Tax Writer Taxwriter Ltd
Columnist
Share this content

MTD: MPs raise more concerns

6th Dec 2016
Tax Writer Taxwriter Ltd
Columnist
Share this content
Parliament
istock_Alicia_Garcia

Two influential Parliamentary committees have questioned the Government’s timetable for MTD and the lack of a contingency plan.

Treasury Committee

Andrew Tyrie MP, chairman of the Treasury Select Committee (TSC) has taken a keen interest in the Government’s MTD proposals.

In October 2016, tax, accountancy and small business experts provided evidence to the TSC about the potential costs and savings expected to be generated by MTD. At that hearing Mike Cherry, policy director of the FSB, suggested that MTD would cost businesses £2,770. When challenged on this figure at the Hardman lecture, Jim Harra director of HMRC, said he would go back to the drawing board if MTD costs small businesses that amount.

Following the TSC hearing Tyrie wrote to the Chancellor on 27 October asking for a fully costed impact assessment of MTD, and a full pilot of MTD before its introduction. On 18 November Tyrie received a reply from Jane Ellison, the Chief Secretary to the Treasury, who has responsibility for HMRC. Ellison reiterated that HMRC expected businesses to make savings from MTD of between £85m and £250m per year.

Ellison also said that an initial pilot of MTD started in October 2016 with 1000 businesses. A second pilot will begin in April 2017 covering 400,000 businesses over a variety of trade sectors and geographical areas.

Tyrie wasn’t satisfied by this reply as he responded on 29 November, querying whether there is enough time to fully consult on the legislation which will underpin MTD. In precise terms Tyrie reminded Ellison that the Government has committed to abiding by the Tax Policy Framework under which “draft clauses for the Finance Bill will be published for scrutiny at least three months before the Bill is introduced to Parliament”.

The draft clauses for Finance Bill 2017 were published yesterday, but these did not include provisions relating to MTD, as the 5200 plus consultation responses are still being analysed. The overview to the draft Finance Bill 2017 states (at para 6.1) that responses to all 6 MTD consultations together with draft Finance Bill 2017 legislation will be published in January 2017.

The final draft of Finance Bill 2017 is expected to be introduced to Parliament shortly after the Spring 2017 Budget. Unless this happens in April 2017, that timing will breech the 3-month rule for consultations under the tax policy framework.

As the Smith and Williamson newsletter noted, “Deviations from the tax policy framework tend to be reserved for anti-avoidance measures required to tackle losses in Exchequer revenue.”

Public Accounts

The Public Accounts Committee (PAC) undertakes an annual review of HMRC’s performance. In its latest report looking at the department’s activities in the year to 31 March 2016 the PAC identifies areas of concern relating to customer service. In particular, the PAC is not convinced that HMRC has a credible plan to make savings without damaging customer service and calls for urgent action to address this.

It warns that HMRC “is staking a great deal on the success of its plans to digitise the tax system, but once again it lacks an adequate plan if demand for its call centres does not reduce as quickly as it hopes”.

The PAC notes HMRC’s assurances that it will seek additional resources if digital services do not reduce demand for personal tax services in line with its expectations. But adds: “We are concerned that it has not agreed a contingency plan for this eventuality with HM Treasury.” In other words there is no Plan B for MTD.

Replies (61)

Please login or register to join the discussion.

Tornado
By Tornado
07th Dec 2016 12:00

I wonder how the 400,000 businesses over a variety of trade sectors and geographical areas will be chosen. I am guessing that they will be businesses already using cloud based accounting software so that the trial will show a large success rate.

On the basis that 75% of businesses do not use cloud based software at the moment, the trial should include 100,000 already using cloud based software and 300,000 not already using cloud based software.

Somehow I don't think this will happen and this looks to me like just another cynical move by the pro MTD people (probably with vested interests) to further their interests.

I may be wrong but ..... I don't think so.

Thanks (19)
Replying to Tornado:
Morph
By kevinringer
08th Dec 2016 12:52

The 400,000 will be volunteers ie those who are probably already using MTD-like software. This won't be representative. HMRC needs to select an across-the-board sample which includes those who are persistent late filers etc.

Thanks (1)
By ireallyshouldknowthisbut
07th Dec 2016 16:56

Surely the pilot will be voluntary.

I would be impressed if they find that many volunteers.

Moreover anyone who does volunteer will presumably not be clients who currently do their books on excel in in a shoe-box.

Thanks (10)
Replying to ireallyshouldknowthisbut:
Morph
By kevinringer
08th Dec 2016 12:54

Very impressive - HMRC genuinely expect to get 10% of SA taxpayers to take part. No matter how IT-savvy you were and up to date, would you want to saddle yourself with the hassle of the extra work?

Thanks (3)
Replying to ireallyshouldknowthisbut:
avatar
By Joe Soap
09th Dec 2016 18:15

Using volunteers for the trial would remove any shred of validity from it.
The volunteers will either be the dead-keen who think this is all fun.
Or - and here is a challenge to you all - they will be those who think MTD is a terrible idea and they might just do everything to demonstrate that it is cr*p.
Please for an orderly line.............

Thanks (0)
avatar
By RobertD
07th Dec 2016 22:17

It'll be another ticked box.

Consultation.....tick (didn't actually tell many businesses)

Impact assessment... tick (started with £900m saving, reduced to £80m or £240m)

Pilot ...tick. (Choose volunteers who are computer savvy)

All done ✅ Sack a load of staff and move into new tax offices.

Wait for plaudits

Prats

Thanks (10)
avatar
By Darryl Gibson
08th Dec 2016 10:24

How can Ellison of HMRC expect businesses to make savings under MTD when many are not even using computers at present and they have to submit the information quarterly, so the accountancy bill and possibly the cost of converting to being able to do things under MTD WILL GO UP CONSIDERABLY.

They are just not living on this planet i think.

Thanks (21)
avatar
By david wilks
08th Dec 2016 10:40

Challenge to Harra is STILL out there. Come to my office if you dare and see what life is really about (and anyone else from MTD for that matter).
Go on Harra, be a man.

Thanks (8)
Replying to david wilks:
avatar
By RobertD
08th Dec 2016 11:05

david wilks wrote:

Challenge to Harra is STILL out there. Come to my office if you dare and see what life is really about (and anyone else from MTD for that matter).
Go on Harra, be a man.

Yes, come on Harra. This guy has challenged you several times. Great PR exercise, bring a photographer and press officer.

Thanks (4)
avatar
By North East Accountant
08th Dec 2016 10:41

One persons outputs are another persons inputs.

Outputs from Joe Bloggs is HMRC inputs. Poor old Joe has no idea what's coming with MTD and as we all know will produce utter tosh, left to his own devices.

HMRC are designing their system based on Joe's inputs.

Good luck with that!

Thanks (4)
avatar
By why always me
08th Dec 2016 10:46

why is it every time hmrc want to help and make it easier / cheaper for taxpayers, it simply adds more bureaucracy which agents get the blame for when we advise clients that it will take 4 times as long to do 4 lots of accounts (for the 50-75% who are not tech savvy and have no interest in being so) and therefore 4 times the cost

Obviously trying to make taxpayer move to doing themselves without advice and pay more tax. Already dealing with rti and auto enrolment mess (typical small client goes through process for all staff to opt out, but they are compliant)

Be honest, raise taxes if need be, or move payments due earlier rather than this nonsense.

Thanks (8)
avatar
By raybackler
08th Dec 2016 10:53

HMRC don't seem to have any idea how much intervention there is from accountants before the data hits their systems. Cloud take up is higher with our limited company clients, whose income is mostly a small salary (covered by RTI) and dividends. I can see a simple requirement to upload dividends quarterly will solve MTD for many of these clients. But what about the limited company directors and annual clients who have rental property? What about the self employed who just produce a pile of receipts once a year? These clients don't use cloud software and, given the choice, they never would.

Thanks (8)
avatar
By Alanpryan
08th Dec 2016 10:55

Put simply....there is a greater possibility that the four horsemen of the apocalypse will canter through my office...than there is that 95% of my self employed clients will cope with any part of MTD - unless I help them, and at least double their current bill

Thanks (8)
By taxhelpukcom
08th Dec 2016 11:07

On a HMRC webinar yesterday they had slides and a presentation that stated 'MTD WILL be coming in and mandatory from April 2018'

So much for the 'consultation' that is supposed to be being analysed at the moment before decisions are made...

Thanks (9)
Tornado
By Tornado
08th Dec 2016 11:12

It is not difficult to see that those with vested interests will make £billions from the MTD proposals and history shows us that where there are large amounts of money involved in a project, there is usually corruption.

I still need to have a truthful answer from someone as to why mandating the use of commercial software is necessary. Although there are ongoing cynical efforts to try and justify this, no believable answer has been given as yet although the reason does seem perfectly obvious to me.

Thanks (7)
avatar
By Barkster
08th Dec 2016 11:20

Is there an online petition to protest about MTD ? If not, shouldn't there be ?

Thanks (5)
Replying to Barkster:
avatar
By RobertD
08th Dec 2016 12:28

Barkster wrote:

Is there an online petition to protest about MTD ? If not, shouldn't there be ?

https://petition.parliament.uk/petitions/167738

Not really taken off but still many aren't aware of the changes let alone the petition

Thanks (0)
Replying to RobertD:
avatar
By BryanS1958
08th Dec 2016 12:54

It doesn't help that the petitioner can't spell hugely.

Thanks (0)
avatar
By Ang
08th Dec 2016 11:21

Before undertaking MTD, HMRC should get it own house in order. We are only a small Agency but if our experience with HMRC over the last 12 months is anything to go by certain sections are an absolute shambles. Complaint letters or even ordinary letters not answered for over 3 months and in the eventual response to a complaint letter our address spelt incorrectly together with a waffle of a reply, just recently Control of Good notice and a field officer visit for an amount overstated by £10K!! evidenced by HMRC's own letters prior to the Notice! and also 2 outstanding letter with HMRC concerning the situation that had been totally ignored. Eventually received a profuse apology saying the Control of Goods notice should never have been sent. Thats all well and good but if we make a mistake when submitting a return or are just one day late then penalties abound without the blink of an eye.

If our experience is anything to go by I hate to think what is happening across the country.

Digger, Tonbridge

Thanks (5)
Replying to Ang:
avatar
By raybackler
08th Dec 2016 12:10

Still waiting for a reply to a letter I wrote to HMRC in February. I made a follow up call and they confirmed they had the letter and it had been passed around several departments. I was promised a couple of months ago that I would get a call about it within a week as "it had gone on long enough". Still waiting and having to steel myself to go through the voice recognition system to make a follow up call. The system that can't recognise "Yes", until it is repeated for the fourth time, that is.

Thanks (4)
Replying to raybackler:
avatar
By raybackler
08th Dec 2016 16:54

I gritted my teeth and made the call. I have been putting it off with some justification. Dialled the employers line and for the second time the voice recognition system diverted me to the employees line when I said my question was related to Tax on Pensions. This was related to a PAYE settlement request where errors were made on a salary sacrifice arrangement that can't be corrected as they are now leavers and the employees involved believed it was done correctly, so wholly an employer error. This is too difficult for the voice recognition system, which assumes that as soon as you mention tax and pensions in the same breath you must be an employee. This is despite giving the Employers Reference, saying I'm an agent and saying yes I do have a 64-8 in place! Anyway they have promised to call back in 7 days, which is the same promise I had on 10th October. Aaargh!

Thanks (1)
Replying to raybackler:
Morph
By kevinringer
08th Dec 2016 17:12

It's called progress. But don't worry. I was assured when I attended the Manchester MTD session that we won't need to phone HMRC. The software will have prompts and nudges that will answer all our questions. Who needs 20th century technology.
Of course, any clients using the software are not going to even attempt to phone HMRC and speak to the voice unrecognition system and have to quote UTR/NINO they don't remember and speak to someone they don't know. Nor are they going to phone their software supplier who also doesn't know the client. No, the clients will phone use because we know them, we know their business, we know the level of IT competency. We are going to be very busy. The only way we'll earn a living is changing our phone number to a premium rate number.

Thanks (3)
Replying to kevinringer:
avatar
By raybackler
09th Dec 2016 13:53

I like the idea of a Premium Rate number, but that is as far as it goes. I think there will be an avalanche of calls for the average accountant. Most clients expect the advice to be free, as they always do when the the law changes, because they don't see it as their fault or their problem. We accountants prevent huge numbers of calls being made to HMRC by giving free advice. On the other hand maybe we should just refer all client enquiries to HMRC and wait for the media storm when the calls go unanswered.

Now hears a thought, I could just transfer the calls to HMRC, via the Premium Rate number and then each client would be paying me 5 minutes at a £1 per minute while they try and negotiate the voice recognition system instead of me. Everyone's a winner (except our clients).

Thanks (0)
avatar
By tiercel55
08th Dec 2016 12:59

This MTD is shaping up to be a monumental disaster . I cannot for the life of me see what the point of it is . Where on earth are these savings to businesses coming from - you don't need to be an accountant to see that there will be additional costs for businesses for absolutely NO benefit

Thanks (5)
Tornado
By Tornado
08th Dec 2016 13:36

taxhelpukcom wrote -

"On a HMRC webinar yesterday they had slides and a presentation that stated 'MTD WILL be coming in and mandatory from April 2018"

This is just self-delusion that seems to be endemic in the MTD team and works on the basis that if you say something many times to yourself, it will become the truth.

I have seen this many times in my life, the latest example being those that convinced themselves there could be nothing other than a remain vote in the EU referendum. The same with the MTD Team, self delusion that MTD will progress as they envisage but not even considering looking at evidence that suggests it might not.

I remember looking (I think it was on the BBC website) recently before the US Election Vote that of 180 polls in the US, only about 17 predicted a Trump win and about 20 or so were 50/50.

Apart from anything else, this now suggests that people taking part in polls are either self-selecting and biased one way or people are deliberately giving answers opposite to the way they will really vote.

The bottom line here is that HMRC can believe what they like and try and convince us the same, but I think the reality is that someone will see sense and MTD will progress is a much more reasonable and pragmatic way.

I note in the letter from Jane Ellison MP to Andrew Tyrie (18th November 2016) that she is still basically reading from the MTD Glossy Brochure but I am somewhat alarmed by her statement that

"The Government intends to implement MTD gradually over a number of years, starting with Income Tax and NICs from April 2018 ...."

This to me suggests that she has NO IDEA what this means and is perhaps thinking that this just relates to people who are employed. Does the Chancellor believe this as well?

What a mess!

Thanks (5)
avatar
By timothyvogel
08th Dec 2016 13:37

why don't we, as professionals working at least in part in the public interest put our money where our moths are, and sign up for the trail. and convince some of our more paper based client to as well. That would allow us to put our point across very strongly.
I floated this idea at a networking meeting recently and at least 2 business were so horrified by the proposal taht they were willing to be included in the trial (to be fair they are both people I have been badgering to buy a computer for a couple of year, this would be the tipping point) .
Also professional bodies being very quiet on this front?

Thanks (0)
Replying to timothyvogel:
Morph
By kevinringer
08th Dec 2016 13:46

I have participated in every HMRC pilot and trial going to date, but I'm not taking part in MTD because I know the massive amount of support my clients would need and I have not got the time. Also, if I did do it then all the hassle would fall on me - as far as HMRC would be concerned the trial would have been a success.

Thanks (2)
avatar
By Mr J Andrews
08th Dec 2016 13:54

Rebecca's conclusion is that there is no Plan B for MTD.
Plan A is not tenable. Harra has advised that he is to go back to the drawing board. The rift between the profession and HMRC is widening by the day with Harra's intransigence.
The profession and Joe Public apart , Tax Policy Framework must be abided by and the Public Accounts Committee must be satisfied. So , nobody is pleased .
Harra's role within HMRC is Tax Assurance Commissioner with departments mainly responsible for :
~Meeting customer needs
~Making it easier for them to get it right.
You just don't get it Harra.
The simple solution is to put Harra out to grass{ sic }and his replacement to WORK TOGETHER with professionals who understand what Harra cannot grasp about real life business.
Too simple perhaps , but how many more costly drawing board meetings to come up with Plan C Harra ?

Thanks (8)
avatar
By Mr J Andrews
08th Dec 2016 13:54

Rebecca's conclusion is that there is no Plan B for MTD.
Plan A is not tenable. Harra has advised that he is to go back to the drawing board. The rift between the profession and HMRC is widening by the day with Harra's intransigence.
The profession and Joe Public apart , Tax Policy Framework must be abided by and the Public Accounts Committee must be satisfied. So , nobody is pleased .
Harra's role within HMRC is Tax Assurance Commissioner with departments mainly responsible for :
~Meeting customer needs
~Making it easier for them to get it right.
You just don't get it Harra.
The simple solution is to put Harra out to grass{ sic }and his replacement to WORK TOGETHER with professionals who understand what Harra cannot grasp about real life business.
Too simple perhaps , but how many more costly drawing board meetings to come up with Plan C Harra ?

Thanks (0)
avatar
By hiu612
08th Dec 2016 15:01

I was on the same webinar yesterday. Its insane - the whole world has told them to slow down and think it through, and instead they are ignoring the consultation, speeding up, and introducing things like agent 2 step verification next April even though by their own admission they haven't yet worked out how that will operate in practice. Its like stubbornness trumps logic.

I have a great proposal - pilot the scheme on MPs. 650 of them, complete spread of ages, genders, outlooks, geographical spread, business interests, tax affairs and wealth. Who can think of a better cross section of society than that as a pilot trial.

Lets face it though, having introduced MTD, the politicians will probably exempt themselves from it on security grounds, like online filing.

Completely agree with the questioning of where the Institutes are on this - they need to be standing up more vociferously for their members in these matters. If they guided all members to boycott the trials, we could collapse them and force a government change. Some decent level lobbying by the Institutes would also be welcome. We roll over far too easily on these things, it seems.

Thanks (8)
Replying to hiu612:
Tornado
By Tornado
08th Dec 2016 15:22
Thanks (2)
Replying to hiu612:
Morph
By kevinringer
08th Dec 2016 15:23

hiu612 wrote:

I have a great proposal - pilot the scheme on MPs. 650 of them, complete spread of ages, genders, outlooks, geographical spread, business interests, tax affairs and wealth.

Great idea, but MP's income is employment but MTD only applies to business income. Those with personal business or rental income would have to comply with MTD.
Thanks (0)
Replying to kevinringer:
Tornado
By Tornado
08th Dec 2016 15:35

MTD will apply to everyone (45 million plus people) eventually which makes the current introduction proposals even more ridiculous, but in theory, EVERY MP would be part of a trial to manage their tax accounts, regardless of where their income comes from. Each person is required to check their digital tax accounts and notify HMRC of any errors on a regular basis. No more estimated PAYE codes as they will be based on the information in your Digital Tax Account which you (and all of us) will certify as being correct.

Thanks (0)
Replying to Tornado:
Morph
By kevinringer
08th Dec 2016 15:45

I recon MPs will be exempt because there are only 650 of them and no commercial software developer is going to create a product with such a limited market. https://www.gov.uk/government/publications/self-assessment-commercial-so... doesn't identify what existing software can handle MPs. Our Tax Return software (PTP) can't handle MPs but the list says it can handle everything. Until recently I thought MPs were exempt from online filing because of the lack of commercial software.

Thanks (0)
Replying to hiu612:
avatar
By Joe Soap
09th Dec 2016 18:10

I am pretty sure that MPs (along with certain other groups) are dealt with in a special office in Cardiff that is not linked to the internet for "security" reasons. So none of them know anything about doing their tax online - because they don't.

Thanks (0)
Tornado
By Tornado
08th Dec 2016 15:26

Does anyone know of anyone who is taking part in the 1000 person trial now in operation (apparently) or anyone who will be taking part in the 400,000 person trial from April 2017?

Or is this just another fantasy to try and fool us? (Seen through it already).

Thanks (0)
Replying to Tornado:
Morph
By kevinringer
08th Dec 2016 15:37

At the MTD HMRC presentation I attended in Manchester HMRC said the 1000 "private beta" taxpayers were supplied by ICAEW and FSB and that the 400,000 "public beta" taxpayers will be volunteers (the last HMRC webinar included a link to sign up).

I subsequently attended a meeting with someone from the ICAEW tax faculty during which I relayed the above - this was news to the ICAEW. So are HMRC telling porkies?

Thanks (0)
Replying to kevinringer:
Tornado
By Tornado
08th Dec 2016 15:49

Thanks Kevin.

400,000 volunteers by April 2017?

Thanks (0)
Replying to Tornado:
Morph
By kevinringer
08th Dec 2016 15:55

Tornado wrote:

400,000 volunteers by April 2017?


I know, it's crazy. 10% of all SA taxpayers. MPs should use this as a test of the feasibility of MTD. If MTD will save money for businesses, then businesses will sign up by the lorry load. If they don't sign up, this proves businesses don't believe they're going to be better of with MTD. Or it could just be ignorance.
Thanks (0)
avatar
By accountright
08th Dec 2016 16:10

We already have a digital tax system - the issue is making it mandatory to report every quarter with penalties for non compliance. The message coming from HMRC is that business' asked for this system. I didn't and none of my clients did so who did?

Far from making it easier for Tax Payers (sorry HMRC's Customers) this will add an administrative burden and therefore additional costs.

The Adverts are already on the TV from an Amercian Company so are they behind the push to MTD?

Thanks (3)
Replying to accountright:
Tornado
By Tornado
08th Dec 2016 16:15

You can bet that big money is driving MTD and you have cited yet another reason why it is so blindingly obvious.

Thanks (3)
Tornado
By Tornado
08th Dec 2016 16:12

I think there are the makings of a good book here -

MTD ... Where did we go wrong?

sitting alongside -

Brexit ... We never saw that coming!

Two potential best sellers for bookshelves of the future, or should that be Kindleshelves of the future.

Thanks (2)
Replying to Tornado:
avatar
By RobertD
08th Dec 2016 18:04

Tornado wrote:

I think there are the makings of a good book here -

MTD ... Where did we go wrong?

sitting alongside -

Brexit ... We never saw that coming!

Two potential best sellers for bookshelves of the future, or should that be Kindleshelves of the future.

and also "Be rude about Trump, He won't win"

Thanks (1)
Morph
By kevinringer
08th Dec 2016 16:26

The driver of MTD is the software industry. Think about it. Software will cost £0 - £20 a month. The £0 software will be rubbish and full of adverts. Most taxpayers will end up paying say £10 a month = £120 a year x 8,000,000 SA taxpayers = £960 million or in round figures £1 billion. At the moment only 2% of my clients use paid-for software, and most of that is Sage Instant bought for a one-off £85 which lasts for several years until they feel they need to upgrade.

Thanks (4)
avatar
By david wilks
08th Dec 2016 16:32

and another thing.
Accessing the self assessment records of clients through my agent gateway I have been trying to call up coding notices for 2015/2016 only to get the message"there are no notices to view".
Funny that, my clients have their paper copies!
If HMRC can't get that sorted what chance MTD.

Thanks (4)
Morph
By kevinringer
08th Dec 2016 17:06

We've got an idea of the cost of software for taxpayers: £0-£20 a month. But what about agent software? How much will we have to pay to access the client's data?
There will be 18 or so MTD software products. How do we bring that data into our tax return software? Will we even have tax return software? Will we have to do the tax return using the client's software. Will we therefore have to have licences for all 18 or so products and therefore have to learn all 18? You might make a decision that you'll insist that your clients use, say, Xero. But what happens if you get a big client that's using something else? They're not going to come to you if you force them to change software. How is all this going to work?

Thanks (1)
avatar
By [email protected]
08th Dec 2016 17:06

I joined in the Talking Points webinar on MTD by HMRC yesterday. Someone submitted a question about liaison between HMRC and the software providers, suggesting that software providers were struggling to design software because the precise information requested by HMRC has not yet been finalised. HMRC's answer was 'I'm sorry, I don't understand the question'

Thanks (2)
Replying to [email protected]:
Morph
By kevinringer
08th Dec 2016 17:08

I joined the webinar too. There was a lot of "sorry I don't understand the question" and Becky Ryland (she was reading out the questions) said we'll come back to it later. We never did. There's an awful lot HMRC don't understand and are refusing to listen to.

Thanks (3)
Replying to kevinringer:
avatar
By Pavilionaire
08th Dec 2016 18:08

The sound was so bad the girl Becky sounded like she was calling from the bottom of a fish tank. The presenter must have said "I'm sorry I don't understand" at least 6 or 7 times, and I was genuinely confused as to whether she meant she couldn't understand because she couldn't hear her properly or whether the didn't understand what the question was about. Either way, I was left with the feeling HMRC were deliberately employing the "fish tank" technique to gloss over the hard questions.

Thanks (1)
Replying to [email protected]:
Tornado
By Tornado
08th Dec 2016 17:11

'I'm sorry, I don't understand the question'

I like that, it could be very useful in the future when dealing with HMRC automated systems.

Thanks (0)

Pages