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MTD mainstream comms coming next year

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27th Oct 2016
Freelance journalist
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The Making Tax Digital consultation ends early next month but in the absence of a national marketing and advertising campaign many small businesses are unaware of the extent of the planned changes and tight timetable.

With less than two weeks before HMRC's consultation on digitising the tax system ends, the tax department will do more to publicise the planned changes after the consultation in spring 2017.

Although there is support for MTD’s aims, many in the profession are concerned that there may not be enough time to prepare for the changes. They are also puzzled as to why the planned changes - the biggest to the UK tax system since the introduction of self assessment tax returns in 1997 - have not yet been explained and publicised in a national advertising campaign.

Contrast this, some experts say, to publicity campaigns for automatic enrolment and campaigns against tax avoidance in different parts of the economy.

HMRC said in a statement to AccountingWEB: “We are currently consulting on the arrangements for Making Tax Digital, using a range of approaches to reach as many stakeholders as possible, and urge all interested parties to respond and make their views known.

“We will expand our activities to raise awareness of what MTD will mean for businesses once the current public consultation is complete and there are specific actions for businesses to take,” the Revenue said.

HMRC did not give a date for when the publicity campaign will start, although mainstream comms are expected to increase early next year following consultation.

IT is another big challenge as many clients will still be using spreadsheets for their financial records.

Ed Molyneux, founder and chief executive of FreeAgent said that recent research it did found that 43% of the UK’s micro-business owners have no idea what Making Tax Digital is.

“The highest priority after the consultation would be for HMRC to provide more clarity and detail to businesses, accountants and other stakeholders on their plans for implementation. This would allow everyone to work together to be able to fully support the initiative,” he said.

Tax expert Rebecca Benneyworth added: “[HMRC] will have to work with software companies and software companies will have to work as quickly as they can once they have nailed down the details [of MTD]. Tax agents can’t really start migrating clients [to MTD] until there’s a reasonably [steady] software product”.

Although HMRC has recently not said much to the press about MTD, it is carrying out thorough consultation with businesses and accountants.

It’s not clear, though, what the main messages of the consultation have been and whether HMRC is prepared to make changes if people don’t like the plans.

“I am encouraging businesses and [accounting] firms to make responses directly to HMRC because on this uniquely it’s the view from the frontline that’s important,” Benneyworth said. “The [representative accounting and business] bodies might have things that they can add to the technical side of it but in terms of answering questions about how [MTD] is going to work and what we see are the key problems it’s the people in practices and businesses that have the insight to say this is exactly the problem.”

For Benneyworth, consultation priorities should focus on supporting businesses moving to the digital tax system and setting the right exemption turnover threshold (£10,000 is the current proposal) for when businesses are covered by MTD.

Is HMRC listening?

“HMRC tells us that they are in listening mode - a phrase they have used many times,” said Richard Wild, head of the tax technical team at the CIOT. “I Hope that’s the case.”

He added: “One thing that’s quite key is almost what they are not consulting on, this is a stage two consultation. A lot of the initial thinking has already been done, for example the timescale [for when MTD becomes mandatory].”

Tina Riches, national partner at Smith & Williamson, hoped that the consultation would clarify what tasks businesses can hand over to their accountants when MTD starts.

“Surely HMRC can’t mean that businesses don’t have to keep digital tax and accounting records themselves rather than getting their accountants [to do it]? That would discriminate against smaller businesses.”

When MTD becomes mandatory some clients may want their accountant to do everything for them while others may decide to do all their own tax, even though they may make mistakes when submitting returns because, for example, they don’t know the right tax relief to claim, Riches said.

 

Have you and your clients responded yet to the MTD consultation yet? Take a look at Rebecca Benneyworth's condoc resource pack for more information on responding.

Replies (34)

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By 0098087
27th Oct 2016 15:39

And the clients who put their invoices in a Tesco bag? Who don't use smartphones or don't have time to?

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By dogsbreath
28th Oct 2016 10:20

Had to look up the TLA for MTD. Kind of illustrates the problem...

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Replying to dogsbreath:
Small vinyl model of a smiling cat wearing a white cactus costume with neon thorns
By Cactuscat
28th Oct 2016 10:43

It'll be Major Technical Disaster pretty soon.

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Replying to dogsbreath:
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By leon0001
28th Oct 2016 10:59

Making Tax Difficult

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Replying to leon0001:
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By Ian McTernan CTA
28th Oct 2016 12:15

I'm going to use this to describe MTD from now on when discussing it with clients/the press/my MP/The Treasury etc.

Making Tax Difficult

Has a certain campaign ring to it!

(As long as you don't mind me stealing it!).

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Replying to Ian McTernan CTA:
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By leon0001
28th Oct 2016 13:02

Not my idea! I heard this from another accountant a couple of months ago.

Feel free to spread the word..

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Jonathan@Aiteo
By [email protected]
28th Oct 2016 10:55

In my opinion it's too early for a national awareness campaign, as the proposals are far to broad. It's not yet clear what detail will come out after the consultation period.

That said, the natural follow on to this is that the timeline of mid-2018 is for Income Tax is unachievable. It requires up to 3m sole trader businesses to switch from manual / Excel records onto digital software compliant with HMRC's new requirements - software which is not yet available on the market.

Thanks (11)
Replying to [email protected]:
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By leon0001
28th Oct 2016 11:07

Time to deadline for first filing is 1 year 9 months 6 days.
No software licensed yet.
No specifications.
Not yet decided who is affected.
I despair.

Thanks (15)
Replying to [email protected]:
Small vinyl model of a smiling cat wearing a white cactus costume with neon thorns
By Cactuscat
28th Oct 2016 12:18

It's such a circular problem at this point.

No awareness campaign means no meaningful consultation for small business.

No meaningful consultation with small businesses means no clear answers about exactly what will be required.

No clear answers about requirements means no direction for software development, means no truly meaningful feedback from either software providers or front-line users, which means even less clarity about direction...

While I can understand the argument that a lack of focus in the proposals means that an awareness campaign wouldn't be ideal, it would at least get more of a conversation started.

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Replying to [email protected]:
Small vinyl model of a smiling cat wearing a white cactus costume with neon thorns
By Cactuscat
28th Oct 2016 12:19

Double-post about a circular issue. Amusing.

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By johnjenkins
28th Oct 2016 11:05

You have to ask yourself why HMRC aren't publicising. The answer is very simple they haven't got a clue what they are doing and have no answers. Just think what fuss business will raise once they realise what is supposed to happen. It'll make the Accountants feedback seem like a tea party.
The software companies haven't got a clue either. This is all going to cost a lot more and I suspect won't come on line till 2020 at the earliest.
I remember being involved in the early days of SA. HMRC new the answers and it worked really well. Then having all income in one year on one return does actually make sense. Having 5 returns in one year for no reason (oh yes it benefits the business - who says it does???????) doesn't make any sense at all.

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By Marlowe52
28th Oct 2016 11:40

I am a small business owner and have responded specifically to HMRC's consultation, written to my MP an the issue and also filled out the on-line questionnaire from HMRC. Do I have confidence that they are listening? Short answer - No!
Most of our business is overseas - as such, we are an exporter of business services. Almost all of our revenue is in foreign currency.
I am horrified (but not surprised) that there is not a single mention in the entire consultation documentation about the challenges of multi-currency accounting and the calculation and recognition of profits in a market where exchange rates are fluctuating.
It is as if we small business exporters didn't exist. Well, here's the news - unless we get some support we won't!

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Replying to Marlowe52:
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By 0098087
28th Oct 2016 11:53

I see you've written to your MP. Good luck, if they are anything like ours in Braintree, you are wasting your time.

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Replying to 0098087:
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By RobertD
29th Oct 2016 07:20

0098087 wrote:

I see you've written to your MP. Good luck, if they are anything like ours in Braintree, you are wasting your time.

I have emailed my MP with the link to the Select Committee meeting video. I have warned him of the "perfect storm " and commented that MP Helen Goodman was able to attend in support if her constituents whilst he is sitting on his hands claiming the "devil is in the detail".

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By catlady
28th Oct 2016 11:45

Ignoring the abilities of clients and accuracy etc., what I do not understand is why they are demanding that everyone has to use cloud based systems. They did not require it for RTI and seem to be happy with desktop payroll systems sending files of data, so why not for MTD?

If cloud was not required, lots of smaller software companies could just build form like apps that would allow everyone to enter their quarterly data from their spreadsheets/ cash books etc. It is the obsession with the cloud that I find so suspicious (for want of a better word!)

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Replying to catlady:
jlsmith
By jlsmith
28th Oct 2016 11:53

It doesn't have to be cloud-based, just digital. So a desktop product would be fine, but it needs to be able to communicate with HMRC's API, so an internet connection will be vital.

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By jon_griffey
28th Oct 2016 12:08

This is going to be this Government's Poll Tax.

Thanks (7)
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By Ian McTernan CTA
28th Oct 2016 12:11

Dear software providers,

Here is what I want my new package to do. Take last year's completed figures, divide by four, reduce it to three lines, and submit that every three months. Allow figures to be adjusted in case we need to increase/decrease based on talking to client.

Then allow amendments to be made so that the actual figures are completed once a year when the client drops off his piles of paper/spreadsheets/bank statements etc.

If HMRC think clients are going to suddenly embrace some accounting package because HMRC says so they have another think coming.

If HMRC think clients will want to pay for quarterly reporting when there is ZERO benefit to them and it costs £XXXX in fees they are living in even further la la land than we already thought.

There is ZERO benefit for clients for MTD, but HMRC will continue to deny this as they have decided it's coming because they say it's a good idea.

Thanks (7)
Replying to Ian McTernan CTA:
By jon_griffey
28th Oct 2016 13:05

Ian McTernan CTA wrote:

Dear software providers,

Here is what I want my new package to do. Take last year's completed figures, divide by four, reduce it to three lines, and submit that every three months. Allow figures to be adjusted in case we need to increase/decrease based on talking to client.

Taking this one stage further, Most people have a rough idea what their business profits will be for the year ahead. That being the case, why not simply, at the start of the tax year provide HMRC with an estimate of the likely profits for each month/quarter of the forthcoming year (either as part of the tax return or perhaps input this info into the Personal Tax Account) and forget about quarterly updates and software altogether? It will save a lot of work, likely be no less accurate and achieve the same result. It will enable them to assess Universal Credit, enable pay-as-you-go and whatever other nefarious purpose they intend with quarterly information.

Thanks (2)
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By Pavilionaire
28th Oct 2016 12:32

Software companies are now beating a path to my door, with Iris, Digita and Xero all proactively trying to do more business with my practice. January is looming so the timing is not ideal.

However, I'm worried if I start signing up clients for their products I might look like a Charlie if - as seems possible:
1. HMRC either raise the 2018/19 'de minimis' level from £10,000 to £83,000.
2.HMRC postpone the introduction for 12 months and blame it on Brexit.
3. Some philanthropic software developer comes up with free software that converts Excel to a Quarterly Submission.

The MTD timelines are already screwed. HMRC need to delay implementation by a year in order to buy sufficient time to get this sorry project back on track.

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Replying to Pavilionaire:
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By leon0001
28th Oct 2016 13:39

You have forgotten:
4. The software from the supplier you select doesn't actually get HMRC approval.

No software has been licensed yet and HMRC have issued no information as to who is in the running or when approvals will be issued.

Still, no need to worry, the first filings aren't due for another 21 months...

Thanks (2)
Replying to leon0001:
Morph
By kevinringer
28th Oct 2016 13:46

I attended the Manchester HMRC MTD meeting. HMRC said that currently there are 25 software suppliers and 1000 taxpayers taking part in a "private" beta. So there must be software albeit not available for public release. HMRC said that they're hoping to get 400,000 taxpayers to participate in the public beta starting spring 2017.

Thanks (1)
Replying to kevinringer:
Jonathan@Aiteo
By [email protected]
28th Oct 2016 14:03

Interesting. At the London event yesterday, HMRC said that there were 18 suppliers on the software beta. Right hand, left hand, etc.

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Replying to Pavilionaire:
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By Duhamel
28th Oct 2016 14:40

Pavilionaire wrote:

However, I'm worried if I start signing up clients for their products I might look like a Charlie if - as seems possible:

As a Charlie, I resent this.

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Morph
By kevinringer
28th Oct 2016 13:15

HMRC's latest slogan: "Tax doesn't have to be taxing but we'll make sure it is"

Thanks (6)
Morph
By kevinringer
28th Oct 2016 13:23

Question re start of MTD: start date April 2018 so 2018-19? What happens if the basis period is 01/05/17-30/04/18? Is the last month only brought into MTD? How will the first 11 months be returned to HMRC?

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Replying to kevinringer:
Jonathan@Aiteo
By [email protected]
28th Oct 2016 14:05

I didn't make an accurate note on this point, but I *think* the answer to this at the event yesterday was in this situation it would count as the final return outside MTD, with future returns falling in scope.

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Replying to kevinringer:
By Silver Birch Accts
28th Oct 2016 16:50

RB stated on Monday's seminat that it is a roll in process.
So MTD will start, from your illustration, on 01/05/18.
Normal service until 30/04/18 to be in 2019 Tax Return (the last one in this case).

Thanks (2)
Morph
By kevinringer
28th Oct 2016 13:26

I've seen a list of suppliers who are developing MTD software but can't locate the list on GOV.UK. If anyone knows it could you post a link please?

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Replying to kevinringer:
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By leon0001
28th Oct 2016 13:42

What list?

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Locutus of Borg
By Locutus
28th Oct 2016 13:57

"FreeAgent said that recent research it did found that 43% of the UK’s micro-business owners have no idea what Making Tax Digital is"

Presumably that 57% who are aware of MTD are FreeAgent users, who have been bombarded with MTD information from FreeAgent.

The true figure for micro-business owners unaware of MTD (including unrepresented taxpayers) is likely to be north of 90%. They have no idea of what is possibly coming in 18 months time.

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Jason Piper
By Jason Piper
28th Oct 2016 15:30

"Although HMRC has recently not said much to the press about MTD, it is carrying out thorough consultation with businesses and accountants."
I don't think it's that thorough. There's not a single reference in the condocs to TMA1970 and how the basis of self-assessment, creation of a tax liability and maintenance of records will all have to be fundamentally re-engineered for taxpayers in the interim reporting regime (MTD) - while of course we'll still need (most) of the existing machinery in place unmodified for those who remain on a pure fiscal year basis. Plus transitional provisions for those moving from one regime to the other.
All of that should have been settled before they started trying to write the software that's supposed to be implementing it; Agile Development is one thing, but this is more like clairvoyance.

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By Eileen Searle
31st Oct 2016 12:10

GHUA
God help us all. My clients are the black bag brigade and I have to work until I'm 70 so the government tells me
(5 years yet) I have trouble understanding all the changes let alone my 50 clients.

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By AndrewV12
14th Nov 2016 13:46

HMRc are keeping this very cloak and dagger, it has the hand of George Osborn allover it. Its all become a secrecy cold war HMRC against Clients, each one desperate to steal an advantage, secrecy and surprise is everything in this war.

Extract above
Contrast this, some experts say, to publicity campaigns for automatic enrolment and campaigns against tax avoidance in different parts of the economy.

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