MTD ITSA tax calculator is cause for concern
The latest instalment in the Making Tax Digital for income tax self assessment saga sees concerns raised over the new tax calculator and what the self in self assessment really means.
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Imagine a giraffe tasking a monkey to find new innovative ways for fish to swim then making those ways the law, just because the zookeeper thought he knew best.
-its pointless
-it will be awful
-they likely wont ask the fish what they want
-was it even needed
and here we have HMRC's MTD for Income Tax.
Why don’t they simply listen to the many of us who want to help them implement a system which works for everyone?
This face saving operation is the most extravagant waste of public money.
There is no reason why HMRC should not develop a better SA return albeit the current one *whispers*would work quite well if they sorted out the auto-population with the existing API rather than redeveloping the same thing without fixing the existing one. But its not HMRC's way, new project launched doesn't work properly, stays like that for life seems to be the way.
With the self assessment tax season winding down towards a close (outside of the firms who like to leave it until mid December to start it) the amount of data available is minimalist to say the least on the feeds.
Fundamentally its just a form with some data on it, and HMRC would do well to keep it as similar as possible to what we have now even if the back end is transformed, albeit with plenty of scope for simplifying many of the boxes.
MTD ITSA tax calculator is cause for concern
That is a bit of an understatement.
The whole MTD project is cause for concern, especially the thousands of millions of pounds that have already been spent on it for no worthwhile return.
However, it is clear that HMRC is absolutely committed to re-platforming on a new enterprise architecture system.
If the current MTD project ever gets into public use, it will already be out of date as AI will run rings around it. Better to try again with a new, more practical idea that is easier to use, quick to implement and is AI Tamper Proof.
(Thanks for the Article Amy)
Has anyone, who was involved with HS2, ever been involved with HMRC. Or, vice versa. This has the hallmarks of an ongoing car crash. Sir Harra must have eaten into the Governments budget for this project, on a rampant scale. And still, no nearer to the starting line.
In the last few years HMRC has demonstrated a rapid and spiralling decline in its capabilities of dealing with agents (who should be HMRC's protagonists) and equally importantly, the general public, or taxpayers' (not customers).
Take HMRC and the outdated business model which is called the NHS, is there any wonder that the Great ship GB is close to the bottom of the pile.
So my case: I have made as much profit as possible between 2015 and 2023 whilst HMRC dither and dally and change goal posts . Now I have retired HORRAY I AM SO HAPPY. Sold the client and let the total concept of MTD go forth. Bring it on I say....I won't have to sort the rubbish out the the S hits the F. My own affairs I have made as simple as possible. If Government want to stifle growth and bog business down with admin then MTD ITSA is the perfect way to do this.
Well done you for making all that profit, I'm glad you're happy. As long as long as you're alright Jack then that's the main thing.
Unfortunately, there are many in the profession like you who are quitting while they are ahead, and for those younger members still many years away from retirement they will be hit with a triple whammy of increased demand for help, reduced number of agents available and lack of qualified staff in the accountancy labour market to hire to deal with the extra workload.
The biggest practical obstacle to MTD for Income Tax now is not IT but having enough agents left who actually understand tax and can sort out this mess when it comes in.
if there is less supply of younger ones is that not good - demand exceeding supply should help maximise income for those peeps. higher income should bring in the extra supply one would hope.
If i look at how easy it is now with ability to view vat/tax/corp tax/paye payments
ability to submit vat returns online
options to do digital stuff - i would never have presumed we would in my days get autofeed of bank items we could set rules up for and code straight away.
Anyone who thinks its generally harder now has probably never appreciated or forgotten all the obstacles we had in the old days. I would concede not everything is better MLR excessive paperwork being a real tough one - facts are though that exists and its another number in the margin calcs ref sorting.
Would you rather have to turn work away or not have enough work to pay for the bills?
Well I actually met with an individual from HMRC when MTDVAT started and also my Local MP both of whom agreed I was broadly correct with what I was saying. HMRC chap has since retired however he put my points forward to MTD Readiness Team the MP wrote letter to The Treasury. Replies from HMRC stated in a nutshell that I was too old and not technologically competent , also told me to send my clients to night class for Computer and Book-keeping skills - even an 80 year old. Was told rather than pushing against the new system I should embrace it. Maybe if younger Accountants had supported me rather than get rich off the back of "selling" MTD then the initiative would have been stopped sooner and the younger ones could make their bucks in another way . I think in light of what I state above the conclusion is " many a good tune played on an old fiddle". My core belief is that we should be one united world were we are all treated equally .
He constantly bellyached before and sold his practice well before he needed when the rest of us knew MTD wouldn't happen in the initial form.
I suggest you read other comments. I have sold my business this year which was nothing to do with MTD. I sold because I am financially independent. MTD VAT did happen in 2019 so you are wrong as MTD did happen. You sound like your jealous cause I will sailing round the world on a cruise ship whilst your in the phone to HMRC lol.
i think its always good top be civil and stam on point withoutb getting personal - its frequently the case that something innocent and not targetted can be misread and treated as some sort of slur or persoanl dig. If one says well it was easier or harder back in the day whoever says that should expect some reposte hopefully in good taste. Peeps somtimes stake offence at what i say - all i know is that was wasnt trying to offend gotta love the internet.
Why do they continue to waste money on this dead project (to anyone outside of HMRC)
The fortune wasted so far could have been spent making the current system of a workable standard.
or more money for the NHS - much more sensible - instead they will have to do both if they implement this & increase mental health support for anyone doing MTD for ITSA!
Vanity project and lack of honesty. Basically the goal is to then collect tax earlier. Improve what we have and bring payments and payments on account earlier and everyone will win
"It is clear that HMRC is absolutely committed to re-platforming on a new enterprise architecture system"
Who writes this stuff ....!!??
Sometimes I think I have landed on another planet. Can we please go back to plain talking and stop this nonsense.
Pre-population of CIS deductions? That's as far as I needed to read to know this will be a disaster.
I deal with CIS subbies and often (more often recently than previously), the CIS deductions are an issue as the contractors tell HMRC a different story to what they tell the subbies.
If HMRC are just going to take as read what they've received from the contractors on CIS300's some subbies will miss out.
Case in point, one of my subbies was told his CIS deducted was about 4k for 2021/22, but HMRC only have ~£1,600. HMRC told me he has to accept their figure.....
Being honest i wish there was an api for subby cis deductions so these could be checked in real time that would give peeps the ability to make sure its right - subbies are quite often numpties here and contractors arent always much better (no disrepect meant i dont its fair they are singled out for suh treatment in the first place) . This would also sort out the rogue operators if there is sensible system put in place from hmrc to stop any company trading if they are submitting correct info.
"HMRC told me he has to accept their figure....."
ref cis as long as the subby has vouchers / reasonable evidence hmrc will happily play ball - so this statement doesnt sound right to me - hopefully you put em in their place.
I have written to HMRC telling them their figure is wrong and we need to use the right figure. Pity the guy did his own 2022 return and overstated the CIS by a few hundred, claiming £4,800 instead of £4,000....
It was the compliance unit of HMRC that called me and said he had until a specific date to change his return to match their figure. Ironically, the call was two days after they finally released the refund he'd claimed over a year earlier.
We've just concluded a S9A for a new subbie enquiry. Previous accountant had over-stated CIS (to some tune). Meanwhile, HMRC were under-stating equally badly. Had we simply taken HMRC's word for it it would have cost our client 10s of 000s of £.
We have done a lot of talking and will continue to do so right up to "kick off". Advice and feedback from professionals has largely fallen upon out of touch deaf ears.
All that is left to do now is to roll it out, experience the problems and what many have been highlighting and then force HMRC to back off and rewind, and to relax the regime until it's working efficiently, which may take .....................................well, how long is a piece of string?
I am particularly interested in how HMRC will resolve issues given the quick deadlines and inept telephone and email system. Not sure a 3 to 6 month response, if it provides resolution, will be of any use!
Oh has Fujitsu diversified it's software products and it is now helping HMRC with MTD-ITSA?
What could possibly go wrong?
I am so glad to see that Fujitsu is broadening it's 'Horizons'!
When you take a step back and look at this project, you can begin to understand why our government is in such a mess. The whole point of MTD is to bring forward the collection of tax and simplify its administration, and yet they still have not grasped that the issue is in calculating a figure that can be relied upon, because the tax code is stupidly complex. We are fast approaching the situation where real tax rates are around 300% of actual income (don't forget that government borrowing is no more than future tax), and the cost of collecting the stuff is double that!
About time HMRC listened to grass root level feedback. We told you for years not to go ahead with this fancy idea of MTD for Income tax. What is wrong with the existing system? Not seen any valid excuse.
There must be a hidden agenda.
The aging population and short of self employment should take the pressure off if there is a problem with the current system. It is advised that HMRC invest more into the current system than finding new systems which has cost millions and millions in addition to to time waste. Has HMRC given any concern about the poor accountants and tax payers time they wasted. New software pilot schemes and endless meetings have taken the toll.
Wasting more money. No benefit to HMRC or the taxpayer. More and more technical stuff and lessons for the businesses when there are other problems in this current economy. Businesses have to put more efforts in generating productivity and not experimenting and learning how to deal with complex tax systems. Where is the red tape gone and so called simplification. Surely a complication more than simplification. Getting bad to worse. Who are these clever people not in touch with common sense?
thats a good point - she will certainly be wanting to make herelf look good - pointing out the whole stupidness of mtd ott stuff shouldnet take too long one woudl think. Just send her sumary of that latest article which proves ref income tax however many years later they are NO clearer to having sensible solution and are obviously going down nonsensical route (if they wrong dictate crap)
Great idea in theory... but we're assuming the Minister for Common Sense is blessed with enough Common Sense to understand the job........
It's just common sense, really... or is it. :-)
Great idea in theory... but we're assuming the Minister for Common Sense is blessed with enough Common Sense to understand the job........
It's just common sense, really... or is it. :-)
MTD ITSA is ill-conceived because it is way too complex to be successfully operated by the average taxpayer and HMRC have overestimated the capability of software, so MTD ITSA will not close the tax gap. Indeed, the VAT gap widened after MTD VAT came into operation. We agents have been warning HMRC about their unrealistic expectations ever since George Osborne announced MTD way back in 2015. HMRC ignored us and ploughed on. HMRC started the MTD ITSA pilot in 2017. After running the pilot for 6 years HMRC had to close it earlier this year. Though HMRC said little publicly, I think that must have wrung alarm bells in HMRC; what if accountants have been right all along? Then Jim Harra admitted MTD ITSA was more complex than HMRC had expected. Oh dear, accountants have been right all along.
The majority of Self Assessment is already reported to HMRC digitally (I have been reporting digitally for 100% of my clients since 1998). Therefore, reporting via MTD ITSA isn’t Making Tax Digital, because it is digital already.
Instead of wasting £1+ billion on converting an existing digital reporting system (SA) to another vastly more complex digital reporting system (MTD ITSA), HMRC should have spent the money on areas which would have actually improved HMRC service eg more staff on the helplines
This is got to be one of the most stupid proposals in the world. Totally mad and not progress at all. Can't they stop this?
HMRC will provide the customer with a calculation of their income tax liability based on the information the customer has provided about their taxable income.”
How can ANY form of pre-population in the SA Return be treated as 'based on information supplied by me'?
My Employer provides my P60 figures to HMRC, my Bank provides my bank interest received to HMRC, my Annuity provider provides my P60 figures to HMRC etc etc etc.
It is certainly not pre-poulated by information I have given, as I only provide information when doing the SA Return!
There is still this reluctance for the Professional Bodies to be pragmatic and just say that the MTD project needs to be scrapped. It has been clear to us for many years that it just is not going to happen and no amount of wishful thinking is going to change that.
As I have said a few times before, MTD is dead to me.
'It seems almost certain that the Chancellor will provide an update in his Autumn Statement on when, if at all, MTD ITSA will be implemented.'
Oh my gosh its 2 days away, however there is every chance we will have a new chancellor by then possibly David Cameron.
Why do so many articles on this website keep mentioning, without any facts, that MTD will be "put to bed"?
The current situation is quite chaotic and this isn't helping at all.
I am employed at a software company that is working on a solution for MTDSA. Whenever an article is published on this website, the management starts to question the future of the company. However, some of them are aware that the content on this website is mostly gossip and not credible.
Please let's avoid baseless speculation and focus on factual reporting.
Sorry to hear about your personal circumstances.
Nothing against software companies. We blame policy makers and politicians. No mention of MTD from the budget.
Thank you.
That's my point, and that's why I waited for the chancellor statement:
"It seems almost certain that the Chancellor will provide an update in his Autumn Statement on when, if at all, MTD ITSA will be implemented."