers, day books, invoices and vouchers in candle light, not even any such gizzmo as a electronic calculator. let alone computers, MSDOS, iPADS and all manner of electrical wizardry now at our finger tips.
So, what if no electricity, what back to the abacus ? What no electronic money, no crypto currency ? Here is the link to the events in history:https://en.wikipedia.org/wiki/Three-Day_Week
Advice to clients and colleagues in preparing for MTD is to invest in a stand by diesel fumes belching stand by gen set.

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By rib
09th Aug 2021 12:18

I am less bothered about the introductory date than the low level of turnover i.e £10000 per annum above which all businesses and landlords must register. Many tiny and part time businesses are thus caught and these often tend to be the ones that still use paper and have little digital investment. Obviously it is difficult to know where to pitch the cut off point but for example £25000 might be a better threshold for all concerned.

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Replying to rib:
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By Paul Crowley
09th Aug 2021 12:37

£85,000 is the HMRC threshold for three line accounts
All they want until MTD ITSA is a thee line account
So logically that should bethe threshold
If not HMRC need to justify why the three line kept getting increased

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Replying to rib:
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By bluebaron
09th Aug 2021 13:18

Exactly. The turnover threshold is ridiculous. Imagine a client with sales of say £12,000 a year having to faff around with this, and enduring the associated costs of compliance. Crazy. I certainly think at least £20,000 would be a better threshold.

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Replying to rib:
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By johnjenkins
09th Aug 2021 14:04

The only thing HMRC might do is have a £50k starting point and see where that goes before reducing any more.

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Replying to johnjenkins:
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By kdbr
09th Aug 2021 14:23

Or better still keep the non-VAT out of it completely. £85k starting point for MTD is the only sensible option; and the one which will see existing clients remain with existing advisers with existing fee levels. And no extra bungs to the software industry.

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Replying to kdbr:
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By johnjenkins
10th Aug 2021 11:08

I agree but unfortunately HMRC don't.

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Chris M
By mr. mischief
09th Aug 2021 13:13

This is the reply today to a routine CIS refund query which I first wrote to HMRC about on 19 April 2021:

"Thank you for using our Agent Account Manager Issue Resolution service.

I have progress chased the issue today as I am yet to receive an update from the department.

I have placed the issue on review for 23/08/2021 and hope to provide a further update then, either issue resolution or that I am further progress chasing the issue. "

Rishi Sunak, if you are reading this. Until HMRC can be arssed to properly resource the existing system, and deal with at least 95% of these sorts of issues within 1 month, NO MORE MESSING UP THE SYSTEM.

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By GHarr497688
09th Aug 2021 13:49

Let the people at HMRC get on with it and when it's all gone wrong I will sit laughing my socks off. HMRC live in cloud cuckoo land and this will come back to bite them. MTD for Vat was very different and I am still convinced many taxpayers and accountants will just be keying the same 9 boxes into bridging software. Worst thing I've seen HMRC do in 40 years. The main point is that they expect the Accountants to deliver an unworkable tax system and thats the main flaw.

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Replying to GHarr497688:
By ireallyshouldknowthisbut
09th Aug 2021 13:53

GHarr497688 wrote:

I am still convinced many taxpayers and accountants will just be keying the same 9 boxes into bridging software.

Just as they will be for the new system. its the only workable solution for a huge swathe of clients. MTU.

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By North East Accountant
09th Aug 2021 13:55

I'm against MTD for one reason and one reason only..... my yardstick...Is this in the best interests of my clients? Err...no.

But it's decided by HMRC so how best to tackle it is the key....too early to say as we don't know the rules.

I don't care what the Government throws at us, we'll handle it cos that's what we do, but the way they are going about MTD is crackers.

Auto Enrolment was phased in over 5 years with everyone getting a staging date....this is 100 times bigger and HMRC want 5m+ to go through the MTD gate all in one go in April 2023.

There's going to be blood, sweat and tears..... and lots of them but look on the bright side .....in 2026 MTDfCT will be a breeze compared to MTDfIT.

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Morph
By kevinringer
09th Aug 2021 13:59

MTD = Making TRANSACTIONS Digital. And that's where the problem lies. The amount of work required to make many of my clients record digital transactions (accurately) will be considerably more than is currently required to prepare the accounts. I have run trials with a few clients and the amount of hand-holding doesn't diminish as time goes on: I am constantly repeating the same instructions time after time. Think about a landlord receiving £1000 a year with a buy-to-let mortgage. She currently supplies me with an annual interest certificate. I prepare the figures: 12 x £1000 = £12,000 and put that in the SA TR, and the interest figure. Done. Under MTD we will have to digitise those transactions and make quarterly submissions. And where are we going to get quarterly interest certificates from? Somehow HMRC thinks this is going to increase accuracy, but having to make 5 returns a year and which 4 will have estimated interest figures is only going to increase problems. It works well at the moment. It won't under MTD. If it ain't broken .....

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Replying to kevinringer:
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By Ian McTernan CTA
10th Aug 2021 23:16

I'm worried you made no mention of any other expenses...

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Tornado
By Tornado
09th Aug 2021 14:25

HMRC NOT FIT FOR PURPOSE

AWEB posts are full of examples of HMRC incompetence and in my own experience, there are many instances where they are not up to the job, one of the worst being that they will not reply to letters and generally make themselves unavailable to deal with the more serious matters.

Basic services are very poor and judging by my experience today when a client has received a notice to say that a 2021 Tax Return was not required (after it was submitted) and then a letter six days later to request the submission of a 2021 Return, the HMRC database is clearly breaking down and I am beginning to wonder just how accurate their information is. As we all know, garbage into a computer system means garbage out and it is more difficult to correct the longer it goes on.

This is an organisation that is supposed to be Digitally aware but cannot get simple matters right. The Brain of HMRC seems to be plodding on regardless while its feet are covered in blisters and barely functional, probably because HMRC have no sense of pain and so completely ignore the real situation.

I think we are fully justified is doubting the ability of HMRC to deliver any of its fancy ideas and whilst (as suggested in an earlier post) a petition is not likely to succeed, formal questions raised about the competency of HMRC might have some effect.

In the meantime, I remain reactive and not proactive when it comes to HMRC as I know this will give me less hassle in the long run.

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By Mr J Andrews
09th Aug 2021 14:29

I see one contributor advises that we stop whinging as we've known long enough that MTD is coming.
Would the same contrbutor offer similar advice if the Govt. / HMRC intoduced a penny income tax on all left handed taxpayers ?

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Morph
By kevinringer
09th Aug 2021 14:40

HMRC wants to be the most digitally advanced tax authority in the world. MTD has nothing to do with that aspiration. MTD doesn't even make tax digital: I've been submitting 100% digital tax returns since 1998 though most of my clients have manual records. No, to achieve the goal of Making TAX Digital, and for HMRC to become the most digitally advanced tax authority in the world, it is necessary for HMRC themselves to change. Why is it that we still have to submit a paper form for a partner joining a partnership? Surely we should be able to log into our GOV.UK account, register online and get a UTR at the end of the process. If there's a problem, we can't even email HMRC. We have to either phone or write. Which means the aspiring most digitally advanced tax authority in the world will only communicate using Victorian technology. HMRC don't even have a secure message portal.

HMRC didn't even think through MTD VAT. How many of have had repayments delayed because there's out of character for that client? This usually happens because the client has bought business premises on which VAT has been charged. When HMRC created MTD VAT HMRC should have created the facility for VAT return 'white space' for agents to supply explanations, and the ability to make attachments: we could attach the invoice for the property purchase. HMRC could then review and issue the refund, whereas currently HMRC has to contact us (or the client) for more information which takes up HMRC time, our time, and delays the refund.

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By DMBAcc
09th Aug 2021 15:25

I have just sent this to [email protected]

Dear Sirs,

I worked in the public sector, including the Civil Service, for some 27 years. Since 2009 I have been running a small successful accountancy business.

I have been somewhat troubled by the sheer volume of change you appear to be putting on small businesses in the near future. The abolition of basis periods being the latest. A step too far methinks.

I have been concerned that these very businesses were neither consulted nor represented when you first announced the MTD policies when George Osborne was chancellor.

It appears no one advised him of the sheer chaos this would bring to the small business world. Further it is clear from speaking to my own MP Scott Mann that he is totally unaware of the trouble small business (especially small farmers) in North Cornwall are going to have.

I did respond to a 70 page questionnaire pointing out these problems and begging that civil servants were sent out to see for themselves just how small businesses function and how the tax system currently works well for them because there is no “middle man” in the form of a software accountancy company.

I asked, too, how you expect a hotelier or small B&B in Cornwall to complete a quarterly return in August when they are rushed off their feet just trying to earn a crust of bread. Again, sheer silence from HM Treasury and from local MPs.

No one but no one is at all interested that this system will blow up in your faces leading to thousands if not hundreds of thousands of fines being sent out. Then, and only then, will politicians sit up and ask why this system wasn’t made voluntary or why small business were not represented and consulted.

I can only deduce that it is HM Treasury’s policy to crush small businesses so that large corporations can take over every part of business from picking strawberries to running all holiday accommodation here in Cornwall.

I would love to sit with one of your advisors and just run them through a typical client of mine so they can see that not only are there NO BENEFITS to most small businesses but there will be HUGE COSTS in time and money to them.

I would advise that you formally write to every business in the country because there are many who do not use accountants and won’t even understand what you want them to do. You will HAVE to advise them if you want this to have any hope of working and I suggest you offer free software for them to use. Of course that won’t be of any use to those without computers. Many of my clients rely on me to put their figures into the HMRC current Self Assessment system - they wouldn’t have a clue how to do this otherwise.

It is probable that things will go wrong and software companies will say it is the fault of HMRC and in turn HMRC will tell tax payers to contact their software provider. Whichever, I can only see the tax collected plummeting and a lot of egg on politicians faces.

As much as I hope, I am not expecting a response from you nor from Scott Mann whom I have asked many times to take up this cause.

I do wish you the very best of luck. You will need it, since many accountants such as myself will not be able to support the many small business clients we have. These small business owners will be utterly bewildered having no one to help them. No MP will be interested and as we know already HMRC have neither the interest nor the resources to assist small businesses.

It won’t be physically possible for me to support 60 clients in just 22 days per quarter to submit quarterly returns. That’s 3 per day without any time to do any other work that earns me money. Maybe you didn’t realise that you have set accountants like me a physically impossible task.

Danny Batten - Accountant

D. M. Batten BSc. FCPFA DMS

09 August 2021

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Replying to DMBAcc:
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By Winnie Wiggleroom
09th Aug 2021 15:13

DMBAcc wrote:

I have just sent this to I would advise that you formally write to every business in the country because there are many who do not use accountants and won’t even understand what you want them to do. You will HAVE to advise them if you want this to have any hope of working and I suggest you offer free software for them to use.

09 August 2021

very valid point - how many clients do you know that were informed by HMRC of MTD for VAT? we had a client with 8 different VAT registered entities, didn't get one letter from HMRC, all we got was "whats MTD?'

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By chronus
09th Aug 2021 16:40

The whole sad and sorry tale begins and ends with the "TAX GAP".
"HMRC defines the tax gap as “the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid”."
A piece of fiction authored by HMRC itself. Here is the 2020 edition.
https://www.nao.org.uk/wp-content/uploads/2020/07/Tackling-the-tax-gap-S...
What I find particularly distaste full is that we, accountants are accused of being creative. Surely that title rightly belongs to HMRC. I prefer the adjective necessary evil.

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By tedbuck
10th Aug 2021 10:53

It is interesting to see that the response to MTD ITSA is pretty much unanimous - It is a grotesque mistake which will waste thousands of otherwise productive hours in supplying HMRC with the same information they already receive.

It is also noticeable that the general opinion of HMRC's ability to do what they should efficiently is that they can't and don't.

I have to say that I got so fed up with the situation that I wrote to Rishi Sunak to complain and also to point out that the general public were by and large totally unaware of all this and that when the proverbial hits the fan the Government will kiss goodbye to being in power for the next 20 years by which time the country would be ruined anyway. No response as yet.

I did however wonder whether it was worth setting the newspapers on the case - you can just imagine the headlines in the Daily Mail.

Our accounting bodies are too busy creeping around the Treasury to say anything and are mostly divorced from the reality of small business anyway sitting in their Ivory Towers in London so no support there I am afraid.

Sad but an onslaught to The Chancellor from ACCWEB and the Daily Mail may be the best way forward in a world where little people don't seem to matter any longer. At least the Daily Mail would raise public awareness of the situation which seems to be non-existent at present.

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Replying to tedbuck:
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By johnjenkins
10th Aug 2021 11:18

I've written to Boris and Rishi with very similar points as yourself. Yes I did get a reply saying basically that this Government keeps everything under review on a constant basis. We really should ask Nigel to set up an abolish MTD, take HMRC out of the employment status equation and reform (not tinker with) our tax system party. He might not win but I'm sure he would make the Government sit up and take notice.

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Replying to johnjenkins:
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By tedbuck
10th Aug 2021 14:23

I like that idea - Nigel does seem to catch the attention and concentrate the otherwise vacant minds of the politicians

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Replying to tedbuck:
Morph
By kevinringer
11th Aug 2021 13:41

Another vote for Nigel. It would be good to get him to do something useful for once.

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Replying to tedbuck:
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By chronus
10th Aug 2021 11:18

Very good idea to get the press involved with us providing the grenades for them.
Failing that all that we will get from Rishi will be :

https://youtu.be/A4DQPLWAzeY?t=18

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Replying to tedbuck:
David Ross
By davidross
11th Aug 2021 12:51

I must disagree that this is a 'mistake'.

HMRC and the Government are having the 'cheek' to insist that traders keep proper business records! Many respondents on this thread are in effect seeking to shield those who don't want to do that. I am done with sympathy for those who think that business records are some sort of joke and to be ignored.

Whilst I am all for the British sense of entrepreneurship and the freedom to start up (without needing the permission of the Mayor, and being able to start a barber's shop when there is already one in the same street), we could still take lessons from other Countries where they do take being in business seriously.

The down side of such slackness is that it hurts others (when a business does not pay) and hurts the proprietors (when they don't make a decent living, get into trouble with their taxes, etc)

............. and now that all you have to do is pay by card and let the Bank and Software do the book-keeping, what is the big problem?

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Replying to davidross:
RLI
By lionofludesch
11th Aug 2021 13:24

davidross wrote:

I must disagree that this is a 'mistake'.

HMRC and the Government are having the 'cheek' to insist that traders keep proper business records! Many respondents on this thread are in effect seeking to shield those who don't want to do that. I am done with sympathy for those who think that business records are some sort of joke and to be ignored.

Whilst I am all for the British sense of entrepreneurship and the freedom to start up (without needing the permission of the Mayor, and being able to start a barber's shop when there is already one in the same street), we could still take lessons from other Countries where they do take being in business seriously.

The down side of such slackness is that it hurts others (when a business does not pay) and hurts the proprietors (when they don't make a decent living, get into trouble with their taxes, etc)

............. and now that all you have to do is pay by card and let the Bank and Software do the book-keeping, what is the big problem?

Are you saying that proper records can only be on computer software?

Have a chat with a few convicted subpostmasters about that.

Retail folk won't get ALL their customers to pay by card. Yes, it's moving that way bit I still see a lot of cash changing hands. We're still fifty years from abandoning cash.

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