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There is but one guaranteed winner out of the stampede towards MTD.
It's not the government - making everything digital won't have much if any effect on the fraud and error tax gap.
It's certainly not the taxpayer, who finds another layer of complexity added to what is already a baffling system for many.
No, the one guaranteed winner out of this is the software houses, who will make out like bandits selling "solutions" to a captive audience with nowhere else to turn.
Has anyone checked the current Cabinet's register of interests, see if any have non-exec posts with the likes of Thomson Reuters or IRIS?
'the webinar did not offer a better understanding of MTD for VAT than could be obtained simply from reading the guidance' - as predicted in my comments on one of the other AWeb MTD VAT discussions last week.
HMRC webinars seem to be generally about reminding the audience on what HMRC have recently published rather than answering the audience's more pressing questions eg specifics on bridging software. The audience polls set by HMRC in their webinars also avoid the hard questions- whilst there was a poll on who has advised their clients about MTD for VAT in general (which obviously gives a strong positive response) there was no poll on whether the audience believed sufficient details have now been made available to enable clients to be fully conversant with new software etc in time for successful implementation of MTD VAT next Spring.
Yes, Roger, I too am extremely disappointed. Where we are at the moment, with hardly any business knowing the nuts and bolts, to where HMRC want us to be in April is nothing short of "it's never going to happen". Give it a couple of more years and you might, just might, have a resemblance of something that could be worked with. As I have said before, HMRC are washing their hands off all responsibility. Their attitude is, there's the product, this is what we want, go to it.
I'm normally pretty good at working round problems but this is just going to be one big catastrophe.
I had submitted many questions to HMRC in advance of the webinar but HMRC failed to answer most of them. I listened to two webinars hoping the second might reveal more but it did not. They added little of interest that had not already been announced in the guide. It appears that many businesses will probably be able to use the existing GOV.UK portal because it doesn't appear it will monitor turnover.
I think this is where the major problem might be in as much as HMRC have said that the normal gateway will be closed to those business with a turnover of over £85k unless exempted. So I presume that form 1st April there will be a turnover monitor.
It would have to be a basic one because of season businesses etc it could not simply cut off at £85,000/4 per quarter and instead monitor cumulative turnover but it would only know quarterly turnover and not monthly - and it is monthly that triggers MTD. Also, box 6 includes taxable and exempt supplies whereas only taxable are relevant for MTD. So monitoring box 6 won't actually monitor turnover for MTD purposes.
A phone call to the MTD team (available if you ring the VAT online helpline) confirmed to me that the Gateway will be closed automatically on 1 April 2019 if the LAST FOUR VAT returns filed before that date showed income over £85,000!
I think this is where the major problem might be in as much as HMRC have said that the normal gateway will be closed to those business with a turnover of over £85k unless exempted. So I presume that form 1st April there will be a turnover monitor.
This worries me, as I have an elderly client with a substantial portfolio of commercial lettings. There are "options to tax" on just three of them, which will be below the VAT threshold but we were told some years ago that all of them have to be included in the turnover box. As most of them are outside the scope of VAT (not exempt or zero rated), they should not be included in the turnover for MTD for VAT but how will HMRC know this?
Anything that is "outside the scope of VAT" does not have to be included in turnover (wages, insurance etc.). However I believe that commercial lettings comes under "exempt" not "outside the scope of VAT" in which case if your clients turnover exceeds £85K they will come under MTD.
I should have added that you will need to ask HMRC how they are dealing with "partial exemption" with regard MTD. I believe there was an article on Aweb earlier in the year but really until HMRC sort out all the scenarios you can't plan.
I don't think the existing GOV.UK filing method will be able to have a turnover test because box 6 includes exempt transactions whereas the MTD threshold excludes them so box 6 cannot be used for the turnover test and there isn't an alternative. With widespread ignorance of MTD in the business world I expect most businesses will continue to file via GOV.UK and HMRC won't have the resources to stop them.
It all makes me wonder why we waste our time attending HMRC webinars, whilst HMRC themselves no doubt regard them as a roaring success - with many hundreds in attendance and lots of 'positive' feedback on the (rather naïve) poll questions. It will give them a false sense of security....
I came to that conclusion last year. HMRC webinars don't really answer any questions you have, they simply reinforce their message. The polls are weighted. Waste of time.
On this "Supplies that do not go on a VAT return are excluded from the requirement."
Does that mean my current paper records which include my VAT chargeable services and those with no VAT (publishing) will have to be kept as two separate accounts for VAT purposes (but one for tax)? So I would keep the paper records for services on which no VAT is chargeable and move to some new kind of digital product with the bridging software wheni it out for the other part of my services. That sounds horrenously complicated (two separate sets of accounts and time and effort) and awful.
The whole point of MTD is for HMRC to have access to all business transactions (to eliminate errors lol). However where business do not have a separate bank account (to save on bank charges) the software may pick up private transactions also. So unless you have an accounting package you would have to keep vatable stuff separate from non vat stuff.
Your publishing is still taxable albeit at zero rate so you would maintain all your records digitally. Indeed if you made exempt supplies these too would be recorded digitally because they go in Box 6 on the VAT return. Exempt expenses would also be recorded because they go in Box 7.
They will need to keep the current portal open for the digitally excluded.
That's a contradiction.
Can't wait for the first enquiry from HMRC on some entries from clients who use their personal account for their self employed income or where costs are apportioned at the year end, etc.
HMRC will assume they (their big data software LOL) knows best and send out automated queries, involving lots more work for us and even more costs in time and money for people who are trying to run their businesses.
I guess we should all write to clients early next year (when they might start to listen) and advise of large fee increases to cover all the extra work, and encourage them all to write to their MP about it.
We have taken the decision to put every client on VT. We don't have a problem with clients over £85k as they are already on VT or have their own packages.
This will give the client a knowledge of exactly how much they will have to pay out every year (using a package that is compatible with MTD will keep the costs down and should stop enquiries.
Hi John - we took the same decision. VT is flexible and it's trial balance export can be taken into a number of packages. We use TaxCalc to file returns and final accounts.
What software will you use as an MTD "front end" i.e to submit the quarterly accounts and VAT returns?
I haven't decided on the MTD stuff. There's too much uncertainty as to submissions at the moment. I personally still can't see this happening in April 2019. If it does go ahead it's going to be a mess. There should be at least another 12 months where either gateway can be used. We then get proper feedback from smaller business that have used MTD. At the moment everybody will be going in blind.