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MTD: Monthly reports may be needed

Four million taxpayers will need to submit quarterly plus end of period reports for each trade and property business, leading to multiple submissions for different periods under MTD for income tax.

19th Feb 2021
Tax Writer Taxwriter Ltd
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MTD reports
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MTD for income tax has now morphed into MTD for income tax self-assessment (ITSA), and HMRC are now referring to the regime as ‘MTD ITSA’.

HMRC estimates there are four million businesses that pay income tax, but who are not VAT registered, so they are not already keeping digital business records. All of these businesses need to enter the MTD ITSA regime from April 2023 (see start dates below).  

What reports are required?

For each trading or property business the taxpayer operates they will have to submit a quarterly report of income and expenses in defined categories. The taxpayer will also have to submit an end of period statement (EOPS) for each of those businesses (the fifth report).

The MTD ITSA regime will incorporate all of the reporting required on the current SA tax return into a ‘finalisation’ or ‘crystallisation’ statement. This statement will bring together all of the information included in the MTD reports, plus other taxable income (such as investment and employment) to calculate the tax liability for the tax year. 

The draft MTD ITSA regulations (see developer hub policy update) indicate that individual landlords must submit separate quarterly updates for each category of property business (eg long term letting, FHL, overseas lettings).

All property businesses must use the tax year as the accounting basis period, but trades can use any accounting period. The quarterly reports are due exactly one month from the end of each of the quarter, which contrasts with one month and seven days after the end of the quarter for VAT.

The EPOS and the finalisation statement are both due by 31 January after the tax year end.

Example 1

Shaun is a self-employed builder who makes up his accounts to 30 April, and his VAT returns are submitted for the quarters to the end of April, July, October and January. He also lets two residential properties, one as furnished holiday accommodation (FHL) and the other as a long term let.

Shaun’s pattern of MTD reporting will be:

Month Property businesses: 5 April year VAT returns  Building trade: 30 April year end EOPS and year end finalisation
January       31 Jan x 3 EPOS31 Jan: Finalisation
February 5 Feb x 2   28 Feb  
March    7 March    
April        
May 5 May x 2   31 May  
June   7 June    
July        
August 5 August x 2   31 August  
September   7 Sept    
October        
November 5 Nov x 2   30 Nov  
December   7 Dec    
Total reports 8 4 4 4

Shaun needs to submit a quarterly MTD report for each of his property businesses and his building trade, an EOPS for each of those businesses, four VAT returns and a finalisation statement – a total of 20 reports to HMRC for each tax year.

Start dates

The mandation dates for MTD ITSA were announced in July 2020 and will be follows:

  • Existing property income: 6 April 2023
  • Existing trading income: first accounting period starting on or after 6 April 2023
  • New property business: 6 April following the start date
  • New trade: start of accounting period in year three

Individuals who have a combined gross income from all trades and letting businesses in excess of £10,000 per year are within scope of MTD ITSA. These people may not be liable to pay any income tax as the entry test is based on gross income not net, and the personal allowance will cover small profits up to at least £12,570.

Example 2

Jade lets her first investment property from 1 June 2023, and also starts a new trade as a self-employed diving instructor from 1 May 2023, making up accounts to 30 April. She will have to come within the MTD ITSA regime from these dates:

  • Property business: from 6 April 2024
  • Self-employed trade: from 1 May 2025

Combinations and mismatches

If Shaun in Example 1 uses the same accounting/MTD-compatible software for all of his property businesses and his building trade, that smart software may combine some of his MTD reports into a single submission. For example, his quarterly reports for his property businesses may be submitted together and all three EOPS may be delivered in one action.

HMRC intends to give businesses some flexibility to align their quarterly reporting periods, but this point is still being debated between the professional bodies and HMRC. The quarterly periods must be matched to the accounting basis periods.

It is clear that some simplification of the tax rules for accounting basis periods is required to make the implementation of MTD run smoothly for small businesses and landlords. The ICAEW has called for this in its Budget representations.

Change the tax year

ICAEW has also asked that the tax year end be changed to align with the end of a calendar month. Moving the year end back from 5 April to 31 March would be easiest to achieve.

However, Anita Monteith has argued more boldly in the FT that the UK should follow the Irish example and change its tax year to the calendar year, to make it more competitive internationally. The Republic of Ireland changed to a 31 December tax year end in 2002 when it joined the Euro.

Tune in to next Wednesday's Tax Talk to hear leading tax expert Rebecca Benneyworth help you stay up to date with legislation changes and share tips on how to get ready for Making Tax Digital.

Replies (181)

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Morph
By kevinringer
22nd Feb 2021 13:19

We have a lot of clients using Sage Business Cloud or QuickBooks Online. Neither of these can cope with any year end other than the last day of the month: they can't cope with 5 April. How are businesses supposed to use software that can't cope with the UK tax year?

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By adjadj
22nd Feb 2021 13:20

It appears that the majority of people in the SME and landlord sector will have a reporting period that end in June. Late July is the peak holiday season in the England/Wales, Scotland is 2 weeks earlier.

It is doubtful whether all will be able to get the help they need from their advisers in days 10-25 of July and whether they would have received all invoices for liabilities incurred in late June. Some sort of workaround will be needed

As a landlord I plan to report 25% of my costs and income for the previous year for July and October and sort things out in time for January with a final reconciliation in April

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By adjadj
22nd Feb 2021 13:22

Post deleted as was a duplicate

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Morph
By kevinringer
22nd Feb 2021 13:29

The problem with MTD is not the number of returns, inconvenient though they are, but the digitisation of the transactions. Take RTI as an example. The increase from 1 return a year to 54 (or more) wasn't as painful as it might have been simply because we were already using software for the payroll. It was still a pain and we've all got clients that tell us next month that employee Fred left 2 months ago. But by and large we can work with it. But for MTD ITSA we will have to digitise loads of transactions that are not digitised. We can train (some) clients to input their VAT into a spreadsheet because they are not having to make judgements and only inputting figures from an invoice. But ITSA requires judgement: is it capital or revenue? There's nothing on the invoice to tell the client so they've got to understand the rules. Then there's the categorisation. I have farmers who will buy all sorts from the agricultural merchant. That's OK for VAT because it's one invoice, one total, one VAT figure. But for ITSA the invoice will need sub-analysing between different ITSA expense categories.

I had a client who used QuickBooks and bank feeds. He made such a hash of it that it took me longer to correct his mistakes than it would have taken to start from scratch on a spreadsheet: and he's an IT consultant! He's been using QBO for a few years and if anything is getting worse (he's lost the enthusiasm he had when he started). So we've agreed he will abandon it and I'll use spreadsheets. He's limited so no ITSA for him, but given he's my most IT competent client I dread to think what my other clients are going to make of it.

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Replying to kevinringer:
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By tedbuck
23rd Feb 2021 10:24

I think Kevin is not alone. I have clients using Xero who have made such a hash of it that it has taken longer to sort it out than it would to have processed a paper bag. VAT errors are common from clients pressing the wrong VAT rate so underpayments of VAT are quite common. (Don't exist in HMRC's mind as digital is PERFECT - they have never heard of GIGO.) I dread to think what will happen when all the little people are pushed into using such software it is so 'clever' that it is very difficult and slow to correct if there are a lot of errors. I even have a client whose son designed her a digital simplex book - at least she is coping with that.

In the old days the Inland Revenue Staff not only understood their job but also had an appreciation of what went on in the real world a factor sadly missing nowadays not only in HMRC but in Parliament also. None of it is fit for purpose.

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Replying to tedbuck:
RLI
By lionofludesch
23rd Feb 2021 10:35

tedbuck wrote:
I even have a client whose son designed her a digital simplex book ....

Great idea.

He should develop and market it.

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Replying to tedbuck:
RLI
By lionofludesch
23rd Feb 2021 10:51

tedbuck wrote:

In the old days the Inland Revenue Staff not only understood their job but also had an appreciation of what went on in the real world a factor sadly missing nowadays not only in HMRC but in Parliament also. None of it is fit for purpose.

Part of this is that HMRC can't retain their staff. Working in the tax office is no longer a career, it's just something to do until a better job comes along. So they're constantly training staff and everyone's on the bottom rung of the ladder.

You can apply this to the wider business world too.

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Morph
By kevinringer
22nd Feb 2021 13:34

Why don't we hear anything about the ongoing MTD ITSA pilot? AccountingWeb reported 4 years ago that the pilot was starting and participators would be exempt from filing a 2017-18 SA return. See https://www.accountingweb.co.uk/tech/practice-software/mtd-pilot-offers-....

It's been rumbling on for 4 years now yet we hear nothing. If MTD was the 'no brainer' HMRC imply, surely we'd all have signed up by now. The fact that the pilot seems to have died a death sends a clear message which HMRC are blind to.

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neand
By neanderthal
22nd Feb 2021 13:36

i dont think that enough of us here understand the implications on us of such a change or we would have stopped words and organised ourselves how to object against this. We are not competitors and enemies with this. If we dont react, we will deserve what comes on us.

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Replying to neanderthal:
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By North East Accountant
22nd Feb 2021 13:42

It not that we don't want to but with DRC next week, followed by the budget, followed by Off Payroll working (IR35) followed by whatever he introduces in the budget it's very hard to find the time.

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Replying to North East Accountant:
neand
By neanderthal
22nd Feb 2021 13:47

i agree with you about work pressures, but we need to get priorities right. what can come before our own survival?

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Replying to neanderthal:
neand
By neanderthal
22nd Feb 2021 13:53

seems to me that some of us are happy about this as they believe its an opportunity to quadraple their fees...sweet dreams.

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Morph
By kevinringer
22nd Feb 2021 13:39

HMRC said they were launching MTD to close the tax gap. HMRC were saying that manual input was causing errors which on balance were in the taxpayer's favour. Not that HMRC gave us any evidence for such a statement. But what has happened to the tax gap since MTD VAT started? Has it closed or has it widened? All the MTD pilots appear to focus on transmission of data to HMRC and not the accuracy of the underlying data itself. It's as if HMRC is not interested in the clangers clients make. We've all seen cases of software claiming 20% on insurance, rates, even drawings and tax. I've even seen clients claim 20% VAT on their HMRC VAT payment! Yet HMRC don't seem to be bothered by this as long as the garbage is transmitted digitally to HMRC they are quite happy.

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Morph
By kevinringer
22nd Feb 2021 13:52

Where would we be without HMRC? How would we have made such a good living? Just think, pre-SA we used to work 9 to 5, 5 days a week. Then HMRC launched their MTD (Make Taxagents Dosh) phase 1: self assessment. Suddenly we had loads more work and could charge our clients more for it. Then phase 2: PAYE software, we took on loads of payrolls and got a bit richer. Then online VAT returns: we could charge for submission even if we didn't complete the return. Every time HMRC introduces something new, it gives us more work so we can charge more for our services. I'm sure HMRC must have shares in our practices. Why else would they give us so much job security. Let's look at recent developments. The 30-day CGT gives us loads more to do (more fees), and domestic reverse charge next month is another bonus. We took on loads of extra work when MTD VAT started and we'll take on loads more if HMRC are crazy enough to start MTD ITSA.

So if we agents are getting so rich, why would we complain? Because our clients don't gain from any of these HMRC schemes. Though many of my clients have been forced onto software or spreadsheets for MTD VAT, not one of them has benefited from it. It takes their time and the resultant garbage is of no use to them whatsoever. MTD ITSA is HMRC's ultimate 'lets keep agents in a job' scheme.

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Replying to kevinringer:
neand
By neanderthal
22nd Feb 2021 13:56

if you are sarcastic here, i am totally with you. if not, what can in say? enjoy your riches.

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Replying to neanderthal:
Morph
By kevinringer
22nd Feb 2021 14:10

For the avoidance of doubt, I was (am) being sarcastic. Some of us may well be charging more, but not for all the additional time. My point is with every scheme, HMRC seem to think that all that needs to be done is to press the button and hey presto all that lovely balanced accounting data is filed with HMRC. HMRC don't seem to know what goes into making nice clean balanced data in the first place. When HMRC started my HMRC contact was with local tax inspectors etc who would be carrying out local inspections so had personal experience of dealing with small businesses. When I attended a HMRC MTD meeting a few years ago all the HMRC bods admitted they had no 'customer' contact at all. In fact they admitted they didn't know much about tax because they were really IT bods. They were amazed when I said I have clients who don't have internet banking. I don't think they believed me when I said I live in rural Wales and have clients who don't even have broadband. The HMRC bods were so out of touch with the real world.

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Replying to kevinringer:
RLI
By lionofludesch
22nd Feb 2021 14:22

The additional work is low grade bookkeeping work.

I'm not interested in it.

I suspect many others aren't either.

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Replying to lionofludesch:
Morph
By kevinringer
22nd Feb 2021 14:41

You may not be interested in bookkeeping work, but I suspect you will be even less interested in wading through the client's efforts and fixing all their mistakes. HMRC seem to think we'll only have to cast our eyes over the client's work and hit 'submit'.

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Replying to kevinringer:
RLI
By lionofludesch
23rd Feb 2021 10:10

kevinringer wrote:

You may not be interested in bookkeeping work, but I suspect you will be even less interested in wading through the client's efforts and fixing all their mistakes. HMRC seem to think we'll only have to cast our eyes over the client's work and hit 'submit'.

I won't be doing that either.

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Replying to kevinringer:
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By BryanS1958
22nd Feb 2021 14:11

Unfortunately most clients are fee sensitive and expect more without paying more. For example, after a lot of running around dealing with furlough claims and jumping through hoops for other initiatives some clients are asking why our fees are higher!

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Replying to BryanS1958:
Morph
By kevinringer
22nd Feb 2021 14:25

That's because they only see a few bits of paper with figures on them (the annual accounts) and have no idea of the blood sweat and tears that went into arriving at those figures. And if we're doing everything on computer then surely it's less work because the computer does it for us. In that respect, HMRC seem to think the same as some clients.

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By rainbow
22nd Feb 2021 14:43

MTD ITSA may be OK for large city firms with clients who are advanced in their IT skills. I do not fit in the first category and certainly my clients do not fit into the second. Many of these have small businesses below the VAT limit and/or rented properties - some only one others several. I count my blessings each year if I am able to get information from them to enable the self assessment return to be submitted in time. There is absolutely no chance of them supplying me with quarterly figures, let alone them or me being able to submit the figures to HMRC that frequently. I always advise my clients of their future tax liabilities at an early stage and this has never been a problem to me or them.
As the original article indicated, it may not even be 4 quarterly returns but depending on the accounting date a further 4 as a minimum.
My clients who were entitled to make SEISS claims struggled to do so and I had to spend a considerable time on the telephone giving instructions.
As another respondent said, with all the possible return periods it inevitable that some will fall when we might be away on holiday. Who will help the clients then?
I am sure others will be faced with similar problems. Perhaps we should tell clients we cannot help them with these in which case HMRC would be faced with a vast number of non-compliant taxpayers. Would they really penalise such numbers or might reality prevail? It is time for our professional bodies to stand up to HMRC and stop this foolishness. What do we pay our membership fees for?

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By unclejoe
22nd Feb 2021 14:48

As I started reading this there were 75 replies, and now there are 96 so I apologise if adding to it is not helpful. Would someone tell me please what the implications of all this are to someone in the following situation:

Income per year, typical:

* domestic garage letting £420
* self employed musician earnings £5,000 (zero for 2000/21)
* self employed casual warehouse work £3,000
* self employed care worker for elderly £4,000
* employed (PAYE) earnings as part time care worker £8,000
Total approx £20-21K

The person is dyspraxic and finds record keeping and organisation extremely difficult. He gets help to complete his once a year tax return which is completed from the bank record. No expenses are claimed as he finds this too complicated, but they are trivial - a few guitar strings, perhaps. He does not use an accountant.

He could probably get away with not reporting most of his self employed income, but he is an honest chap and would not want to not play by the rules. My guess is that MTD will effectively force him to do that. Or maybe he will just give up his self employed work and live on state benefits. Either way, how does that help HMRC or contribute to the wider economy.

A commentor suggested that this would help reduce fraud. It won't - it will make fraud more likely, IMHO. HMRC will be so inundated with their own nonsense bureaucracy that they will not have time to tackle fraud and the frausters know it. And it is more likely to push honest citizens like this fellow into the black economy. It is so, so nuts.

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Replying to unclejoe:
Morph
By kevinringer
22nd Feb 2021 15:03

Uncle Joe, you would apply for exemption for your client. I have applied for MTD VAT exemption for a quarter of my MTD VAT mandated clients and HMRC accepted all but one without question. So that gives you hope they will accept your client too.

FYI if HMRC reduce the MTD VAT turnover threshold 2022 I will be applying for loads more exemptions. And if they steam roller MTD ITSA, yet more again.

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By memyself-eye
22nd Feb 2021 15:11

37 days to go.

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By Jo Nokes
22nd Feb 2021 16:04

Iwish Sift could make this thread a 'sticky' so that the topic will remain at the forefront. I've been waiting for some time for the debate to hot up, and this article has provoked just that. I don't think the Institutes have fought our corner, but the small trader is not their concern.

And although we are rightly concerned with the people we represent, there is a huge number of tax payers, maybe landlords, or traders, who currently file their own retruns, and who will be dismayed, to say the least, when HMRC finally announcces the new procedures (they will do that, won't they?)

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Replying to Jo Nokes:
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By tedbuck
23rd Feb 2021 10:38

Judging by what on reads on Domestic Reverse Charge about 40% of people affected don't know it exists so given the target audience I should think about 60% of taxpayers won't know what is coming, so there does need to be a public debate in the press and on tv and on other media forms so that Jo Public is aware of what is going to hit him. The only thing in the media at the moment is Covid scaremongering and everything else is forgotten but MTD is just as much a plague as Covid and will drive many people to the edge of insanity. Personally I think it is a deliberate ploy by Government to raise money through fines instead of taxes. Look at GDPR and the like it's quicker and easier than taxing people and allows 'no tax rises' promises not to be broken. I mean they could always stop final salary pension schemes for civil servants and politicians which we pay for and few in the real world can now afford. Rishi Sunak please note.

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Morph
By kevinringer
22nd Feb 2021 16:42

A key difference between MTD VAT and MTD ITSA is that VAT is a transactional tax so can be recorded on a transactional basis and declared monthly, quarterly or annually. But income tax is an annual tax and any attempt to chop it up into smaller periods causes problems.

Look at how complex PAYE is which merely attempts to chop up the Personal Allowance and tax bands into smaller bits. Even then there are all sorts of problems with changes in income, allowances etc which might cause K codes, week 1 and so on. Now multiply PAYE complexities by 1000 when we start to take into account that many businesses are seasonal and might make all their profit in just one MTD ITSA quarter so attempting to force quarterly MTD ITSA tax estimates into an annual estimate just won't work unless you attempt to forecast the remaining quarters. Even if the business is not seasonal, many small businesses don't buy their plant and equipment until the end of the year (because it's then that the proprietors have an idea what their ANNUAL profits are and how much they can/should invest in equipment) and because AIA are annual, they relate to all 4 quarters of the MTD ITSA year which then make meaningless any tax calculations from the first 3 quarters.

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Morph
By kevinringer
22nd Feb 2021 16:46

How does MTD ITSA apply to partnerships? I have lots of family farm partnerships that allocate their profits at the end of the year based on the most tax-efficient allocation. Their partnership agreements allow for this and as the tax is paid from the partnership bank account they all want to minimise it. It's not until the end of the year that the profit can be determined and apportioned because events at the end of the year can significantly affect the whole year. Just look at Covid - lockdown just a few weeks before the end of the year meant some businesses suddenly found themselves with worthless perishable stock.

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Tornado
By Tornado
22nd Feb 2021 16:59

I love the current Sage (or is is Xero) advert where a primitive robot has a screen on its chest full of graphs and it is extolling the advantages of using their software. The fact is that only one or two of my clients might have any interest at all in graphs and I think most people are likely to be totally unimpressed by this advert which probably doesn't work as well as anticipated.

Not as bad, however, as the current advert for an electric car leaving tracks in pristine snow and then coming to a halt in same snow. I am not sure what this is meant to convey but my first thought is that the damn thing has run out of electricity in the middle of nowhere, surrounded by a wilderness of snow.

So it is not only programmers that out out of touch with the real world but 'clever' advert creators as well.

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Replying to Tornado:
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By tom123
22nd Feb 2021 20:14

Working at board level for many years, I have probably only done a handful of graphs!

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By tedbuck
22nd Feb 2021 17:37

We need a revolt of taxpayers over this pointless rubbish. Get the media to talk to the world about it and let people know what it will cost them in time and money and get them to lobby their MPs.

If their lives are affected by it they might just listen although in their cloistered world it may seem unlikely.

Could always sack the bloke at the top of HMRC!

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RLI
By lionofludesch
23rd Feb 2021 07:05

"Just take a picture on your smartphone and upload it using the free app."

No problem.

And, by the way, they're not "returns", they're "quarterly updates".

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Replying to lionofludesch:
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By Carolynne
23rd Feb 2021 09:06

Lionofludesch, you are assuming that all those lower earning self employed people have smart phones and know how to use technology. I have lots of clients who do not. At the other end of the scale, I even have a client who turns over more than a million and doesn't know how to use their phone or a computer in this way. You also assume that this person understands book keeping and knows how to code their purchases and sales - a lot do not.

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Replying to Carolynne:
RLI
By lionofludesch
23rd Feb 2021 10:37

Carolynne wrote:

Lionofludesch, you are assuming that all those lower earning self employed people have smart phones and know how to use technology. I have lots of clients who do not. At the other end of the scale, I even have a client who turns over more than a million and doesn't know how to use their phone or a computer in this way. You also assume that this person understands book keeping and knows how to code their purchases and sales - a lot do not.

Aye.

I'm guessing you missed HMRC's "John the Plumber" video when MTD was first announced.

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By AndrewV12
23rd Feb 2021 08:17

But I don't understand the Conservative party are the party of low taxes and cutting red tape, ............... Surely.

one reason we left the EU.

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By AndrewV12
23rd Feb 2021 08:17

But I don't understand the Conservative party are the party of low taxes and cutting red tape, ............... Surely.

one reason we left the EU.

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Replying to AndrewV12:
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By Ajtms
23rd Feb 2021 09:27

The problem is that MP's don't understand the underlying detail. They just see headline material that it is all about computerising tax and we can understand that they would support those headlines if the headlines is all that they are given by HMRC. We all now need to write to our MP's and fill them in on the detail showing that this will destroy businesses as they will need to spend more time accounting than looking for work and earning a living.

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By Carolynne
23rd Feb 2021 09:02

If its the tax they are after on a more regular basis from the self employed, why can't they simplify it and just ask the self employed person to pay tax payments on account on a monthly basis, based on the previous years submission. Then they are getting the tax in regularly without all this farce?

It is going to be a nightmare, especially for those clients who are not computer literate or not very organised with paperwork. How will the lower earners be able to afford all these additional requirements, both in the provision of software and increased accountancy fees? It beggars belief doesn't it.

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Morph
By kevinringer
23rd Feb 2021 09:39

All this was announced in detail in the HMRC consultations held autumn 2016. But it appears to be news to some on this forum. There's still time to get something done about it: lobby your professional body, lobby your MP, if there is another consultation take part in it, lobby HMRC (via the Agent Forum - ok, hardly anyone uses it but it is now HMRC's official means of agent/HRMC communication).

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neand
By neanderthal
23rd Feb 2021 09:45

there is no doubt that action nneds to be taken. Certanly lobbying MPs, lobbying the prof. bodies helps. I will do that plus i will email all clients to explain the situation with contact details of their MP asking them to contact them. In addition, I will contact the local press for a release.

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Morph
By kevinringer
23rd Feb 2021 09:46

Re contacting your MP, I actually met my MP about MTD and he was astonished about the requirements. He had been self-employed in a former life so knew something of the obligations that fall on the self-employed. He contacted HMRC and received their standard reply about how wonderful MTD will be. It didn't progress any further because no other constituents contacted him. But enough did, he'd take it further. Also, if enough MPs write to HMRC then maybe the message will get through. Having said that, there was no ambiguity in the House of Lords report but HMRC ignored it.

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Replying to kevinringer:
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By johnjenkins
23rd Feb 2021 10:10

We all know HMRC won't do anything, they never do until last minute. I very much liken HMRC to the EU. Ideals above their station with no regard to the people that get affected.

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Morph
By kevinringer
23rd Feb 2021 09:54

Re the arguments about paying tax more frequently, I am in favour of that though I oppose MTD because of the huge burden of digitising transactions. The currently payment regime only works if income is consistent, and how many self-employed have consistent profits? Buy a van 2018-19 and tax bill goes down and maybe no payments on account 2019-20. 2019-20 profits are up because didn't buy a van 2019-20 so big tax bill 31/01/2021 and also payments on account. So 31/01/2021 is huge. Large payments on account 31/07/2021. But 2020-21 profits are down so when the 2020-21 tax return goes in there's a refund. The current system is crazy. There's lots of ways to make it better without the need for digitised transactions. I'd favour more payments and get rid of 31 January being the balance for one year and first payment on account of another year. I think there is some merit in changing the SA DD system so it works like the VAT DD (by automatically collecting the right amount of tax) and get everyone to pay monthly DD - still in arrears.

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Replying to kevinringer:
RLI
By lionofludesch
23rd Feb 2021 10:04

kevinringer wrote:
....... get rid of 31 January being the balance for one year and first payment on account of another year.

I've not had a client who gets this at all.

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Replying to kevinringer:
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By johnjenkins
23rd Feb 2021 10:21

The date of submission of returns and tax payment should be 31st March. Many of us advocated this at the seminars during SA talks. Then the second on account payment 30th September. There is a mechanism that these on account payments can be changed, and there is certainly nothing stopping people paying monthly if they so desire. Why should it be mandatory? SE is based on a years profits and that should not be changed. If it does get changed then there will be a bigger mess than ever. VAT is totally different as the money is based on fact not what profits may be.

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Tornado
By Tornado
23rd Feb 2021 10:00

The bottom line is that the current self-assessment system works very well indeed in principal and if HMG spent time on improving this rather than on fancy new unworkable schemes that are doomed to failure, then we really would have a world beating tax administration system.

If payments are required quarterly instead of half yearly, then OK as this would be fairly easy to introduce.

I do, however, know that it is the nature of Government (or is it the Civil Service) to do things the hard way so that they keep their jobs and it is very unlikely indeed that a logical, simpler way to do things will ever get accepted as that would mean the loss of those jobs.

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Replying to Tornado:
RLI
By lionofludesch
23rd Feb 2021 10:14

Tornado wrote:

I do, however, know that it is the nature of Government (or is it the Civil Service) to do things the hard way so that they keep their jobs and it is very unlikely indeed that a logical, simpler way to do things will ever get accepted as that would mean the loss of those jobs.

In fact, the taxpayers are doing the hard graft so that less civil servants are needed.

Who knows how much revenue is slipping through the net now that the prospect of an enquiry is so close to zero.

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By the_fishmonger
24th Feb 2021 09:26

Tornado wrote:

I do, however, know that it is the nature of Government (or is it the Civil Service) to do things the hard way so that they keep their jobs and it is very unlikely indeed that a logical, simpler way to do things will ever get accepted as that would mean the loss of those jobs.

But making things simpler does not need to lead on to job losses. If they actually thought about this, or asked someone outside of their consultantcy bubbles, they'd maybe see a simpler system with more compliance officers (those jobs that would otherwise be 'lost') would be more efficient and better equiped to collect as much tax as possible.

The crux is you aren't going to see this because the lunatics cannot think differently to what they have been indoctrinated in.

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Replying to the_fishmonger:
Tornado
By Tornado
24th Feb 2021 09:43

Yes, I generally agree with you. This is the argument in another thread about doing away with VAT and having a sales tax which would make perfect sense in that all those HMRC officers checking the correct treatment of VAT as it passes through multiple businesses could specifically allocated to the monitoring of tax collected from the end user.

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