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MTD law shelved in wash-up

25th Apr 2017
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The largest Finance Bill in history has been shrunk in the “wash-up” before Parliament is dissolved for the General Election. The scrapped clauses include those which impose digital reporting and record keeping for MTD.

Wash-up

This is the term for the last few days of a Parliament before the dissolution prior to a General Election. Public Bills cannot be carried forward into a new Parliament, so they must be passed or scrapped.

The Finance Bill is too important to be abandoned, so the opposition parties and the Government must come to an agreement as to which clauses to pass and which to drop. Normally only the non-contentious clauses survive to be passed into law as part of a much slimmer Finance Act.

What’s out?

The majority of the Finance Bill has been cut from the version of the Bill which will pass its committee and report stages in the House of Commons on 25 April, and be read by the House of Lords on 26 April 2017. No amendments of the Bill can be made once it has passed its report stage in the House of Commons. The Finance Bill is expected to receive Royal Assent to become Finance Act 2017 by 28 April.

The CIOT has produced a handy list of what is in or out of the Finance Bill. The abandoned clauses include:

  • Digital reporting and record keeping (MTD) for income tax and VAT
  • Dividend tax rate for 2018/19
  • £1000 tax free allowances for property and sundry income
  • £500 tax free pensions advice
  • Changes to taxation of terminations payments
  • Reduction in money purchase annual allowance from £10,000 to £4000
  • Power to tax capital gains made from UK land as income tax not CGT
  • Deemed domicile for all taxes for non-doms
  • Changes to substantial shareholding exemption
  • Changes to EIS, SEIS, SITR and VCT schemes
  • Restrictions on corporation tax losses
  • Tax relief for cost of Museum exhibitions
  • VAT in relation to goods stored in UK warehouses

What’s in?

The following significant provisions remain in the draft Bill:

  • Income tax rates for 2017/18
  • Corporation tax rate for 2018
  • Air passenger duty rates for 2017
  • Insurance premium tax rates from June 2017
  • IR35 for the public sector
  • VED duty rates from April 2017
  • Alcohol and tobacco duty rates
  • Soft drinks levy
  • Changes to salary sacrifice schemes
  • Deduction of tax at source
  • Abolition of Employer Shareholder Scheme

Note the IR35 provisions for workers performing contracts in the public sector remains in the Bill, although it is a contentious and badly drafted piece of law.

What happens now?

This is not the end of MTD, and it may not even delay its implementation. The provisions taken out of the Finance Bill 2017 are merely deferred, and are likely to be reintroduced in a very similar form when Parliament resumes after the General Election. However, that does depend on which Party is able to form the next Government. 

If you are concerned about MTD you have an ideal opportunity to quiz your prospective parliamentary candidates about it during the General Election campaign. 

Replies (114)

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By adeyb
25th Apr 2017 12:36

Let me get this right, the MTD fiasco that NO ONE has any idea about (what it consists or how it will affect them - even if they can use Excel at a bare minimum) which are we told we are all expected to start doing from the beginning of April 2018 MIGHT now be shelved?

Possibly? But depending on whichever Government comes to power and if they have a feel for it?

What... A... Mess...

You couldn't make this up if you really tried...

Thanks (29)
Richard Sergeant
By Richard Sergeant
25th Apr 2017 12:45

"If you are concerned about MTD you have an ideal opportunity to quiz your prospective parliamentary candidates about it during the General Election campaign. "

- I did, and mine didn't know what I was talking about and said they would look into it for me...which I thought was a nice touch.

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Replying to rsergeant:
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By adeyb
25th Apr 2017 12:58

rsergeant wrote:

"If you are concerned about MTD you have an ideal opportunity to quiz your prospective parliamentary candidates about it during the General Election campaign. "

- I did, and mine didn't know what I was talking about and said they would look into it for me...which I thought was a nice touch.

I would imagine, if they bother to continue with their gesture, their enquiry would lead them to HMRC.

"Hello, thank heavens! I've been on here for the past 2 hours! Could you assist me please? I need some information regarding MTD? No... I don't have a NI number to give you, it's a general enquiry. Sorry, but I don't want a specific department! I just need to know what 'MTD' is? Pretty sure it's nothing to do with PAYE... You're suggesting I try the Department of Transport? Erm, no, I said 'MTD' not 'MOT'. Can I speak to your manager? He's off on a training excersise... It's not regarding MTD is it? Oh, it a 'Slave Labour' course. Can you call me back when you have the information please? You don't call back from this number... Have I checked your website? I would but I need two step..."
***CLICK***
"Hello? HELLO?"

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Replying to adeyb:
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By JoandToby
26th Apr 2017 11:24

Ha ha, this is so spot on, certainly brightened my morning! x

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Replying to rsergeant:
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By bosclibby
26th Apr 2017 11:37

rsergeant wrote:

"If you are concerned about MTD you have an ideal opportunity to quiz your prospective parliamentary candidates about it during the General Election campaign. "

- I did, and mine didn't know what I was talking about and said they would look into it for me...which I thought was a nice touch.


Ditto - I had no reply despite writing to my MP. As you say, I simply think they have no concept of this or it's ramifications. All the stress and worry is on our shoulders and we will be the ones who have to try and educate clients....and then pick up the pieces after - if we're not all in the "loony bin" by then!
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Replying to bosclibby:
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By bendybod
26th Apr 2017 11:53

I did eventually get a response from mine's secretary, saying that my email had been passed to the relevant person (which, apparently was not my MP) but that if my MP could ever be of any help in the future that, of course, I should feel free to contact him. I have done so twice in my lifetime. Neither made me come away thinking that I would vote for him! Unfortunately, the majority of the electorate down here are unlikely to agree with me.

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Replying to rsergeant:
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By Michael C Feltham
26th Apr 2017 12:07

Oh I do wish we had smilies on this site!

'Cos then I would stick in the largest ROTFL smilie I could find!

As I mentioned on these boards before, my local accounts group (one of my fellow committee members seems involved with the Con Association) arranged for Sir David Ames to come to an informal lunchtime meeting to discuss MTD, last year.

I told them not to waste our time: years ago I was naive enough to waste considerable time with idiot politicians; meeting cabinet ministers and Secs. of State; having mediocre tea on the terrace of the House etc.

Amos insisted any questions be in writing and pre-advised. I didn't attend; far more important things to do...

I told them what would happen. As expected, the majority of the questions were about MTD. Amos, of course, waffled, clearly knowing zip about MTD, tax, practice and the SME sector and then, eventually sent a letter to Treasury and copied our group chair into the answer; which was probably written by a newbie grad as is normally the way.

More endless anodyne waffle.

Don't waste your time lobbying MPs and prospective MPs. Utter wastes of space and oxygen.

Personally, having made representations at length to the earlier consultative processes, now I am in process of escalating this to the media.

At least the Lord's Committee provided accreditation; you can read my document, here.

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidence...

(Apols for the odd typo!)

I will let you all know how this proceeds.

Thanks (9)
Replying to Michael C Feltham:
Tornado
By Tornado
26th Apr 2017 13:55

Your Written Evidence is excellent and certainly summarises much of my view about MTD. Thanks for taking the time to prepare and submit this.

Without taking away anything from your Evidence, what you say is essentially common sense and vividly highlights the extreme ignorance (or possibly just arrogance and pompousness) of the MTD Architects who appear to have little or no common sense.

Common sense for us, but perhaps common sense is not for the likes of the MTD Elite.

Thanks (3)
Replying to Tornado:
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By Michael C Feltham
26th Apr 2017 14:03

I used to regularly correspond with the late Andrew Alexander: who finished up his long service in Fleet Street as the Daily Mail's City Editor. Well, someone had to do it and Andrew managed extremely well. The only bit I used to read from my wife's daily paper! Prior to this he had been a Political Editor, mixing daily with the not so great and not so good.....

Once, Andrew wrote back to me and said "You are making a very serious mistake; you seem to believe politicians are intelligent and bright. They are not; so don't!

Core problem is - again - between the politicians and the Mandarins of Whitehall, not one of 'em has a wee damned clue about accountancy, bookkeeping and /or computer systems and software; and, worse, once again, they are being led by the nose by venal ICT Consultants, such as Accenture, Cap Gemini, BT, EDS et al. The normal suspects. Take just one; Accenture. Originally, part of Anderson accountancy and consulting: err, remember Enron?

At present I am unable to dig out which private sector consultancies are involved.

However, the main problem is one of specifying: when anyone client asks a contractor to design and deliver a system, then they need a top System Architect and Programme Manager to oversee the process and ensure the objective outcome/s are met and the deliverables clearly defined.

There aren't any in government!

Conclusion: this delusional nonsense will make the abortive NHS ICT system and the Peter Lilly benefit card (one billion £ plus) fiascos pale into insignificance.

Why?

Because most of the other government IT disasters were only set-up to distribute sources and funding. MTDfb is intended to COLLECT government revenue, not dispense it!

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Replying to Michael C Feltham:
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By carnmores
26th Apr 2017 14:38

Andrew was a lovely old dear

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Replying to carnmores:
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By Michael C Feltham
26th Apr 2017 16:29

Yes he was.

Very astute and an excellent forensic company analyst.

I well remember his spot-on analyses and warnings concerning Brent Walker and Queen's Moat House: plus his acerbic criticism of Sir Campbell Fraser, the fool who ruined Dunlop.

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RLI
By lionofludesch
25th Apr 2017 12:59

Don't worry - MTD will be back in June.

Unless we have another election in July, obviously.

Thanks (6)
Replying to lionofludesch:
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By johnjenkins
26th Apr 2017 11:54

Many a true word. If TM doesn't get the majority she expects then she'll be down the road.

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By sushi_ginger
25th Apr 2017 13:15

More importantly they've left in IR35 which is probably the most contentious item on the list.

This badly written, ill-conceived piece of legislation which is already causing huge damage to the public sector and causing projects to be delayed (including at HMRC hehe) should have been the first thing thrown out. Then they could start again and think of something sensible and give MPs the chance to scrutinize it.

Instead it is being "snuck-in" hoping that MPs already have enough on their plates with the election campaign to bother even reading it.

A disgrace - I can see Hammond rubbing his hands with delight in another step forward for his personal vendetta against the self-employed.

Thanks (9)
Replying to sushi_ginger:
By DotasScandalDotOrg
26th Apr 2017 14:08

Spot-on...except it really is Gauke's vendetta, and Hammond is an empty suit.

Thanks (2)
Tornado
By Tornado
25th Apr 2017 13:22

Let us hope that MTD is on a very high shelf where it might get forgotten about.

Thanks (19)
Replying to Tornado:
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By SpreadsheetUser
25th Apr 2017 14:27

Came on here to post a comment about high shelf. Already beaten!

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Replying to Tornado:
Richard Sergeant
By Richard Sergeant
25th Apr 2017 14:28

I fear not. Just a bit of expediency before the holidays...sorry election.

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By memyself-eye
25th Apr 2017 13:58

MTD Shelved? deferred? abandoned?
I'll contact my MP but wait......

I'm voting UKIP!
maybe not, they have no candidates left
Labour then
They do have candidates but no policies
The Greens
They have policies but no support
Plied Cumree then.
They have support but it's in welsh see, and no one understands it.
Scots Nats then
Everyone understands what they want but they are led by a nut case
Monster raving loony party it is then! C/O HMRC portcullis house London.

Sorted.

Thanks (16)
Replying to memyself-eye:
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By chatman
26th Apr 2017 11:14

memyself-eye wrote:

Labour then
They do have candidates but no policies

Seriously? They have policies on virtually everything. Why are you saying they have none?

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Replying to memyself-eye:
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By Jack Spratt
26th Apr 2017 13:06

Labour then
They do have candidates but no policies

Of course they have candidates - and some very good ones.
And they have policies - including some very good ones.
All they need is someone to lead them. Yes, I know they have someone called a leader but..............

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Replying to memyself-eye:
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By Jack Spratt
26th Apr 2017 13:12

.

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By youngloch
25th Apr 2017 17:46

According to the Telegraph it's going to be properly debated in due course and according to "experts" it will be delayed by at least another year

http://www.telegraph.co.uk/news/2017/04/25/controversial-digital-tax-ret...

Any House of Commons debate though then takes us probably up to the summer recess of Parliament and then into the Autumn and beyond......

So in the meantime how on earth are we meant to plan for something that might be coming in from April next year.

This affects choice of software, staffing, planning for clients.......

MTD potentially means us doubling our admin staff, taking on more junior accounting staff, more office space. We're ready to do it, and were planning for it but now what do we do?

A total and utter disgrace. Government need to quickly say whether the plan remains to roll out from April 2018 or, alternatively, confirm a delay of at least a year.

The software companies must be livid as well.

None of this should have been going anywhere close to legislation until there had been a long and proper debate and agreed plan.

Thanks (10)
Replying to youngloch:
Richard Sergeant
By Richard Sergeant
26th Apr 2017 11:39

very fair comments.

Planning around this level of uncertainty is almost crazy.

The reality though is that it IS coming. It's just a matter of when.

I would suggest to carry on as if it is going ahead next April as indicated - you can't afford to get caught out.

Thanks (1)
Replying to rsergeant:
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By youngloch
26th Apr 2017 12:20

I completely agree that MTD will be coming but the issue in our case is that the majority of our clients require us to pretty much do everything for them and, in the vast majority of cases, they want us to continue to do so.

This is where staffing, office space etc then all comes in.

So, with that in mind, this is why I say clarity is needed ASAP as I do not look forward to spending time recruiting new staff, taking on more office space only to find that suddenly everything is pushed back by 12 months.....

Perhaps even more to the point though is the question as to whether the threshold will end up being increased to the VAT limit as recommended by, pretty much, everybody.

If it is increased then the need for additional staffing etc reduces greatly as at that stage MTD will not have the huge impact on many of us which it would otherwise have as, for such clients, we already do everything quarterly anyway.

A common sense approach by government can make MTD workable, but low turnover thresholds and 1 month turnarounds per quarter with a contradictory 10 month year end process is not, in my opinion, common sense!

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Chris M
By mr. mischief
25th Apr 2017 20:22

My carefully minimal effort solution to this - MTU or Making Tax Up see many earlier posts - is looking, at this stage, to be a real winner.

SELL Xero!

SELL Sage!

Buy put options!!

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By SpreadsheetUser
25th Apr 2017 23:33

Now it's FINALLY made the mainstream press I am hopeful it will be killed off. It didn't take long for a U-Turn on NI and this Government has done many a U-Turn

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Replying to SpreadsheetUser:
RLI
By lionofludesch
26th Apr 2017 08:00

SpreadsheetUser wrote:

Now it's FINALLY made the mainstream press I am hopeful it will be killed off. It didn't take long for a U-Turn on NI and this Government has done many a U-Turn

Theresa Maybe, indeed.

As the Swedes say, apparently......

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Replying to lionofludesch:
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By youngloch
26th Apr 2017 12:21

But it's not really hit the mainstream press though.

Go on Twitter and search for "Making Tax Digital" and you'll only really find posts from software companies and accountants - says it all!

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Replying to SpreadsheetUser:
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By the_fishmonger
26th Apr 2017 17:20

The NI U-turn was made because they said they wouldn't do it. Now we have a general election, the tax lock is broken (the legislation was written that way) so, if they get the majority and return, so will Class4 NI increases and probably VAT up too

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By carnmores
26th Apr 2017 08:39

when I went to Any Questions before Christmas David Gaulke was on the panel, after the programme ended I buttonholed him and told him that they needed to look at it again, however he tried to shrug it off; it will be back and probably sooner than later, too much time and effort has gone into it. however much we dislike it its happening , do you remember all the dire warnings about RTI which we all handle easily now

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Replying to carnmores:
Tornado
By Tornado
26th Apr 2017 09:18

Nothing like RTI.

One significant difference is that HMRC provide a payroll program for small employers that several of my clients use and get on with OK.

Thanks (3)
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By SpreadsheetUser
26th Apr 2017 08:42

You can't compare RTI to MTD, miles apart. We already had to calculate payroll weekly/monthly so the changes were minor

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By justsotax
26th Apr 2017 09:09

I would love to see the reception this news got from our beloved software providers....

Perhaps they may feel a small bit of what we have to put up with, getting fed a line, buying into the 'benefits', realising that you have been sold a pup!

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Replying to justsotax:
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By daveforbes
26th Apr 2017 10:30

The most I think that will happen is mandation for the > £83k will be postponed by a year but even that is unlikely.
Speaking as a software supplier, it makes little difference. It may have introduced a more uncertainty as to when or if it will happen. From a workload point of view, the bulk of our MTD development is already done - if we leave it to see what happens it would be too late. The biggest uncertainty for us remains what will happen to the market when (or if) MTD arrives.

Thanks (1)
Replying to daveforbes:
Tornado
By Tornado
26th Apr 2017 10:59

"From a workload point of view, the bulk of our MTD development is already done "

This may be the situation for you but for tens of thousands of Accountants and other Agents, and millions of small businesses and Landlords, the work has yet to be started.

The costs are also unacceptable. I have calculated that I will have at least £30,000 in unproductive time to bear the cost of, and an additional £6,000 a year in software costs in order to get anywhere near the MTD requirements which my clients are unlikely to pay for.

This is despite the fact that I have excellent, efficient and relevant systems in place already and there is actually no need to change anything to deliver accurate and efficient returns to HMRC and to my provide my clients with the help they actually need .... as I have been doing for many years now.

There is no need to re-invent the wheel. All that is required is to give the existing systems some better bearings, improve the satnav and let the experienced drivers carry on with the work that they do best.

Thanks (14)
Replying to Tornado:
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By daveforbes
26th Apr 2017 11:12

Are you involved in the pilot ? It is difficult to interpret the £30,000 and £6,000 calculations. If you have ten thousand clients this would be cheap, if you have 3, then very expensive !

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Replying to daveforbes:
Tornado
By Tornado
26th Apr 2017 11:45

I am not involved in the Pilot and would not want to be. I have been involved with much beta software in the past (of several types) and usually gained some benefit from the time and effort put in. I see the MTDS Pilot as working for the Government for no reward at all and feel it would be much like voluntarily sharpening the blade of the executioner who was shortly going to chop your head off.

I am a small practice with trading clients ranging from £500 to £8 million turnovers and each one of my clients will have different problems with MTD.

You are missing the point, however, which is that without MTD there is no extra cost to me or my clients but with MTD there is likely to be substantial additional costs to myself and my clients, just to do what we already do.

Thanks (3)
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By Chris Mann
26th Apr 2017 09:19

David Gauke was the Financial Secretary to the Treasury.

However, from 15th July 2016, Jane Ellison MP, has been in that role.
https://www.gov.uk/government/people/jane-ellison

There might be some mileage in a sustained and considered lobbying of national newspapers, given the natural break, which the General Election will bring?

We have some very talented contributors (I'm thinking Rebecca above etc) and, it would be interesting/useful to know if they consider such a suggestion would carry any weight and, if so, how an efficient strategy might be attempted.

My views on HMRC are well publicised on the Aweb site. I take the view that the hierarchy are leading a generally incompetent, arrogant and disingenuous organisation who are a mere shadow of the administration, which they once were. I pity anyone who works for HMRC, particularly on the front line.

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By ireallyshouldknowthisbut
26th Apr 2017 09:27

Personally I cant see anything other than this coming back on stream "as is" in 2 months time, emboldened by the fact the small people have 5 years to get over it before we go to the polls again.

There is no effective opposition and too many people believe what is written in the tabloids controlled by those who back the nice low corp tax rates and other blue corner benefits for billionaires. Even the BBC seems to be laying into Farron and Jezza whilst May doesnt get so much as a slight knock and every news report seems to end in a bland and wholly misleading statement about how "funding is at its highest level" for which ever public service is facing a crisis this week.

The only slight plus is this does give an excuse for a change of direction "from the top" and fingers crossed makes this for VAT regd businesses only which then remove 95% of the problems. Seems a slim hope to me.

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By Rangith Athauda
26th Apr 2017 10:28

I hope this MTD madness will disappear from our lives.
All what it is for the HMRC cover up for the inefficient activities in the past. They will make the country go bankrupt with new ideas embarking upon innocent tax payers of small businesses. The new idea of MTD is not known to anyone of my clients. Yet HMRC maintains that due consultation was taken place with small businesses.
Where and when unknown. Loss of 8 billion a year is an inaccurate statement. These losses are due to bad debt management and nothing to do with reporting method. There will be a lot of mistakes by everyone is resorted to MTD which will make this country bankrupt.
Mark my words Mr Chancellor. Scrap the whole lot.
If tories would like to win then scrap it now.

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By carnmores
26th Apr 2017 10:33

DG is chief sec to the treasury and widely believed to be the 'political architect' of MTD

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Replying to carnmores:
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By Chris Mann
26th Apr 2017 10:59

I couldn't agree more carnmores. There is no doubt who is "responsible" for making tax easy/digital/difficult. He appears aloof, with regards to criticism of his conduct.

I was simply trying to emphasise that Jane Ellison is (now) the departmental minister for HMRC.

The standard of this Government agency suggest (to me at least) that it would benefit from a Ministry (akin to Health, Transport etc), rather than just a financial secretary who covers a multitude of responsibilities.

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Replying to Chris Mann:
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By carnmores
26th Apr 2017 11:04

Hubris is perhaps an inadequate description

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Replying to carnmores:
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By Rangith Athauda
26th Apr 2017 17:36

David G should not be given any responsibility with money management.
He copied the same letter to everyone when queried through our Local MPs.
Ill advised gentleman with no idea of how small businesses run. He does not deserve to be in a position of responsibility. I hope Theresa may take note.

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Replying to Rangith Athauda:
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By edmundwright
27th Apr 2017 10:41

D Gauke was trained as a Solicitor, and worked for Macfarlanes, a BIG city firm advising huge mulitnationals and high net worth individuals.
As a Solicitor, he should not be let within screaming range of Tax or Tax policy, and it is conspicuous that MTD is NOT being brought in for larger firms, as a) for some quarterly payments of CT are in place (shape of things to come!!??) and b) they have people power and systems that can cope. Therefore do not touch them but hit those quite unsuited for the regime no-one in their right mind would think is suitable - typical Solicitor all principle without a shred of understanding.

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Replying to edmundwright:
RLI
By lionofludesch
27th Apr 2017 11:24

edmundwright wrote:

D Gauke was trained as a Solicitor, and worked for Macfarlanes, a BIG city firm advising huge mulitnationals and high net worth individuals.

David Gauke had a proper job before signing up as an MP ?

No - that can't be right.

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Tornado
By Tornado
26th Apr 2017 10:45

HARRA, MIDDLETON & HAMMOND DODGE QUESTIONING

They are lucky that the grilling they were all going to get has been cancelled for the moment, but if MTD is revived after the election without significant concessions and a longer phase in, they are sure to be called back.

https://www.cchdaily.co.uk/treasury-committee-cancels-making-tax-digital...

Perhaps persuading Theresa to call an election was a slightly over-the-top way to wriggle out of having to answer difficult questions that really have no acceptable answers!

I wonder if all three will be up on a shelf after the election as well. Certainly I would not be surprised to see Harra and Middleton jump ship at the earliest opportunity. I think the new government is going to be very different to what they have been used to and they may not like it.

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Replying to Tornado:
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By carnmores
26th Apr 2017 11:05

CCH link doesn't appear to work , maybe if you're not a subscriber...

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Replying to carnmores:
Tornado
By Tornado
26th Apr 2017 11:30

The link does work for me and I am not aware that I am a subscriber and don't appear to be logged in as a subscriber.

The gist of the article is -

On 25 April 2017 HMRC executives, Theresa Middleton and Jim Harra, were required to appear before the committee to provide information and answer questions about developments with Making Tax Digital. Also on the 26 April 2017 the committee was going to question Philip Hammond. about MTD.

Due to the upcoming election both sessions have now been cancelled, and there is no information about if/when they will be rescheduled.

Thanks (5)

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