Stride: ‘Full steam ahead’ on MTD for VAT

Mel Stride Sage event
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The minister responsible for HMRC has confirmed that Making Tax Digital (MTD) for VAT will go ahead as planned on April 2019, but remained tight-lipped over when the individuals programme will come online.

Speaking to AccountingWEB at Sage’s Making Tax Digital ‘One year to go’ event, Financial Secretary to the Treasury Mel Stride confirmed that MTD for VAT is “definitely mandated” for April 2019 for all businesses above the VAT threshold of £85,000.

One of the first things Stride did when he took office last June was to change the timescale for the rollout of MTD and the minister has recently fielded calls for the programme to be pushed back further.

However, speaking to an assembled audience of accountants, officials and software developers at the House of Commons, Stride stated his determination to keep the new timetable on track.

Kelly: MTD ‘catalyst to stimulate productivity’

Sage CEO Stephen Kelly hosted the parliamentary get together to renew the software house’s commitment to the government’s policy.

Kelly set out his reasons for publicly and politically aligning Sage with MTD: “Making Tax Digital we see as a catalyst to stimulate productivity in the UK economy”.

According to Kelly, the UK is “behind the game” when it comes to digitisation, highlighting a Sage survey which showed the average UK business wasted 120 days a year on admin.

“We have some way to go before we leave bureaucracy behind and accelerate towards a digital Britain,” said Kelly. “We can’t be left behind by the Finns, Australians, Spanish and Hungarians [all of whom have rolled out digital taxation programmes to various degrees]. Digitisation will help us manage cash flow and reduce late payment.”

Just 220 working days to go

Presenting the accounting point of view to the room was Chris Downing, Milsted Langdon BI partner and AccountingWEB technology champion.

Discussing the future of accountancy, Downing told the audience that accountants recognise compliance is reducing in value. “Clients ask what they’re getting for their money,” he said. “We can use technology to change relationships and maintain fee levels. But only with good data can we give good advice.”

Downing also flagged the need for urgent action to make affected clients aware of the changes from both accountants and HMRC, as at time of writing there are only 220 working days until MTD for VAT.

“Accounting firms have clients on Excel, manual or non-compliant software. Even moving them across one a day is hard –that’s the education factor.”

Key problem is capacity

Representing the SME community at the event was FSB policy chairman Martin McTague. In a forthright address he stated that in his opinion, digitisation was not at the top of the priority list for small business.

However, McTague acknowledged that the administration of tax collection is a serious problem. “The key problem is capacity,” he said, “if we could get this right, MTD can be part of that capacity issue.

“The most irritating thing for our members is that HMRC says you are their customers,” continued McTague. “I don’t think anyone in this country thinks of themselves as that. And the customer experience is very poor.

“Rather than closing the tax gap, MTD should be about making a better experience”.

MTD for Individuals

Despite the positivity around the VAT side of the digital taxation programme, there remain questions around when it will come into force for individuals.

Commenting on AccountingWEB earlier this month Xero MD Gary Turner said: “I think it's fair to say MTD (Income Tax scope, not MTDfb (VAT)) is 'effectively' redundant. Last July they said it would be 2020 earliest, and last month added that any remaining HMRC resources and focus on this part were being pulled altogether."

Responding to this point, Stride told AccountingWEB that they have the project “constantly under review”, but that the Treasury was not looking to make an immediate announcement on it.

“HMRC clearly has a whole host of different priorities,” he said, “and one of those which is a new priority since George Osborne’s announcement [launching MTD as the death of the tax return] is Brexit.

“Whilst we’re looking at VAT being mandated for April next year we’re going to go no earlier than April 2020 for the other tax areas. I think that’s the right thing to do. We’re advancing at a sustainable pace where we can get it right, and that’s the most important thing.”

About Tom Herbert

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23rd May 2018 08:18

Smith:

"Full steam ahead engine room."

Titanic, April 1912.

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23rd May 2018 10:02

I will inform my clients when HMRC decide to inform them. We as Accountants know all about this but what about the VAT registered person? what about those who complete their own VAT returns?. Perhaps it would be an idea for HMRC to inform these people of digital VAT!!. Until they do this, I'm doing nothing. And when they do, I will inform my clients that fall into MTD to find another Accountant and I will deal with clients under the VAT threshold from thereon as I'm sure many others will. If people think GDPR is a problem, you aint seen nothing yet.

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to Wyn Lewis
23rd May 2018 10:36

Wyn Lewis wrote:

I will inform my clients when HMRC decide to inform them. We as Accountants know all about this but what about the VAT registered person? what about those who complete their own VAT returns?. Perhaps it would be an idea for HMRC to inform these people of digital VAT!!. Until they do this, I'm doing nothing. And when they do, I will inform my clients that fall into MTD to find another Accountant and I will deal with clients under the VAT threshold from thereon as I'm sure many others will. If people think GDPR is a problem, you aint seen nothing yet.

I agree but am informing clients and have already started the process of handing over affected clients to someone else, as I have neither the software nor the will to deal with MTDfVAT.

Incidentally, we do have one client for whom I would like to claim exemption (over 70 with commercial lettings and VAT registered). He doesn't own a computer or smartphone and is completely clueless about technology, so keeps his records on paper, which we then transfer to spreadsheet. I have been trying without success so far to find out how we go about this. I presume we are supposed to wait until next year to apply!?

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to Homeworker
23rd May 2018 11:13

Maybe this client should turn to God!

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23rd May 2018 10:12

"MTD will stimulate productivity in the UK economy". Who makes this crap up? Who believes this crap other than Mel and Co?
There is no possible way that all business that have to will be doing their VAT returns on the "new system" that isn't working (no bridging software as yet, etc.) by April 2019. This is going to be the biggest April fools joke ever.
Mel, a bit of advice. Get out while you can cos the backlash from business will be immense. Oops sorry nearly forgot, HMRC have washed their hands of all responsibility haven't they?

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23rd May 2018 16:52

You can see the minister being propelled forward by the only people who stand to gain from this farce - the software co's - and the tax payers being irrelevant.

I must admit I take significant issue with the "nanny state" argument that clients are deliberately wasting time with excel and other options. They are not, they take a pragmatic business decision about the best way to keep records, and changing accounting software ia a big deal and has significant costs in terms of management time.

The reason the cloud mob dont like excel, is we don't have to pay £20 a month to them for it. This also happens to be one of the big pluses for clients.

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By Tornado
to ireallyshouldknowthisbut
23rd May 2018 20:37

"You can see the minister being propelled forward by the only people who stand to gain from this farce - the software co's - and the tax payers being irrelevant."

It seems a little naive at best that Mel has been tricked into effectively promoting Sage, whilst clearly demonstrating his lack of understanding of this project.

One has to wonder where he got his information from ... or maybe not.

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23rd May 2018 11:14

I think I know MTD until I client asks me detail and I realise my ignorance. Despite reading tons of material.
Clients know even less. Many look confused when I say MTD. They never heard of it.

And April 2019 some 10 months away, full implementation? Will make the Titanic disaster look like a pleasant summer swim.

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23rd May 2018 11:55

"According to Kelly, the UK is “behind the game” when it comes to digitisation, highlighting a Sage survey which showed the average UK business wasted 120 days a year on admin."

So that will make it 240 wasted days once MTD is in place. Knock off weekends and holidays and there's not much time left for increased "stimulation to the economy".
Ah, the penny has just dropped. Sage et al will be raking it in whilst the hard pressed self-employed give up their weekends and holidays to pay for their software packages and administer this unnecessary burden. Clever stuff, but best not to let the general public know about it until it's in place, otherwise it might spoil the delight that awaits them.

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to anthonystorey
23rd May 2018 12:12

Or they keep it quiet so that changing the word 'mandatory' to 'optional' in April 2019 will be easier. They've already been hinting about the clash with Brexit. Call me naïve, but I still can't see this coming in as compulsory in such a short period of time. And, yes, you are correct, they are too frightened to inform the public. The backlash will be massive.

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By Tornado
23rd May 2018 13:25

Poor Mel

Does he REALLY think MTD for VAT is going to be mandatory from April 2019?

I think not.

Having today prepared another 2018 Tax Return that is affected by Exclusion 70 and will have to be submitted on paper, I think Mel has absolutely no idea about how this all works, or rather does not work.

Simple things like being able to calculate tax correctly should be the priority of HMRC and the Government, not doggedly sticking to a project that cannot possibly work under the current proposals.

As Mel pays the bills of the Country, good luck to him when VAT revenues dry up as people try to grapple with the new process. If people are simply not fully prepared for MTD for VAT, then they will not be able to file Returns or even calculate what is due.

The software developers would do us all a favour if they, as a body, told HMRC that this project should be delayed or made voluntary from April 2019.

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23rd May 2018 13:37

Politicians may take a different view once this starts being widely publicised - no doubt there post bags and surgeries will be in jam packed by small business owners complaining about the timetable and extra costs being imposed on them.

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By Elvis11
23rd May 2018 15:00

Oh dear. When this joker announced last July that the preposterous and unworkable original MTD proposals had been put on hold, it appeared that perhaps there was a chance that this wholly flawed venture might be reconsidered.
Just under a year later however, this halfwit has confirmed that he now knows enough to ignore all expert opinion and it's "full steam ahead". So if we are to believe this is going to happen, the VAT portal will be removed or disabled with effect from 1st July 2019 and businesses who have previously reported and paid the correct amount of VAT in a simple and efficient way will be required to incur additional software and hardware costs, spend additional time on unproductive administration and then pay the correct amount of VAT just like they were before.
Only an utter moron could possibly consider this is a sensible plan. Micro businesses will of course be most adversely affected.
Still, if he believes the utter gibberish spouted by the Sage CEO (MTD will be a catalyst to stimulate productivity) then there really is no hope. Mr Stride, please come and visit my small practice so that I can prevent you from making yourself a laughing stock.

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By hl45
23rd May 2018 15:59

I was willing to take part in the pilot, had meetings arranged for discussions with HMRC.
Tried to access system, couldn't then was told after a months delay that it couldn't be started as the client pays by direct debit and it isn't possible for business that pay this way yet to be included in the pilot.
So how can it go ahead if no one is able to pilot it!

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By Tornado
23rd May 2018 16:08

FULL STEAM AHEAD!

Yes, maybe, but not so good if you are heading in the wrong direction.

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24th May 2018 09:53

I , for one, refuse to waste my time being an unpaid MTD messenger for HMRC, especially when I have nothing constructive I can show my clients to explain how MTD will work with their spreadsheet records.
Unlike politicians who live in a fantasy world and get paid for spouting nonsense, I work in the real world and only get paid for delivering constructive services to my clients.
My message to Mr Stride : Get real !

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24th May 2018 15:29

I've just looked at the new "my tax" service for Finland as that was specifically mentioned. It's interesting that following the link to "how to file tax returns" and look at point 4, it takes you to the VAT filing example - which is virtually identical to the information that we file now and nowhere near as involved as MTD.
https://www.vero.fi/en/About-us/contact-us/efil/information-on-mytax/fil...

The corporation tax filing video even mentions PDF attachments for accounts.

What is does show is one platform for all taxes. Perhaps that should have been the goal?

My BS detector has hit 11.

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25th May 2018 08:44

I was at the event at the House of Commons on Tuesday and had planned to have a forthright conversation with Mel Stride about MTD.

Mel Stride appeared just before the formal talk bit started with Stephen Kelly leading the intro and then introducing him.

After his brief section it was then Martin McTague from the FSB for a few minutes.

Next back to Stephen Kelly who had a few minutes question and answer with Chris Downing and Caroline Plumb.

At this point I was directly watching Mel Stride and he quietly slipped out and was gone.

No chance to talk to him.

He did not stay and talk to accountants and answer the difficult questions.

No doubt the spin will be that they are listening to accountants and have taken their concerns on board. What a load!

Then again he is an MP so I am a fool for thinking he would be any different and actually listen to some accountants who actually know what they are talking about.

My thanks, however, to Sage who were the perfect hosts.

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to North East Accountant
25th May 2018 09:46

Now I'n not sure what's going on in Mel's mind, but given his background I would presume that he was too embarassed to answer questions. He must know that MTD will not go live in April 2019.
Mel, a lot of our self-employed are not administrators, nor do they want to be. They go out to work, many, long hours, and earn a living so that the state doesn't have to provide for them. Many have got pensions (perhaps property) to provide for their retirement. The Government via HMRC are trying to destroy that way of life. If you and they suceed, forget the damage brexit may cause, the coffers will run dry very quickly. It is time for HMRC to work with business not against them.
Yes, Mel, you've got it all wrong. Sit down with us "ground level" Accountants and we will give you a blueprint for a healthy relationship between HMRC and the business world. Then watch the coffers fill up.

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By djtax
29th May 2018 12:08

There are thousands of (mostly smaller) VAT registered businesses who have relied (perfectly adequately to date) on spreadsheets and are still waiting for the promised 'bridging software' to appear. Does anyone know anything about when this will become available?

As yet I have no idea what this will involve and presume I will need time to appraise/understand it before even starting to educate clients on it, let alone implementing it. Presumably there will be some requirement to change/standardise spreadsheet layout etc?

Given the current absence of any detail, how on earth are we going to get the affected clients up and running by April 2019? How come no one has pushed this point with the powers that be (or if they have then where's the feedback)? Has anyone made this point to Mel Stride yet? Or is it down to us? Should all small practitioners be writing to him spelling out what actually goes on in the real (small business) world? This is getting beyond ridiculous...

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By Tornado
to djtax
29th May 2018 12:41

I think this is going to be Achilles Heel of the April 2019 mandatory start date, mainly for all the reasons you have pointed out.

There are some people developing 'bridging' software, and as far as I can see the information is extracted from the spreadsheet using CSV files which are then imported into the bridging software, which can be used to file in MTD compliant format.

The bit that puzzles me at the moment is that the information extracted from the spreadsheet seems to just the relevant totals and not all of the transactions. If it just the totals that are to be sent to HMRC, then this is not so onerous at all, and as my current book-keeping systems (in Excel and other formats) already prepare VAT summaries for clients (or us) to type straight into the HMRC VAT Portal. There may be very little that needs to change.

What I am looking for is some confirmation that the only information required to be submitted to HMRC through Bridging software is the VAT totals and not every single transaction that the spreadsheet contains. That would be impossible to achieve and does not make the use of spreadsheets a viable option.

Mel and HMRC really need to quantify the exact way spreadsheets can be used to keep MTD records, and he needs to do this pretty sharpish.

I actually feel sorry for Mel Stride as clearly the only things he knows about MTD is what he has been told by Sage, I am beginning to think he may be the chosen scapegoat for when this all goes wrong. Someone is going to have to take the blame, and he is the obvious choice.

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to Tornado
29th May 2018 13:08

I was under the impression that the "software", although only extracting totals had the ability to extract further information if needed. Hence the detail of the transactions for compliance purposes.

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to djtax
29th May 2018 13:03

You've missed one of the points why HMRC are so keen on getting MTD moving. They have washed their hands of having anything to do with the workings. It is up to our clients (or us on their behalf) to make sure that they comply with MTD and get the software from whoever. HMRC are not getting involved with that side of things. So if the client doesn't comply, penalties. If the software houses aren't ready, it's their fault. No blame attached to HMRC whatsoever. That doesn't deter from the fact that it ain't never gonna happen.

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30th May 2018 10:57

All good points - for me the constant moving target makes the who job much more difficult to manage. I understand why HMRC want to implement MTD because of the perception of reduced collection costs.

A much simpler system to save costs is to abandon the paper tax return. Perhaps offering those with an income of say below the personal allowance a £35 tax allowance to cover the cost of purchase of the software.

HMRC need to get a grip and take the accounting profession with them or disasters as reported in Australia will arise. It was reported that 35000 investigations into incorrect self-employment tax returns were opened.... HMRC take note

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30th May 2018 11:43

I follow Dr Richard North's Brexit site (for a laugh) and it is clear from the posts from a few 'insiders' that most politicians simply won't be told; they live in a delirium.

It's as funny as MTD, and potentially at least equally as serious.

I admire the offers of help with the real world from well-meaning posters above in this thread. Like HMRC, our current political system is not fit for purpose and these people are beyond help.

Fortunately, this realisation is beginning to spread.

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