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MTD delays

MTD ITSA delay: A blessing in disguise?


Today's government announcement of yet another MTD ITSA delay has left some AccountingWEB readers doubting the validity of the entire scheme. Tallula Brogan summarises the reaction to the postponement on Any Answers and in the wider accounting profession. 

23rd Sep 2021
Community Assistant AccountingWEB
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The accounting profession got more than they ordered this lunchtime with the sudden arrival of some news from Treasury - the government has delayed the start of MTD for income tax self assessment to 6 April 2024.

Constant to-ing and fro-ing

This announcement is another in a string of delays, with the initial start date spanning back to April 2018. The constant to-ing and fro-ing has had an effect on client communications, with a number of accountants struggling to continue repeating themselves:

“I must look like a right twonk. Every year this gets delayed. Been informing clients for years,” said AccountingWEB member SXGuy of the news on Any Answers.

“After the initial VAT MTD got delayed I gave up doing this. I dread to think how many hours I spent,” added AdamMurphy.

While it may come as a shock to some, the stream of MTD setbacks has damaged many in the profession’s trust in the entire prospect. When AccountingWEB members started considering the fate of MTD for corporation tax, one member said: “It won't happen full stop.”

A welcome break

With the countdown to MTD ITSA has been a thorn in the side of many in the profession for the past year, some were relieved the delay gives everybody more time to prepare:

“Maybe this will buy enough time to sort out the stupid tax year date, as the OTS report said this needs more time… Here's more time,” commented one AWEB member.

AccountingWEB regular Michael Beaver agreed: “I hope this also gives enough time for the tax institutions to lobby the government to amend the implementation plan so that it progresses in stages, like auto enrolment did.”

Meanwhile, accountants nearing retirement greeted today's announcement with a sigh of relief.  “And breathe," said AccountingWEB user kdbr. "Another year before retiral becomes a viable option; another year to re-consider that daft turnover limit; another year to think about mandating from the VAT limit first." 

Accountancy bodies react

Leading tax and accountancy bodies welcomed the news, after calling on the Treasury in the August to delay MTD ITSA "to preserve integrity of tax system". 

ICAEW president Michael Izza was pleased the government listened to the concerns raised by the wider accountancy profession. "The previous start date was far too soon and risked causing serious damage to the UK tax system. The new start date will allow businesses more time to prepare and their advisers more time to ensure their clients are ready."

ICAS also greeted the postponement with open arms: “There are huge pressures on Members’ practices and businesses at the moment as we come out of the pandemic, and changes to tax compliance need to be factored in carefully, so this delay is very welcome,” said David Menzies, Director of Practice at ICAS.

Alison Hobbs, chair of the joint CIOT and ATT digitalisation and agent services committee, said: “The delay gives HMRC a fighting chance of achieving the goals of MTD while limiting the confusion and costs for individuals who are reeling from the impact of the pandemic and, for some, the consequences of Brexit. 

“There is now more time to sort out problems and get software products tested, for example, but HMRC must make full use of this extra year.  They must also undertake a significant communications and educational exercise to try to ensure all affected taxpayers are aware of their obligations and how to comply with them in time."

What Hobbs wants to see next is a marked increase in the number of taxpayers taking part in the pilot, an an increase in the number of software products available and to assess the effectiveness of MTD for VAT.

'As advanced as a Casio calculator'

Not everyone was so pleased to hear the news. A large number of accountants on Any Answers were calling for the abandonment of the prospect altogether after a treadmill year of MTD stress and talks of hanging up their calculators for good.

“Been a long time since I read such a carp load of marketing twonk. HMRC are about as digitally advanced as a Casio calculator,” commented one member. 

Many were left questioning the details of the scheme, with one too many deferrals seeming to cause confusion: “Surely costs will be even more massive for traders as MTD will catch them out and close the tax gap. And MTD will increase the money being paid to the Exchequer. Dream on,” added AccountingWEB regular Paul Crowley. 

The announcement of another anticipated delay appears to have confirmed the seeds of MTD doubt sprouting amongst the profession:

“Anyone would think it's a bit trickier to do than they thought,” said ireallyshouldknowthisbut. “Roll forward to March 2024, and I would imagine the hard launch will be softened markedly and it will be a very soft launch for a handful of customers with penalties suspended for 12 months at least.”

“The field of long grass for kicking the ball into is larger than I thought,” added another member.

Why now?

There was also talks of government conspiracy amongst the community:

“Is this possibly so it is introduced after the next election... And to give enough time for HMRC to manage/mismanage their tax gap figures?” questioned JD.

Meanwhile AccountingWEB Jon Hemming wondered if the timing of the announcement relates to the recent change in the financial secretary of the Treasury, with Jesse Norman handing the reins to Lucy Frazer in the recent cabinet reshuffle. “ The FST cannot be criticised for this because she has only just got the job,” added johnhemming.

Whatever the reason behind the decision, accountants have a little more time to prepare for MTD (until the next delay).

What do you think of the MTD ITSA update? Feel free to comment below or share your thoughts in our Any Answers forum. 

Replies (11)

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By ireallyshouldknowthisbut
24th Sep 2021 09:14

Why would this be a "blessing in disguise?"

Clearly it is a huge benefit of all accountants and tax payers to keep kicking this farce down the road.

The only people crying about this will be those trying to sell services to deliver this nonsense. Most accountants recognise that there will be little if any profit in delivering this. Clients are not interested in the blow by blow detail of tax administration. Its very hard to sell service to clients who are not interested.

Thanks (10)
By johnjenkins
24th Sep 2021 09:51

Great now all we have to do is get rid of quarterly updates.

Thanks (6)
By adam.arca
24th Sep 2021 12:53

So HMRC completely ignore accountants' howls of protest about MTD (ie the ones who will actually implement this).

But then they have a meeting with the IT industry who also tell them how it is from their perspective. And they (HMRC) immediately fold their tent.

Wtf? Shows what they think of accountants.

I've previously ignored some of the more "extreme" postings on here calling for an accountants' version of civil disobedience but, honestly, I think those posters may have it right. Our profession is getting absolutely no respect from HMG: they clearly think we're there at their beck and call.

Thanks (9)
Glenn Martin
By Glenn Martin
24th Sep 2021 13:11

As a long term Casio user I feel offended that someone could compare HMRC it systems to such a fine piece.

It made me think of Ralph and brought a tear to my.

Thanks (4)
Replying to Glennzy:
By Paul Crowley
24th Sep 2021 16:43

If only Ralph was with us today
No need for MTD, he would have sorted it

Thanks (0)
By Paul Crowley
24th Sep 2021 13:38

I have no doubt that the delay is because HMRC accept that the thing is not ready yet and will cause HMRC to look even more unfit
They could not answer even the most simple questions being asked by people at a recent event
Why? Because those questions were not addressed at the planning stage.

Piilot testing was only of the most simple types of trade and landlord and did not include partnerships
The testing assumed a dedicated bank account

HMRC were nowhere near ready and cannot even attempt anything but the most simple partnerships even after postponing those for 2 years

HMRC ignored everybody other than their own IT developers

No favours done
Even now I doubt they will be able to deliver anything except the most simple versions come the day
And remember, the simple versions are going to be provided free, not from HMRC but the private sector. With free support? No I thought not.

Thanks (1)
Replying to Paul Crowley:
By tonyaustin
24th Sep 2021 13:55

HMRC sent one of their IT developers to present a webinar on MTD ITSA for Accountex recently. He freely admitted he knew nothing about accounts or how they were prepared, having always been an employee. Quarterly MTD makes sense for VAT which is a tax based on quarterly transactions. IT is an annual tax on annual profits using the accruals basis. If a business is small enough to use the cash basis then reporting quarterly receipts and payments should be easy enough but with expenses not allowable in whole or in part, it will still make no sense until the final figures are prepared. It will also still not stop takings being hidden by those wishing to evade tax.

Thanks (3)
Replying to Paul Crowley:
By djtax
24th Sep 2021 14:27

I gave up on bothering with HMRC events after a similar experience to yours, when they were holding webinars in the run up to MTD for VAT. At every webinar the audience was one step ahead of the presenters - we already knew what they were telling us and the presenters were out of their depth when responding to the questions being raised.

Thanks (2)
By indomitable
24th Sep 2021 15:53

They need to get VAT MTD right first!

HMRC's IT systems are a complete and utter shamble, Agent Services account, agent account, business tax account, normal gateway account. The whole thing is a mess. Try and a get a new client authorised for VAT, they have to set up a new account (try and explain it to a client).

It's a shambles! I have no confidence in their roll out of MTD ITSA!

Thanks (1)
By indomitable
24th Sep 2021 15:53

They need to get VAT MTD right first!

HMRC's IT systems are a complete and utter shambles, Agent Services account, agent account, business tax account, normal gateway account. The whole thing is a mess. Try and a get a new client authorised for VAT, they have to set up a new account (try and explain it to a client).

It's a shambles! I have no confidence in their roll out of MTD ITSA!

Thanks (2)
By Rgab1947
27th Sep 2021 09:24

“Been a long time since I read such a carp load of marketing twonk. HMRC are about as digitally advanced as a Casio calculator,” commented one member.

I really liked this one as my first calculator was a Casio and I was ahead of the pack with it.

It did not last as long as Ralph though. The digits fading in part got me in hot water with erroneous calculations when I guessed the digits wrong

Thanks (0)