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MTD ITSA: The long wait for guidance

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It’s been six long years since the first MTD consultation papers were published, but we are still waiting for HMRC guidance to tell us how the various MTD ITSA reports will fit together in practice.

5th Aug 2022
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When I was young a common schoolyard chant was “Why are we waiting?” sung to the tune of O Come, All Ye Faithful. This earworm invaded my brain when I learned that the Making Tax Digital for income tax self assessment (MTD ITSA) guidance will not be available for some time, according to the Institute of Chartered Accountants in England and Wales (ICAEW) Tax Faculty

This is beyond disappointing.

Rhyme or reason

What, in this context, does “some time” mean? Has HMRC been counting out the cherry stones singing: “This year, next year, some time, never”?

Should we expect the delay to be:

  • 3 months: October 2022 – just about acceptable (see promises below)

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Replies (53)

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By Hugo Fair
05th Aug 2022 12:30

"This is beyond disappointing" wins the 2022 award for most understated comment uttered through gritted teeth - and that's in a year with political commentaries on almost unbelievable events.

Keep up the good fight Rebecca, but I fear that HMRC have completely exhausted any remaining goodwill amongst their 'customers' and have extinguished any hope for a working/complete plan amongst advisers. Fearful though the results might be, I now look forward to the failure of MTD.

Thanks (18)
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By Paul Crowley
05th Aug 2022 13:24

It will fail because HMRC just refuse to engage with accountants
As we all know IT and HMRC are like oil and water
HMRC IT systems. Rust in peace
Time for Aweb to stop promoting MTD ITSA content until MTD ITSA is defined and actually available for more than 9 people
HMRC facebook status? It's complicated, I do not know why everybody hates me

Now six systems?
Does each system have a pilot volunteer yet?

Thanks (11)
Replying to Paul Crowley:
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By Jabba the Hut
08th Aug 2022 13:27

I'm still struggling to understand why I need a new authorisation to submit a CGT return on residential property when that is within the self-assessment authorisation anyway!
The problems that has cause trying to get non IT savvy clients to get a reference number!

Thanks (4)
Replying to Jabba the Hut:
Morph
By kevinringer
08th Aug 2022 13:56

The problem is HMRC is being led by IT people and not tax people. So the IT people build a system for a tax and even though that tax is part of SA, the IT people aren't thinking about tax so they don't think about joining it up. That's the same reason why our 64-8 which covers SA, and therefore CGT, doesn't cover 60-day CGT. It's a bit like building a PAYE system where NI is reported on a different system that is in isolation to PAYE. HMRC powers-that-be need to re-focus on their core duty (to collect tax) and stop wasting resources on all these vanity projects (MTD, 60-day CGT and so on).

Thanks (3)
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By JustAnotherUser
05th Aug 2022 13:42

I shall start asking on all of these articles Rebecca, where possible please begin to add some accountability to these and instead of calling out 'HMRC' trying to replace with the names of the people who are responsible.

"We are still waiting on HMRC guidance"... published by who, which department, who is the department head? Is this Joanna Rowlands department?

Who is failing UK accountants and business here, not everyone of the 66,000 employees surely?

The draft notices 1st July, with open questions and do not answer others were made by 'The Commissioners for Her Majesty’s Revenue and Customs (HMRC) ' There are 6 of them here...

https://www.gov.uk/government/organisations/hm-revenue-customs/about/our...

I almost guarantee you any query being sent to 'HMRC' is getting handled by some poor person just as frustrated as you and just as bewildered as to what the answers should be or when the answers will actually come.

Thanks (7)
Replying to JustAnotherUser:
Morph
By kevinringer
08th Aug 2022 10:11

Good idea, the director of MTD is the person to start with.

Thanks (2)
Replying to kevinringer:
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By raybackler
08th Aug 2022 10:46

I have read the CVs on the links to the 'six' and the rest of those in senior rules mentioned in the link. I don't hold out much hope. They are a combination of career civil servants with a smattering of people from big business. The vast majority of tax payers are small businesses and they have no voice. I can't see any of them defending the position of small buy-to-let landlords, for instance. Never mind the self employed and those using 'close' companies. MTD for ITSA is going to hit all of these un-represented 'customers'. Where is their champion in the 'Customer Experience Team'?

Thanks (3)
Replying to raybackler:
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By JustAnotherUser
08th Aug 2022 11:42

Got a complaint, using usual channels and getting no where? Email the CEO direct and in most cases the experience will be 10 x and resolved much faster.

Most companies have a code red process, the CEO wants to be know and held in a positive light.

Blaming HMRC in every article holds no-one to account, all I ask is from an editorial point of view, if you are going to write an article, include some names and not just blame 66,000 people.

Keep blaming HMRC will not get anywhere, I am confident if 'Jenny Bloggs' name starts appearing in all these articles, Jenny wont like her name being associated with the stink it causes and maybe, just maybe, there's some form of response other than none.

Change or not it a poor article when 'HMRC' is the only blame.

Thanks (7)
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By MCV71
05th Aug 2022 14:34

Just pull the plug and put the destined to fail project out of its misery

Thanks (9)
Intercity
By Mr Hankey
05th Aug 2022 15:11

The deputy director job for Making Tax Digital is currently vacant, if anyone fancies applying you can view the details here:

https://www.civilservicejobs.service.gov.uk/csr/index.cgi?SID=b3duZXJ0eX...

Thanks (2)
Replying to Mr Hankey:
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By MCV71
05th Aug 2022 17:53

So the ship is even more rudderless than we thought!

Thanks (3)
Replying to Mr Hankey:
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By GHarr497688
07th Aug 2022 11:39

seems very late in the day to be recruiting for this post. We need information to pass to clients now - not in 6 months .

Thanks (1)
Replying to Mr Hankey:
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By raybackler
08th Aug 2022 10:47

The job has now been withdrawn from that link!!

Thanks (2)
Replying to raybackler:
Morph
By kevinringer
08th Aug 2022 11:10

Proves that HMRC read AWeb

Thanks (3)
Replying to raybackler:
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By Peter-S
08th Aug 2022 11:29

Still showing here:
https://independentjobs.independent.co.uk/job/35353646/deputy-director-h...

Might be gone now but application cut off 30 August presumably to then do some interviews, assuming there was more than one applicant, for a mega project that needs to be live 18 months later!

Thanks (2)
Replying to Peter-S:
Morph
By kevinringer
08th Aug 2022 11:36

I note the job description includes:

"The principal activity of the role will be to ensure that the end-to-end design of the services delivered by MTD meets both internal and external customers needs"

I wonder how they identify "customer needs" considering they've not engaged with "customers". Perhaps they make it up as they go along like they did for the 30-day CGT fiasco.

Thanks (1)
Replying to kevinringer:
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By johnjenkins
08th Aug 2022 14:14

I am very seriously considering applying.

Thanks (4)
Replying to johnjenkins:
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By spilly
08th Aug 2022 14:43

Please do. Then we can all email you to say it won’t work and why, and you’ll have oodles of evidence to put forward to get it postponed/cancelled/completely revised (depending on your preference).

Thanks (2)
Replying to johnjenkins:
Morph
By kevinringer
08th Aug 2022 14:52

Sorry John, you're not suitable because you know about tax and have had recent contact with "customers". No, the successful applicant must have no knowledge of tax or small businesses and been in quarantine from "customers" for a couple of decades.

Thanks (2)
Replying to kevinringer:
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By johnjenkins
08th Aug 2022 15:07

I suppose i could lie and then use the phrases "I've been waiting all my life for this job" and "I would do a great marketing job with the SE".

Thanks (1)
Replying to Peter-S:
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By raybackler
08th Aug 2022 15:38

Good luck with the incumbent achieving the £2 billion tax savings. There is a lot we accountants can contribute in our six minute submission window, so that's alright then.

Thanks (1)
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By Philysis
06th Aug 2022 09:27

Those that make the rules have no rules!

Thanks (1)
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By GHarr497688
06th Aug 2022 16:28

I am retiring earlier than I would want and just because of this sheer negligence by HMRC. Imagine if a client was being investigates and they were so slow to supply information. Each year I have carried on waiting another year since 2015. Now my spirits are so low and the uncertainty so great I will retire.
2023 and 2024 are written into Law and yet no one had said what is really happening. Message to HMRC: Ye shall reap what ye shall sow.

Thanks (7)
Replying to GHarr497688:
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By anthony stevens
08th Aug 2022 09:41

Me too.

Thanks (2)
Replying to anthony stevens:
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By Homeworker
08th Aug 2022 15:37

and me! It would be interesting to find out just how many small accountants are planning to retire by 2024!

Thanks (2)
Replying to Homeworker:
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By spilly
08th Aug 2022 21:46

Not able to retire yet, but definitely restricting new clients to Ltds unless they are demonstrably computer literate, and hence able to do their own quarterly submissions.

Thanks (1)
Replying to Homeworker:
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By anthony stevens
09th Aug 2022 08:54

I was nearly there but this has just pushed me to let younger partners take up the challenge. They will cope but old dogs and one too many new tricks. Our profession needs to kick back but it never does.

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Replying to Homeworker:
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By Geoff56
09th Aug 2022 09:27

You can add me to the list of those who are determined to be gone (retired, not dead hopefully) before this nightmare arrives.

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Replying to Homeworker:
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By Samsung
09th Aug 2022 14:02

I am too. Next year will be my last for all sole traders. Will be 65 next year anyway. Can't be bothered anymore with HMRC. The problems they have created for small practitioners in the last few years, the writing is on the wall for us I think. I might keep the few company clients I have for a year more or so (cost of living!), or perhaps not even. Had enough.

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Replying to Homeworker:
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By Samsung
09th Aug 2022 14:02

I am too. Next year will be my last for all sole traders. Will be 65 next year anyway. Can't be bothered anymore with HMRC. The problems they have created for small practitioners in the last few years, the writing is on the wall for us I think. I might keep the few company clients I have for a year more or so (cost of living!), or perhaps not even. Had enough.

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Replying to anthony stevens:
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By Vallery Lee
10th Aug 2022 11:20

... and you can add me to the list.

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Replying to anthony stevens:
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By Vallery Lee
10th Aug 2022 11:20

... and you can add me to the list.

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By johnjenkins
08th Aug 2022 09:35

Rebecca, there is no possible way MTD will start in April 2024. The next PM will be too busy with manipulating tax and NI, which will of course mean HMRC staff doing other things. We then will have a GE with another lot (hung) trying to sort out the mess.

Thanks (7)
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By RobertD
08th Aug 2022 09:47

While HMRC delay I am (and other accountants I know) are busy preparing for MTD. 90% of my self employed and rentals have now been disengaged. Hopefully natural wastage will diminish the remaining 10% further.

Thanks (5)
Replying to RobertD:
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By Geoff56
08th Aug 2022 09:54

Robert, are you saying that your way of preparing for MTD ITSA, is to ditch those clients who will be caught by it?

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Replying to Geoff56:
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By MCV71
08th Aug 2022 10:33

Unbelievable! Why on earth do that. This was announced in 2015 and still hardly any detail with barely a year and half to go. Anyone who thinks it is starting in April 2024 is in cloud (no pun intended) cuckoo land

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Replying to Geoff56:
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By RobertD
08th Aug 2022 10:50

My mortgage has gone and I can concentrate on companies. Easy decision

Thanks (1)
Morph
By kevinringer
08th Aug 2022 10:08

"Where is the coherent plan?"

There isn't one. HMRC were convinced that all that MTD entailed was for the businesses to press the right button in their software and hey presto, all that lovely squeakily clean 100% accurate and complete data would flow seamlessly into HMRC's systems. But we at the coalface knew that HMRC had lost contact with its "customers" to such an extent that HMRC had no idea what it's MTD baby actually entailed. HMRC launched the MTD ITSA pilot in 2017 and has run it less than half-hearted ever since. Even now, HMRC really haven't focused on delivering MTD ITSA and in turn putting into place what is needed to deliver MTD ITSA. HMRC still seem to think that all is needed is for their "customers" to press the right button in the software, or at least that is how HMRC are reacting. Given the MTD ITSA pilot has been ongoing for more than 5 years already, HMRC should have figured out how to handle every aspect of MTD ITSA by now. But they haven't. I fear MTD ITSA is going to be like 30-day CGT: HMRC force us onto a regime which is not fit for purpose, then as it falls apart, HMRC slowly reacts and changes the rules to make it half-baked, which in HMRC terms is a success compared to 100% broken.

Thanks (8)
Morph
By kevinringer
08th Aug 2022 10:15

MTD ITSA is doomed to fail because setting the threshold at £10,000 means it catches people who are not running businesses such as accidental landlords and accidental self-employed such as CIS subcontractors and hobby traders. If HMRC had set the threshold at £85,000 (or better still, increase the VAT registration threshold to £100,000 and use that for MTD ITSA too), then it would be more achievable and I suspect there would be less opposition from the profession.

Thanks (7)
Morph
By kevinringer
08th Aug 2022 10:21

The MTD ITSA pilot started in 2017. I would like to know if anyone has been in the pilot throughout and if so, how much MTD ITSA has saved them in accountancy costs and administration. My suspicion is that no one has been in the pilot throughout, and that no one has had any cost/admin savings. HMRC had argued at the outset that MTD ITSA would be cheaper, but if it was, I'm sure HMRC would not have been shy about telling us. No, all MTD ITSA is is a licence for the software industry to print money. Look at Sage: pre-MTD I could buy a perpetual licence for Sage 50 for £85+VAT, today Sage charge £72 a month (see https://www.sage.com/en-gb/products/sage-50cloud/). That is exploitation.

Thanks (7)
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By MCV71
08th Aug 2022 10:34

One of the biggest changes since Self Assessment and no detail with 18 months or so to go. It ain't happening.

Thanks (3)
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By North East Accountant
08th Aug 2022 10:46

The original consultation for MTD was published 15th August 2016, at holiday time.

Seeing as I'm off on holiday Sunday 14th August 2022 I was betting on it landing Friday 12th August 2022....just in time for some light holiday reading.

Not so sure now but you never know......

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By adjadj
08th Aug 2022 11:22

For those interested in understanding the detail of the information gaps then it is worth reading the short ICAEW submission to HMRC https://www.icaew.com/-/media/corporate/files/technical/icaew-representa... and their public comment https://www.icaew.com/insights/tax-news/2022/aug-2022/mtd-itsa-notices-a...?

Thanks (3)
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By tedbuck
08th Aug 2022 11:34

Plan for the future-
Sack Jim Harra and put in place someone who understands tax.
Scrap MTD for ITSA and put staff back on the ground to do the work that's there.
When up to date with that lot start someone with a brain looking at the obvious cases where people's income won't support where they live and conduct an 'enquiry' - remember them?

Train staff, train staff and train staff.

Our latest - a letter to a client suggesting he might consider his SEISS status as his tax return showed he had ceased in business. He has already repaid the SEISS to HMRC!!!! That is how utterly incompetent they are. They are not fit for purpose. In the real world the MD/CEO would have sacked long ago so why is he still there?

Thanks (9)
Replying to tedbuck:
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By MCV71
08th Aug 2022 13:17

Apart from a Higher Income Child Benefit enquiry, I've only had ONE in the last 10 years. Shocking.

Thanks (3)
Replying to MCV71:
Morph
By kevinringer
08th Aug 2022 13:35

I've not had any. When SA was introduced we were told HMRC would be enquiring into 1-2% of TRs annually at random to check the system is working. So I should have had a hand full every year of random enquiries at least. MTD VAT has revealed that HMRC will accept any rubbish as long as it is digital rubbish. Maybe MTD ITSA will be ok: client can input any rubbish because HMRC will accept it. I won't need to check anything and I can let the undiluted rubbish make its merry way to HMRC. I get my life back, client saves accountancy fees, HMRC receives digital rubbish. Yes, I can see the benefits all round. Of course, if HMRC expects us to check that the MTD ITSA transactions are complete and correct, well that's a different ball game.

Thanks (4)
Replying to MCV71:
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By Carol Jefferis
09th Aug 2022 09:21

Enquiries are starting up again, I've had a couple in the last month and I'm only in a small practice with straightforward clients. They both hinged on undeclared interest from Indian bank accounts. Also had several nudge letters on the same subject. Common Reporting Standard showing results.

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Replying to tedbuck:
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By GHarr497688
09th Aug 2022 09:17

HMRC recruited Graduates back in 2015 and closed many offices with trained staff made redundant all in an effort to save costs to The Government . The result is a broken tax system headed by younger people lacking in knowledge out for their own ends and wanting to prove their worth . A very worrying situation that many will be blissfully unaware of .

Thanks (1)
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By Anthony G Thorne
08th Aug 2022 18:12

It would appear that HMRC have not even got enough of a plan to provide the specification to get their own software in place so we now have evidence to show that they do not understand the time scales to develop software properly and ensure it is fit for purpose.

Until you know exactly what you want how can you write the necessary instructions for the development team? It looks like putting the cart before the horse.

I fully agree that they should stop this nonsense and get their existing processes working properly before making more problems for themselves.

Thanks (2)
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By leekris
09th Aug 2022 11:43

I wonder if [the nameless individuals at] HMRC working on implementation of MTD are so disillusioned with it that they are just letting it drift with the hope that Sir Humphrey will manage to dissuade each new chancellor from this 'courageous' project.

Perhaps the delay in releasing clear information is with the idea that when we move out of the 'zombie government' period the then chancellor will see fit to bin the whole thing.

Probably wishful thinking. Government under the new PM may continue in zombie mode with HMRC releasing guidelines the day before the new chancellor is appointed.

I feel cancellation would involve so much loss of face that the guidelines will be (as kevinringer suggests) based on face-saving quarterly return of any old 'digital rubbish'.

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