Brought to you by
Save content
Have you found this content useful? Use the button above to save it to your profile.
Practice Excellence Live! MTD panel with HMRC's Clare Sheehan
PEP Live_Making Tax Digital
Practice Excellence Live! MTD panel

MTD: Your questions answered

by
25th Oct 2016
Brought to you by
Save content
Have you found this content useful? Use the button above to save it to your profile.

HMRC was urged to consider raising its exemption threshold and delaying the implementation of mandatory quarterly reporting by panellists in AccountingWEB’s Practice Excellence Live webcasts on Monday.

Making Tax Digital (MTD) is the biggest talking point within the profession at the moment, so it made sense to kick of our series of Practice Excellence Live! webcasts with two sessions dedicated to the subject, supported by Thomson Reuters.

Monday’s panels were designed to inform members about the facts rather than set a campaigning agenda, but during both sessions, panellists used the opportunity to urge the tax department to take a more cautious approach than is currently planned.

During the practice-focused session, accountant Jon Cooper from CooperFaure said it would make sense for HMRC to leave the least prepared unincorporated businesses outside of the system and start instead with VAT-registered businesses that are being lined up to start reporting online from April 2019.

“There is a talk of a deferral. [I] aboslutely think everyone should be campaigning for that overall fee to be the VAT threshold… Anything less than that will put undue pressure on accountancy practices and their clients,” he said.

Rebecca Benneyworth made a similar point and called for flexibility in the MTD timetable when discussing the transitional challenges for practitioners towards the end of the introductory webcast.

“As well as making the transition to the new software and processes, you’re still going to have the old stuff coming along,” she said. “Because of delays of Brexit to the consultation documents, HMRC might need to be more flexible with the start date.”

All the Practice Excellence Live! webcasts taking place this week will be available for on-demand viewing on AccountingWEB’s YouTube channel. Viewers can review the discussion and download guidance on the individual session pages:

  • What you need to know about MTD (60mins - pictured above) - The key ingredients proposed for the new digital tax system are covered, along with issues and stumbling blocks identified by the AccountingWEB/Thomson Reuters suyrvey of 1,000 accountants
  • The impact on your firm and clients (57mins) - Rebecca Benneyworth and practitioner Jon Cooper considered how MTD will change the way accountants service their clients. The session delved deeper into the issues facing accountants and offered constructive ideas about how to start preparing clients for the transition to quarterly reporting

HMRC engagement team leader Clare Sheehan took part in the 'what you need to know' webcast and answered many of the points raised by AccountingWEB members, acknowledging that they were repeating concerns that had been raised by accountants during informal discussions and public meetings over the past few months.

Both panels fielded questions from the live audience, but with so many coming in there wasn’t enough time to address them all during the presentations. Afterwards, however, Clare Sheehan picked up a few of those talking points with AccountingWEB.

Dealing with corrections

During the first session, Freddie asked: “If errors are made in reporting will there be the possibility to resubmit an updated version?”

Sheehan replied that when people submit their quarterly updates to provide their latest financial position, they’ll be able to make changes up until the point at which they finalise the information at the end of the year and make the declaration to formally calculate their tax liabilities.

Free software

There was plenty of discussion on the exact nature of the free software offering. Sheehan wasn’t able to reveal more details on the nature of the software itself, but confirmed that the Revenue does not plan to provide free software to agents who provide a paid-for service. They should already be using MTD-capable tools to operate the processes within their practices.

No decision has been reached on whether small businesses represented by an accountant would have access to the software, but Sheehan said some software developers HMRC is speaking to are considering offering free software to a much wider base.

Internet access issues

Bookkeeper asked: “What about businesses that live in an area with intermittent or no internet access?”

While Sheehan confirmed the consultation line that those who can’t access the internet for geographical reasons won’t be required to comply with these changes, HMRC is investigating options for those with patchy internet as part of its testing programme.

“Based on our understanding so far”, said Sheehan, “uploading summary information will be equivalent in terms of size to an email without attachments, so these are not big files. We’re not asking for people’s digital records. We’re just asking for the summaries.”

Payment dates

One cynical interpretation is that the whole scheme is part of a long-term plan by the government to make businesses pay their tax earlier. Sheehan insisted that this was not the case, and that the government “has committed to not making any changes to the payment dates in the course of this parliament”. While this might seem to some like a qualified response, it is true that no government can commit to what a future administration will do, she said.

Many of the queries sought answers to some fundamental characteristics of the new regime as laid out in the HMRC consultation documents published on 15 August. Rebecca Benneyworth, too, took some extra time out to go over these points in this short video:

 

Benneyworth’s call for accountants to find the time before 7 November to look at HMRC’s consultation overview and respond to some of its questions was supported by all the panellists taking part. That is the only way HMRC will understand the burdens placed on small business and the pressure accountants are likely to experience as they take their clients through the MTD transition over the next few years.

If time is short, the fastest and easiest way for you and your clients to get your views heard is to answer HMRC’s online Making Tax Digital questionnaire. But you can always raise any additional points by commenting below.

Replies (38)

Please login or register to join the discussion.

avatar
By RobertD
25th Oct 2016 14:19
Thanks (4)
Replying to RobertD:
avatar
By CMED
25th Oct 2016 21:11

I just wonder why Accountingweb didn't see fit to place http://www.parliamentlive.tv/Event/Index/4d8d7057-d422-47af-902d-03dcc42...

on the 'Front Page'

It was a good discussion, Rebecca Benneyworth was excellent, as always, but I thought Mike Cherry from the FSB was very good with all the costings to business at his finger tips. I was less impressed with Chas Roy-Chowdhury from ACCA and Frank Haskew from ICAEW.

I was rather surprised to see the MP for my constituency, Helen Goodman, there. Her questions regarding the cost of MTD to the hill farmers (and me) in this area where broadband is a bit hit and miss (more miss than hit) almost endeared her to me.

Thanks (4)
Replying to CMED:
avatar
By RobertD
26th Oct 2016 10:41

[quote=CMED]

I just wonder why Accountingweb didn't see fit to place http://www.parliamentlive.tv/Event/Index/4d8d7057-d422-47af-902d-03dcc42...

on the 'Front Page'

No MTD = less advertising by software sharks

Thanks (4)
Chris M
By mr. mischief
25th Oct 2016 18:24

In my view it is a waste of time interacting with HMRC, with whom this is a done deal. That's why I have written to the Treasury Select Committee and Mr Hammond instead. Mr. H has plenty on his plate dealing with the rabid Brexit rabble without a pointless tax meltdown caused by arrogant and over ambitious HMRC idiocy.

Thanks (10)
Replying to mr. mischief:
avatar
By JohnB
26th Oct 2016 11:06

Nice non-confrontational description of those who voted to leave the European Union Mr Mischief.

Thanks (2)
avatar
By cstwragby
25th Oct 2016 20:48

I attended another webinar from HMRC today and it is clear they are hellbent on introducing this and adopt a "la-la-la not listening" attitude to any questions because they give stock answers much as the same as a call centre reading from a script card. It also looks doubtful spreadsheets will be allowed. They state people are asking for this new system but I would like to see their research published as to how they arrive at this conclusion. Software companies must be rubbing their hands with glee.
They also don't know yet how they will deal with the very small taxpayers with income to declare of under £10,000
And still no details of what software we can choose from despite this only being 17 months away!

Thanks (12)
avatar
By johnjenkins
26th Oct 2016 11:03

Total waste of time.
Haven't you lot at Aweb etc. realised that HMRC aren't interested in what we have to say. They have Government (our) money and they will push on with what will end up one of the biggest shambles ever to come out of HMRC. The problem with any future administration is that they would have to take it further because of the investment and they need to get some of that back asap.
Why is it that the business over the VAT threshold will not be on the system first? Answer, because with 2 years small business on the system the next step to RTI is relatively easy.

Thanks (0)
avatar
By Ian McTernan CTA
26th Oct 2016 11:18

Don't panic about the three month reporting. It's easy, three lines and you're done, then once a year prepare the actual figures and adjust as necessary. Base next 4 quarters on final figures.
The issue is in how you get those three lines of information to HMRC, and how much additional cost you will incur in attempting to do so.
One upside is that practically every business no matter how small will now want someone else to deal with this for them, so plenty of additional fees in the offing.
I've yet to meet anyone who asked for this, or even thinks it's a good idea, apart from some ivory tower HMRC people who seem to think all businesses have limitless time to comply with HMRC's every whim.
Maybe if more HMRC senior staff had real world experience of running their own small business they wouldn't come up with these ideas....

Thanks (3)
avatar
By KIKISROSSIDES
26th Oct 2016 11:33

I can not believe that at a time this country is leaving Europe these buraucrats that have nothing better to do are trying to introduce such an unworkable stupidity! Why burden the entire business world with additional work and expenses at a time they have to be at their most efficient?
Somebody somewhere has to do something to stop this and the sooner the better.

Thanks (4)
Replying to KIKISROSSIDES:
avatar
By johnjenkins
26th Oct 2016 11:46

The Government of the day did not expect to be leaving the EU. So the EU wanted more info. Now they ain't gonna get it but we saddled with the outcome of what they wanted (MTD).

Thanks (2)
avatar
By Michael C Feltham
26th Oct 2016 11:39

Before I wised up, I led as respondent to most government consultative initiatives for my then professional body.

Indeed, I obviously made a certain impact, since the OFT wrote requesting I also respond to the "Competition in the Professions" consultation.

Perhaps my cynicism and pragmatism is best summed up by the recently departed Antony Jay (Yes Minister/Prime Minister).

Jim Hacker: "What's an official reply, Bernard?"

Bernard Woolley: "It just says; ' The Minister has asked me to thank you for your letter', and then we say something like; 'The matter is under consideration', or even if we are so inclined, 'under active consideration',".

Hacker: "What's the difference?"

Bernard: "Well, in the first case 'Under consideration' means we've lost the file, under ' active consideration' means we are trying to find it!"

It is all a charade; public enquiries and consultation processes are simply a whitewash, with the sole singular objective of government pretending to listen whilst meanwhile proceeding on a plan they have already decided upon.

Of course and once again, the main thrust of objection ought properly to have been emanating from CCAB, and ICAEW, ACCA et al.

CCAB, however, is the Tom Tiddler's Ground for the top ten practices who care not a whit for SMEs (the sector to suffer the most), since their lucrative and exorbitant fees come from multinationals and plcs.

These guys haven't a wee clue about the SME sector: neither does government. Both are utterly myopic in their blithe disregard for the circa 47% GDP and circa 46% employment created and sustained by SMEs.

Some years back for my software business I completed a fully segmented market analysis of the SME sector: and it will not surprise you to know, the vast majority of SMEs are in the lowest level; with microsized and Class Size Zero (Sole Trader no employees) segment representing the clear majority.

Thanks (10)
avatar
By Ruth Corkin
26th Oct 2016 11:53

VAT registered businesses are the ones that are least likely to be prepared for the MTD implementation. Only 12% of VAT registered businesses use software to file VAT returns (including returns filed by agents). Also VAT registered businesses are the most likely ones to be caught up in BREXIT at the same time. VAT advisors are lobbying to have the VAT implementation delayed for these reasons. It would appear that the most MTD ready clients are those that pay corporation tax, due to tagging etc and they already use agents to file the returns, whereas VAT registered businesses tend to file their own returns.

Thanks (1)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
26th Oct 2016 11:56

Robert & CMED - It's not part of some conspiracy that we weren't on top of yesterday's Treasury committee hearing, just a capacity issue.

There are a lot of things happening at the moment that we want to cover, but we are devoting quite a lot of attention to our Practice Excellence Live webcasts this week.

Thanks to your prompting we will pick up on the hearing and report on it to the wider community asap.

Normal AccountingWEB service will resume on Thursday, but if you'd like to see what we've been doing instead, have a look at our Practice Excellence Live! page for a run down on the tax/MTD, marketing and technology topics we've been covering:
https://www.accountingweb.co.uk/hub/practice-excellence-live

Thanks (2)
avatar
By Pavilionaire
26th Oct 2016 11:58

I too listened in on the HMRC webinar yesterday re MTD and, once again, my question was ignored. This relates to my biggest concern, which is HMRC's final annual declaration proposed deadline of 9 months after the taxpayer's period-end. Given that all landlords and 90%+ of sole traders / partnerships seem to have a year-end of 31st March / 5th April then this would place the annual Declaration deadline at 31st December / 5th January, i.e. in the Christmas holidays - surely this is a disaster waiting to happen? The January deadline is testing enough for all concerned, so the prospect of losing a whole month (10% of the time available at present) is awful, particularly as the payment deadline will remain unchanged so 31st January.

Thanks (5)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
26th Oct 2016 11:59

Robert & CMED - It's not part of some conspiracy that we weren't on top of yesterday's Treasury committee hearing, just a capacity issue.

There are a lot of things happening at the moment that we want to cover, but we are devoting quite a lot of attention to our Practice Excellence Live webcasts this week.

Thanks to your prompting we will pick up on the hearing and report on it to the wider community asap.

Normal AccountingWEB service will resume on Thursday, but if you'd like to see what we've been doing instead, have a look at our Practice Excellence Live! page for a run down on the tax/MTD, marketing and technology topics we've been covering:
https://www.accountingweb.co.uk/hub/practice-excellence-live

Thanks (0)
avatar
By mickeyparish
26th Oct 2016 12:03

We have a £6M business, audited every year, and producing the final accounts takes between 3 and 6 months from the year end. Yes, we do have accountancy software, and a reasonably well-controlled business, but there is absolutely NO WAY we can ever produce quarterly accurate profit statements without employing probably £100k worth of addtional staff, and I would frankly rather close the thing down than fatten up our overheads during lean times. What fantasy land do these people live in ?

Thanks (6)
avatar
By leon0001
26th Oct 2016 12:07

Surely the logical turnover threshold for Making Tax Difficult should be the same as for the VAT Flat Rate Scheme. i.e. £150,000.

(Unless HMRC would be happy with the VAT Annual Accounting Scheme limit - £1.35 million).

Thanks (3)
avatar
By Myshkin
26th Oct 2016 12:47

Can HMRC start off with "what is the point of quarterly reporting"? Instead of 2 hour videos that would take about 10 seconds.

Thanks (4)
Chris M
By mr. mischief
26th Oct 2016 13:54

For Mickeyparish and others I personally have no concerns whatsoever about submitting the data. I will adopt the MTU methodology - Making Tax Up.

I'll set upa file to generate ball park numbers for all clients, with random numbers generators so that the end digits and so on are not suspicious. The file will generate credible numbers which - surprise surprise - produce low or zero tax liabilities for all affected clients.

Then I'll just upload and press submit, job done until next quarter. But of course I will charge for doing this, AND I will offer a "Full Monty" option to all clients affected - with a correspondingly larger quote - so the responsibility for choosing MTU lies with the clients.

Personally I would sooner not be in the world of make believe and MTU but it's the only pragmatic answer I can see which at least gives clients a chance of keeping fees down.

Thanks (3)
avatar
By Mr J Andrews
26th Oct 2016 14:41

Interesting to read the Foreword by Jane Ellison { HMRC } to the MTD Consultation Document.
''We want to create something that is more effective , more efficient and EASIER for taxpayers''.
So there you are - it's not a £1.3 billion investment to get rid of some more Revenue staff and get the money in more quickly by ambitious , radical robotic means.
You really need to be a cynic to question Ms Ellison's aims.
For what it's worth , I've posted my many concerns and complaints to 100 Parliament Street and copied in Rt. Hon. Andrew Tyrie for good measure. Amongst the considered shortcomings , am I the only one to consider two serious breaches by HMRC with the so called consultation documention . Everyone must be treated equally with fairness dignity and respect under the 1998 Human Rights Act. HMRC chose to consult agents , business representative bodies , software developers and insolvency practitioners . With the imminent 7 November deadline looming , what about Joe Public - the countless unrepresented taxpayers { HMRC's customers } . Did the Revenue not think these valuable customers were worthy of consultation ? Does HMRC simply not care if Joe isn't made aware of MTD - perhaps at least not until the April 2018 supposed implementation date.
Just as we comply with the legislation to avoid penal consequences - in particular the 1970 Taxes Management Acts , so is HMRC bound to its duty of Care and Management under Section 1 {3} TMA 1970. By presenting unrealistic timescales with MTD before establishing the FULL IMPACTS , UNDERSTANDING , REALITY , EVIDENCE , GAPS and by using BROAD ESTIMATES [ all bold words are the Revenue's admitted shortcomings from the consultation documents ] , a great deal of anxiety , concern , uncertainty , costly time and administration , to say the least , has been created.
I couldn't see the penalty clause for failure to comply with Section 1{3} TMA 1970.

JIM

Thanks (4)
avatar
By 0098087
26th Oct 2016 15:22

Just picked up a VAT to do for a builder. Invoices are unorganised, typical carrier bag stuff. No way whatsoever will MTD happen with him. It's a limited company, Sorry, but the HMRC should stop this nonsense now.

Thanks (5)
avatar
By johnjenkins
26th Oct 2016 15:32

Shouldn't it be MTD - Your Questions Unanswered.

Thanks (2)
Jennifer Adams
By Jennifer Adams
26th Oct 2016 15:48

Ian is right. Many client's turnovers are about the same every year. If you look at the consultation document on penalties under MTD HMRC wont be looking into the actual content of the quarterly submissions. Rather akin to Co House HMRC will be issuing penalty points only if the return is not submitted ontime. So submit an estimate every quarter and then do the final one as usual.
What say you?

Thanks (3)
Jennifer Adams
By Jennifer Adams
26th Oct 2016 15:53

Mr Mischief is correct. We are all concerned about MTD but it is a done deal. The government has spent millions on this so they wont be backing out now.
If anyone wants to look at what a basic (free) tax return will look like look at the USA's returns. As is intended with the UK the US dont sully their hands with such things - private firms do that. The 'free' ones arevery basic with just one or 2 entries.

Thanks (1)
Replying to Jennifer Adams:
avatar
By mickeyparish
26th Oct 2016 16:20

I can live with MTU ( Mr Mischief's solution ) and have 9 months from the end of the FY to work it out correctly. That's ok, MTU is less work than a VAT return, but what a monumental waste of time and money, not to count the stress on thousands of small enterprises who will try to do it accurately.

Thanks (1)
Adrian Pearson
By Adrian Pearson
26th Oct 2016 16:29

The most interesting takeaway for me was that only "unrepresented" taxpayers will be given free software to use.

So, every accountant here (and all of their clients) will be paying for the tools needed to comply.

Thanks (3)
By ireallyshouldknowthisbut
26th Oct 2016 18:21

Junk data is the only way to make this fly.
This is going to be the solution.

Gauke can trumpet his 21st century solution and book his place to the Lords and a large 'consultancy' role on retirement for the winners of the contract [its not a bribe, its not a bribe, keep repeating that]

HMRC can say they are complying with it. Honest, feel the volume of filings and all these lovely fines we have raised.

We fling in useless data no-one looks at

The client pays for this charade as its now too hard for them to do themselves.

Trebles all round.

Thanks (0)
Chris M
By mr. mischief
26th Oct 2016 20:36

To John and others regarding the rabid Brexit lot:

Q: What is the difference between Brexit Minister David Davies and Baldrick from Blackadder?

A: Baldrick had a plan.

In my view, Hammond will be fully occupied in the next 2 years with his finger in the Brexit [***] trying to avoid the "Hard Brexit and we don't give two hoots if the economy tanks and the pound goes to 80 cents" brigade from really [***] things up.

Our job therefore is to make him aware of how bad Making Tax Diabolical could be. The guy is an accountant, after all, so he must have some memory of what a bunch of useless tossers are mostly at the top of HMRC.

On top of that, in previous jobs he has been notable for being unnoticeable. No crash and burn reforms like Lansbury and his ilk. Just steady as she goes.

With Brexit steady as she goes will be a major achievement over the next 5 years. On MTD if he gets enough warning of the impending mess he will axe it.

Thanks (2)
Replying to mr. mischief:
avatar
By Michael C Feltham
27th Oct 2016 08:38

There is one aspect to this I really cannot comprehend.

On another topic, a majority of members here were quite vituperative on the matter of the recently promoted petition.

There were many criticisms of the wording and context of this petition.

Thus either (i) Start a new further petition, or (ii) Sign the original; mainly since if it were to reach 100,000 signatures, then under Government's own rules, this automatically compels a parliamentary question

Clearly, the majority of respondents to this thread are far from happy bunnies concerning MTD!

Most of us agree, the consultative process is a pointless exercise, since HMRC and Treasury's mind is already set; and the consultation merely a whitewash.

It seems me, accountants, today fall into two disparate groups: Group: A old stagers (myself included) who place service to clients above every other consideration: and, Group B: who seem to adore the challenge of new software systems and state-of-the-art system approaches, such as cloud-hosted approaches to practice.

Problem with Group B, is they almost invariably prioritise systems, as a challenge and opportunity, and thereafter simply consider the client as an unfortunate and immaterial system-feeder to the systems themselves.

The planned paradigm change of MTD will cause untold damage to the "real" economy of once great Britain. (The real in this context meaning private sector GDP which excludes public spending and employment incomes therefrom).

All government ministers and senior bureaucrats are myopic on business and, as I stated previously, the essential economic lifeblood created and sustained by the SME sector.

And it is precisely the lower echelons of SMEs who will be the hardest hit in terms of both additional administration and cost: on top of the plethora of extant statutory regulations and demands; all of which are time and money consumers of zero revenue return: PAYE: SSP: SML: SPL: Autoenrolment: VAT: Class IV NIC: keep going!

A cake is, after all, only so big..........

Thanks (0)
avatar
By North East Accountant
27th Oct 2016 08:36

I took the time to read the entire condocs and after spending a 1/2 day at the local MTD meeting came to the conclusion that responding is a total waste of time.

Consultation end's 07/11/16, Autumn Statement 23/11/16 and Draft Finance Bill Clauses 05/12/16. HMRC have got it all wrapped up already and the whole thing is a disgraceful PR exercise.

With all due respect to the like of Rebecca our esteemed ICAEW, CCAB, etc should be fighting this tooth and nail not having nicey nicey talks and engaging in this sham.

If I had the time I would start a protest movement to try and stop this MTD madness but as a busy GP it's impossible what with AE, FRS 102, etc.

Thanks (0)
RedFive
By RedFive
27th Oct 2016 08:46

I for one will be watching the budget, sorry, Autumn statement with even more interest than normal next month.

I'm an eternal optimist so am fully expecting a climb down or at least a deferral until after Brexit.

*If* that doesn't happen I too will be following the Mr Mischief proposals. My concern though is that once we get the next Parliament then not only will they bring in quarterly payments of tax they will also have wisened up to the junk being submitted and will impose a penalty regime for the data entered.

Lots of people on here seem to think the consultation document is a roadmap for how it will look for ever. While the proposals are an unworkable nightmare for most small businesses in its present form it is but nothing compared to what they will do once it is in place and they have passed the 2020 general election.

Thanks (0)
avatar
By johnjenkins
27th Oct 2016 09:03

Michael, group (B) are under the impression that any software that appears to make their job quicker and easier will benefit them and their clients. it's called "added value" and conning business out of extra fees. (yes I'm an oldie - but with flexibility)
Let's assume that for one euphoric moment someone in HMRC says "look people this MTD is just not going to work". So how do we get out of it? Simple wait till the software people decide they need more money (that's a definite) then we can say "not our fault but the cost is just too much". So MTD gets watered down.
So our force should be directed at the software people as to cost, type, when, etc. etc. because we got no chance with our elected MP's or bodies.

Thanks (0)
avatar
By cstwragby
27th Oct 2016 22:50

Just another point from the webinar - you won't be able to make up a 3-line set of figures each quarter, HMRC are wanting headings such as those on the Self-Employment (full) pages.

Thanks (0)
Replying to cstwragby:
avatar
By johnjenkins
28th Oct 2016 08:59

If HMRC are not going to use the figures for any purpose (the figures are purely for the tax payers benefit) then why not accept 3 liners?

Thanks (0)
Replying to johnjenkins:
By cfield
29th Oct 2016 23:37

I wonder what would happen if there was a massive campaign of civil disobedience and people simply refused to comply with MTD. What could they do?

Thanks (0)
Replying to cfield:
avatar
By johnjenkins
31st Oct 2016 09:09

Let's block the tunnel. That should concentrate their minds.

Thanks (1)
Replying to johnjenkins:
By cfield
31st Oct 2016 09:17

johnjenkins wrote:

Let's block the tunnel. That should concentrate their minds.

That comment reminds me of a famous Harry Enfield sketch.

Thanks (0)
Replying to johnjenkins:
avatar
By 0098087
31st Oct 2016 09:36

Thought the Brexiters were doing that anyway!

Thanks (0)