MTD ITSA delay: A blessing in disguise?by
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.
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.
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.