Editorial team AccountingWEB.co.uk
Share this content
race is on
istock_BrianAJackson

The MTD software race is on

by
1st Feb 2017
Editorial team AccountingWEB.co.uk
Share this content

HMRC sent out a clear message with its response to Making Tax Digital consultations. Despite widespread misgivings about the practicalities and timetable, digital tax will be launched in 14 months’ time. John Stokdyk and Richard Hattersley explore the technological feasibility of meeting this deadline.

HMRC’s Making Tax Digital director Theresa Middleton told AccountingWEB on Tuesday that she expected to see end-to-end MTD software in the next couple of months that will be able to keep digital records digitally, categorise expenses and produce a summary submission for HMRC. HMRC will record the details and present them to the taxpayer in their personal tax accounts.

Now the timetable has been set for unincorporated businesses to go digital from April 2018, developers can start designing, building and delivering these new tools, she said.

According to Middleton, HMRC had been working with 18 developers in a private beta test programme, and expected five of them to have products ready for testing by this April. While HMRC decided to let businesses continue using spreadsheets for record keeping, but they will have to ensure the spreadsheet can handle the requirements to submit MTD updates.

That leaves just two months before public testing is due to begin. This 12-month lead-in complies with the principle that new systems should be properly tested before they are officially launched and will allow the MTD mechanisms to go through a full cycle before taxpayers are forced to use them.

Three weeks ago, the Treasury select committee questioned whether HMRC will be equipped to deliver Making Tax Digital to its “over-ambitious” original schedule. HMRC’s summary response attempted to placate those fears, some within the software industry are unconvinced.

TaxCalc’s Steve Checkley commented in the AccountingWEB’s live panel that HMRC has been doing a lot behind the scenes to meet the April 2017 deadline for public beta testing to go live, but added that the “timeframes are very, very pushed”.

What needs to happen, when

Mark Purdue from Thomson Reuters told AccountingWEB that the profession was looking for two basic answers from HMRC this week:

  • Which of my clients are affected by MTD in 2018?
  • How will my clients’ taxable profit be calculated?

With the conditions for exemptions and basis periods left unspecified, the answers will arrive “later this year” in secondary legislation - “which isn’t really good enough at this relatively late stage”, Purdue said.

For the test programme to go live this April HMRC needs to specify what information needs be reported, and ensure the MTD systems can carry data back and forth between taxpayers and the central tax computers.

Word reached us from other developers of problems dealing with the team working on the application programming interfaces (APIs) that will make all this data transmission possible. With the help of a number of industry insiders, we set out to assess whether the infrastructure and systems are in place for MTD to work as envisaged by HMRC’s deadlines.

Third party information

HMRC’s consultation response on “better use of information” gives further background on an important ingredient in the whole process - how relevant data will be collected and displayed to taxpayers in their online tax accounts.

In some cases the tax department is already getting information from third parties and it will build on this experience with new standards and processes to improve security and visibility for taxpayers.

The consultation response points out that Making Tax Digital is moving away from Self-Assessment principles where customers report their information themselves and can change it. The new system will be based on information provided by a third party.

In HMRC’s new stance, if data belongs to the third party, it’s up to them to change it. This will increase the burden on taxpayers - and potentially increase volume of queries needing to be resolved by information providers and HMRC. Some of the consultation responses raised concerns that HMRC lacked the resources to deal with queries, the paper noted.

One of the information sources of most concern is HMRC’s own Real Time Information environment for PAYE and the way that payments into the system are allocated according to mysterious algorithms rather than the taxpayer’s intentions.

AccountingWEB member and expert PAYE contributor Kate Upcraft continues to warn that all is not well with RTI data. If the government insists on pumping dodgy data into personal tax accounts, the current problems will escalate significantly when live taxpayers are added to the online mix.

If this scenario plays out as Upcraft anticipates, taxpayers and agents could have to go back to employers to resolve recurring errors in tax calculations and codes. The problem will be even more acute for people receiving universal credit, Upcraft warned, should any erroneous data filter through to the Department of Work and Pensions’ system.

In response to some of these concerns, HMRC acknowledged there are complex scenarios and complaints that will require HMRC intervention, “where it will be appropriate for the customer to contact HMRC to resolve the issue.” They will be able to do so via their personal tax account or as yet unspecified alternative routes where necessary.

API progress report

HMRC’s API hub currently lists seven beta APIs and one “stable” version. These APIs form part of a self assessment structure that currently includes; trading income, property income, UK interest and UK dividends. According to Purdue the content and layout of this API mirrors the SA103 and SA105 (excluding interest and dividends) and will provide the backbone of the public beta testing in April.  

But will that information match the income, expense and benefit types envisaged for MTD quarterly updates? According to Checkley, extending the option for three-line accounts complicates the picture, as “how something is submitted depends upon the software interface. It may not be as simple as a replication of the SA103S.”

Elsewhere in the industry, we struggled to find five, let alone 18 developers who were involved in the private beta programme. The feedback on how things are progressing with the actual software development was patchy. A picture of what has been happening emerged in a blog from API team leader Lee Hawksworth in December, who listed eight key positions as part of the department’s recruitment drive. What he didn’t mention were a number of departures noted by external developers.

Can they deliver?

Despite the squeezed timeframe, Xero’s Gary Turner is one of several software executives who is confident HMRC will release the APIs in time. Turner is less concerned with the software part or HMRC’s technical engagement than with the department’s ability to convince small businesses to adopt software in a compressed timeframe.

“I am not sure the availability of a selection of new MTD products that are either free or low cost will change the fact that driving adoption is a very difficult thing to do,” he warned.

The emotions we encountered from those working on MTD ranged from the soothing assurances of Theresa Middleton and her colleagues at HMRC to predictions of chaos and doom in both the software industry and wider accounting profession.

The more closely involved with the project, the more confident companies were about MTD’s progress. IRIS, Sage and Receipt Bank confirmed their involvement in the private beta programme and all were bullish about moving into the public phase of testing in April. This is what they told us:

  • Sion Lewis, IRIS:  “It's just a case of getting the final API puzzle together and continue to plough forward with our own plans.” IRIS has been working with HMRC on the MTD API definitions and expexts to integrate then into KashFlow and its accountancy suite by October.
  • Matt Perkins, Receipt Bank: “We have been liaising closely with HMRC and have put 50 of our 1Tap users through the private beta.” Perkins confirmed that 1Tap is likely to be the first, free MTD-compatible product to hit the streets. When asked if 1Tap was the MTD product that would be ready in February, he laughed nervously, “We hope so.” 1Tap can be used by individual taxpayers who want to file updates themselves, but also feeds data through to an accountant’s dashboard for those clients who want professional help. Currently 1Tap only shares the data it collects with the in-house dashboard, but the company has been modelling its own prototype tax calculation engine so that it is ready to plug in when HMRC’s data exchange mechanisms are confirmed.
  • Sage: Having participated in the private beta testing programe, Sage is planning tweaks to Sage One and Sage Expenses so they will be able to take large numbers of customer into the public beta testing programme.

Even developers who chose not to HMRC’s private testing programme are confident in their ability to cope with the deadlines. As a small, technology-focused software developer, Forbes Computer Systems prides itself on being able to turn around code quickly. As well as an Android Record Keeper already listed on HMRC app page, he has developed a cloud accounting system that will allow accountants to file on clients’ behalf under MTD. “We’ll have it ready by April,” said David Forbes.

On behalf of Thomson Reuters, Mark Purdue commented: “We are confident that we can support all of our existing users who wish to take part in the public beta from April with a solution based around Onvio Tax. This is progressing well. We will be able to provide ‘show and tell’ and product demos at our user event in March.”

Bigger concerns

But there’s a potentially bigger issue than software requirements and deadlines here. Regardless of HMRC’s grand plans, tax purists are worried that HMRC software developers are effectively devising tax law.

The idea that software developers and HMRC are inventing the information types that are being filed conflicts with the accepted practice that politicians decide what kind of tax is paid and on what basis

This week’s public announcements mean that MTD is no longer a private playground for cloud API evangelists. As a UK government tax policy (as yet unlegislated), MTD has entered the public domain and the questions it poses will rise significantly when taxpayers are forced to adopt the system. This article set out to find answers to some of the technology questions that will arise. It will be the first of many such articles as we travel towards the new digital tax horizon.

Keen to keep up with digital tax developments? Sign up for our free monthly MTD digest

Replies (64)

Please login or register to join the discussion.

avatar
By RobertD
02nd Feb 2017 11:23

The "soothing assurances of Theresa Middleton and her colleagues at HMRC" is based on fantasy and the "predictions of chaos and doom in both the software industry and wider accounting profession" are based on facts. The accountancy profession and software industry have first hand knowledge of processes involved in producing accounts, working with different revenue streams and calculating taxable profits. HMRC don't. Middleton, Harra and Ellison have staked their reputations on this being running smoothly by 05.04.18. If it is not then the distress caused to taxpayers will require that they all resign.

Thanks (3)
Replying to RobertD:
avatar
By steve 12321
02nd Feb 2017 13:06

RobertD wrote:

The "soothing assurances of Theresa Middleton and her colleagues at HMRC" is based on fantasy and the "predictions of chaos and doom in both the software industry and wider accounting profession" are based on facts. The accountancy profession and software industry have first hand knowledge of processes involved in producing accounts, working with different revenue streams and calculating taxable profits. HMRC don't. Middleton, Harra and Ellison have staked their reputations on this being running smoothly by 05.04.18. If it is not then the distress caused to taxpayers will require that they all resign.

Problem being is they are not then left to cope with the mess. It has been seen too often

Thanks (2)
avatar
By DMBAcc
02nd Feb 2017 11:33

My stress levels have now gone through the roof again

Thanks (1)
avatar
By North East Accountant
07th Feb 2017 08:28

Millions of employers, pension companies, interest payers, dividend payers, letting agents, etc, etc, feeding stuff into millions of personal digital tax account's.

What could possibly go wrong!

Thanks (4)
Replying to North East Accountant:
By alan.rolfe
02nd Feb 2017 11:52

North East Accountant wrote:

Millions of employers, pension company's, interest payer's, dividend payer's, letting agent's, etc, etc, feeding stuff into millions of personal digital tax account's.

What could possibly go wrong!

Apostrophes's

Thanks (8)
Replying to North East Accountant:
avatar
By steve 12321
02nd Feb 2017 13:09

that's the spirit! Press a button and early nights all round.

Thanks (0)
Replying to North East Accountant:
avatar
By Agutter Accounts
08th Feb 2017 06:30

What could possibly go wrong?

I deal with the bottom end of the market - all those one-person businesses for whom tax returns, accounts and all the tedious effort of dealing with HMRC is a chore they give to me once a year. Expecting them to be organised enough to do this four times a year is just moonshine.

Practising in the north east you'll be well aware of the tendency of small businesses to operate "below the radar" in part or in full. I suspect that tendency may become more marked with MTD.

What could possibly go wrong? Hmm. Where do we start?

Thanks (0)
avatar
By raymondrook12
02nd Feb 2017 11:47

I have several older clients who have never used a computer or smart phone and suffer both from dark areas where both broadband and mobile signal are poor compounded by the fact that I as their agent will not be allowed to submit their information from my IT system I am seriously concerned how are they going to cope

Thanks (1)
Replying to raymondrook12:
avatar
By steve 12321
02nd Feb 2017 13:12

they will not be able to so they will either cease to trade if they can, suffer penalties and have heart attacks with the stress and the NHS bill will go up / crash.... Just because of the wish to change a system that works well enough for the majority. The are just too stupid to accept this.

Thanks (0)
avatar
By mikegabb
02nd Feb 2017 11:47

This MTD thing all seems a bit unnecessary. Won't all businesses be trading as limited companies by 2020 when Corporation Tax hits 17%?!?

Thanks (0)
Jonathan@Aiteo
By [email protected]
02nd Feb 2017 11:51

These boards are an important place to gather and express views on MTD. It helps flesh out areas where there may be misunderstandings and consolidates those areas where there are issues.

Don't just leave it at that though - I've written to my favourite Parliamentarian, Jacob Rees-Mogg, on this. During the Treasury Committee review of MTD, he seemed to have a good grasp of the issues. Write to your MP, write to the Chair of the Select Committee and anyone else who might be able to influence. Not necessarily to stop MTD - but to make reasonable adjustments to ensure it is rolled out with a chance of success.

Thanks (4)
Replying to [email protected]:
avatar
By RobertD
02nd Feb 2017 13:08

Jonathan-AT-Aiteo wrote:

These boards are an important place to gather and express views on MTD. It helps flesh out areas where there may be misunderstandings and consolidates those areas where there are issues.

Don't just leave it at that though - I've written to my favourite Parliamentarian, Jacob Rees-Mogg, on this. During the Treasury Committee review of MTD, he seemed to have a good grasp of the issues. Write to your MP, write to the Chair of the Select Committee and anyone else who might be able to influence. Not necessarily to stop MTD - but to make reasonable adjustments to ensure it is rolled out with a chance of success.

I'm off to see my MP soon. He appears happy not to understand the issues and relies on feeding me HMRC's glossy responses. I am damn well not putting up with that.

Thanks (1)
Replying to RobertD:
avatar
By DMBAcc
09th Feb 2017 13:52

I too have written to and met my local MP all to no avail. The party whip has closed his mouth and now he will not even acknowledge my emails even though his websites promises a reply within 2 weeks. No Tory MP will stand in the way of this monstrosity because of all the money their friends are going to make from this undemocratic and corrupt imposition. Jonathan, do tell us all precisely what your favourite parlimentarian has achieved to date. Perhaps that will inform us as to what he will achieve in the future. Non-compliance will be the only democratic weapon we will have to save oursleves and our beleaguered clients. No one who has clout is listening to we peasants - no change there then eh? Parliamentary democracy - what a sick joke.

Thanks (0)
avatar
By Eric T
02nd Feb 2017 11:52

It seems to me that many of the "simplified" aspects of submitting quarterly accounting data seems to contravene standard accounting parctices AND some tax legislation as well.

Is this a case of MTD requirements supplanting existing tax law?

Thanks (2)
avatar
By stevedpearce
02nd Feb 2017 11:54

Free version of 1Tap seems to only deal with expenses not income?

Thanks (0)
Replying to stevedpearce:
Jonathan@Aiteo
By [email protected]
02nd Feb 2017 12:05

Also, it appears accountants can only offer 1 Tap to clients if we subscribe to the practice platform (£75/month if you have more than one practice user). This is how they recoup the cost of providing it free to the end-user.

Thanks (3)
By taxbakbristol
02nd Feb 2017 12:11

At the present moment the data feed from sources within UK Government is poor .
Child Benefit figures given are incorrect many times.
DWP cannot seem to get their pension data into SA individual accounts either correctly or its muddled.
There are many other likely feeds , Sickness . Maternity, Disability allowances et al.
If internal feeds are not correct then what hope for MTD?
Then there are basis period problems , Farmers averaging, capital allowances , stock valuations!
It is not possible to calculate these items at all with any rael degree of accuracy!
The only people that will benefit from this over zealous exercise in stupidity are the software developers.Who else?
Certainly not HMRC!
In all this there have been those whose voices have not been heard - but they really should have been at the fore of this major event voicing our concerns ...who are these tongue tied bodies ? You and I support them every year .They are laughingly called our professional institutes...I have cancelled my huge subscription as its not worth £10 pa let alone £500+
If I spent money on a motoring rescue breakdown company every year I would expect them to offer advice , lobby on my behalf , tell me whats happening but what have I received from my lot ....NOTHING!
Lastly , where do HMRC get their figures from ? Is there a department that makes up these estimates and are tea leaves and newts entrails involved?
I do not believe one of them ..nobody wants this monstrosity...it will never fly!

Thanks (3)
By coolmanwithbeard
02nd Feb 2017 12:15

I have grave issues with all of this. I spent over half hour on to HMRC this morning trying to understand what their dashboard was telling me about a client's PAYE scheme. We were at cross purposes until she confirmed that the information I was looking at was different to the information she was looking at and she didn't know why. I'm still not happy I can reconcile to the figures she has given me either.

We need live systems that are live and that match what they have. If I make a submission from my payroll software to NEST it's there live on their system - same with my bank. Others do it so why can't HMRC?

I have had issues with NIC and Child Benefit entries on Self Assessments where my entries differ from theirs. I'm happy to resolve these but I do object to my clients getting a letter that says we have corrected your self assessment. This gives my clients the impression I have got in wrong - in each case I was correct and they were wrong.

If this is the shape of things to come it's huge issue.

Thanks (2)
Replying to coolmanwithbeard:
avatar
By David Gordon FCCA
02nd Feb 2017 17:48

I also suffered from this.
Eventually an HMRC person with some moral backbone advised that HMRC runs at least two SYSTEMS. Information from one to the other is not shared real time.
But is transferred at set intervals.
This means that which appears on yur screen vis a vis a client's tax account, may well be different from the screen the HMRC person is viewing.

Thanks (2)
avatar
By crislar
02nd Feb 2017 12:53

I hadn't twigged until this article that HMRC are intending to stop self assessment and move to 3rd party information sources for data reporting.

This means assumptions are having to be made about the interpretation of the data. This will be in the APIs and in the HMRC systems themselves.

This means that all this talk of APIs is actually talk of decision making algorithms being invented behind closed doors to do all this interpretation.

There are going to be huge errors and people are going to be caught up in a mesh of digital data that they cannot easily roll back as the power to do so is now going to be in third party hands.

Here is one test. Are there any measures being produced to prevent software and service providers being sued for the inevitable mistakes in their algorithms (APIs) and upstream in HMRC as presumably they are also contracting with HMRC on software - If liability is being hoisted on the user citizen / tax payer then we can smell the rat.

The fact that all this is being done behind closed doors and NDAs with a select few is also a substantial concern.

C

Thanks (4)
Replying to crislar:
avatar
By Eric T
02nd Feb 2017 13:19

.

Thanks (1)
Replying to crislar:
avatar
By David Gordon FCCA
02nd Feb 2017 18:13

Don't be silly.
Have you ever read the terms and conditions of use relating to tax and accounting programs?
You do not own it
Any error is your fault
and if you annoy the software provider he /she/ it may withdraw the program from you without notice, irrespective of whether or not you have paid up front.
The software seller is not liable for anything, not no way, not ever.

If automobile firms tried to sell their cars on similar guarantees they would swiftly go to jail.

Go on, try a dose of masochism, read some of this stuff- start with Microsoft, and work down through the Alphabet of Software houses.

I am reminded of an old apocryphal joke from the early 1980s.
Bill Gates says to the chairman of General Motors, if cars advanced as fast as computers, we would be using 500 mph self-driving machines.
To which the chairman replies, if cars advanced as computers, every car would carry two persons on the back seat, one an engineer to fix it, and two a PR man to tell the owner why it was not the software house's fault it went wrong.
I will pass a bet on to my children's children's children, that in two hundred years time social scientists will puzzle why the first generation of computer users worshipped the machines. Also that by then UK tax legislation will have "Advanced" from 9,000 pages to 9,000,000.
I wonder if any person has counted the total number of pages HMRC has had to produce, of explanation, help, and guidance, of the current state of play.

Thanks (2)
rebecca cave
By Rebecca Cave
02nd Feb 2017 13:20

"This 12-month lead-in complies with the principle that new systems should be properly tested before they are officially launched and will allow the MTD mechanisms to go through a full cycle before taxpayers are forced to use them."
NO!
The full cycle for MTD is 22 months: 12 month accounting period + 10 months to submit the end of period return. A 12 month pilot period is not sufficent.
Also the pilots should involve tax agents. There is no indication that the HMRC systems will be ready to allow tax agents to submit and alter MTD filings on behalf of taxpayers by April 2017 .

Thanks (7)
Morph
By kevinringer
02nd Feb 2017 13:23

I have many clients who have jointly let properties and are involved in more than one business. Let us suppose partners P1 and P2 maintain their records using Software1. Partner P2 is in another partnership using Software2. P2 owns property jointly with P3 - P3 maintains the letting business' records using Software3. How does P2 pull all this together for his MTD? Will all the different software talk to each other? We're told there won't be any Tax Returns, so how will P2 submit everything to HMRC?

Thanks (0)
Replying to kevinringer:
avatar
By Eric T
02nd Feb 2017 14:18

Multiple quarterly returns for P2 I'm afraid.

There are some individuals who will be submitting a lot more than four quarterly returns each year.

Also, the end of year "reconciliation" submission may very well be three or four end of year reconciliation submissions (one for each source of self employment or rental income).

I can envisage some individuals looking at submitting 20 plus returns a year (over and above any commitments to other forms of tax such as PAYE or CIS)

Thanks (1)
avatar
By pauljohnston
02nd Feb 2017 13:33

Not a lot about how to fix data errors. These I believe will be the biggest nightmare for accountants and taxpayers. Some will just lie down and accept them. So If a £30k pension is fed in at £3k the taxpayer will be in for a nice suprise and then a shock when 10 months later his SA is adjusted and he will collect a tax bill, a penalty and interest. Of course there is a chance that nothing will change.

Thanks (1)
avatar
By 0098087
02nd Feb 2017 13:41

there is no need for this. It's all penalty driven. I just can't see why it's needed. Seriosuly looking at getting out as we will all get the blame when it all goes wrong. Endless phone calls to HMRC when they have the wrong figures, RTI doesn't work, How will this! Sodding IDS. All his fault,

Thanks (1)
Julie Stacey
By Pingsquitch
02nd Feb 2017 14:08

As a part-time agent currently calculating and submitting 11 returns annually, I fail to see where I fit in if the client is going to have to submit their own data. At the moment, I anticipate a third of my income being slashed!

None of the clients I work for are computer literate so I anticipate there will be lots of errors (after they have gone out to buy a computer!), how will HMRC know if the submissions are accurate?

Thanks (2)
Replying to Pingsquitch:
avatar
By Eric T
02nd Feb 2017 14:20

The end of year reconciliations submission (or submissions - it's not clear how many might be needed) is where the agent might finally get the opportunity to do their job.

Thanks (0)
Replying to Pingsquitch:
blue sheep
By Nigel Henshaw
03rd Feb 2017 15:00

I don't think you understand, if your clients are anything like mine, you need to change the way they or you do the bookkeeping by getting them onto a cloud package.
It is your job to advise them through that process and verify on a quarterly basis that the figures are correct.
You will be needed now more than ever and the quicker you get ahead of the game the easier your life will become down the line.

Thanks (1)
avatar
By Klhr
02nd Feb 2017 14:52

I think we should vote Trump in charge of HMRC. Then all will be well...

Thanks (1)
avatar
By 0098087
02nd Feb 2017 14:57

So can someone tell me what we are supposed to tell clients. What software? Can we look at it. One year to go and no news. accountex may be the answer.

Thanks (0)
avatar
By Eric T
02nd Feb 2017 15:07

No news is bad news - in this case.

Thanks (0)
Chris M
By mr. mischief
02nd Feb 2017 16:01

"Xero’s Gary Turner is one of several software executives who is confident HMRC will release the APIs in time."

I'm just cleaning up a coffee spill which took place when I read this. Correct me if I am wrong, but is this not from the software company which took a year to write code for a P60?

Thanks (6)
avatar
By RobertD
02nd Feb 2017 16:20

Why do I always think of Blofeld's cat when I read anything about Gary Turner. Strange.

Edit: And Jim Harra as Blofeld for that matter.

Thanks (3)
avatar
By cstwragby
02nd Feb 2017 23:15

Ruddy hell. another article about MTD and Gary Turner being confident about it. He's the only one who is. Wonder why....

Thanks (1)
avatar
By DaisyEMB
03rd Feb 2017 11:08

I got as far as the second paragraph of this article and became distracted by the mention of the "personal tax account".

In order to access my own personal tax account I can only opt to receive a call to my landline with the passcode - we live in rural Wales and cannot get mobile signal at home, so receiving the code by text is out of the question. When the automated call comes through to the landline our internet cuts out for about 5 minutes as soon as I put the phone down.

HMRC seriously need to consider the fact that a sizeable proportion of the population don't yet have reliable means to even access their personal tax accounts let alone anything else.

Thanks (1)
Replying to DaisyEMB:
Tornado
By Tornado
03rd Feb 2017 17:44

I set up my Personal Tax Account and guess what, the only thing I could not see was my taxes.

Pension projection, Child Tax Credits and Pension Credits were all on offer and yet the system did not know if I was actually eligible for or receiving anything to do with these 'taxes'.

At this stage the information on Personal Tax Accounts should be accurate and relevant, but it is not.

I don't think you are missing anything!

Thanks (1)
avatar
By Jim100
03rd Feb 2017 14:43

Little unclear how the data will flow say for a micro company

Will data flow from the Clouding accounting software to Accounts Production software then to Corporation Tax Software or will the data just flow from the Cloud Accounting Software to Accounts Production then to HMRC to file a Corporation Tax ?

What software will be free - will it be the data capture and cloud accounting software. Is HMRC subsidising the software development companies

I didn't see any mention of the software developers e.g freeagent, quickbooks. Is HMRC just dealing with a few software companies ?

Thanks (0)
Replying to Jim100:
Jonathan@Aiteo
By [email protected]
03rd Feb 2017 16:51

Data flow is an important question. My (undoubtedly imperfect) understanding from what I have read is that the software will be configured to submit the figures directly to HMRC.

How agents can interact with this is still unclear to me, but probably similar to how VAT returns are generated and submitted in accounting software now.

HMRC is dealing with number, something in the order of 18-30, companies, as I understand it. Certainly all the major players are involved, but that doesn't mean they will be offering free software. I think Xero are on record saying they won't be doing so.

Thanks (0)
Replying to Jim100:
rebecca cave
By Rebecca Cave
04th Feb 2017 15:04

The MTD proposals, as presented so far, DO NOT deal with companies. All of the MTD consultations and the MTD software under construction will only apply to unincorporated businesses, and possibly partnerships, including mixed partnerships.
We are waiting for another MTD consultation paper to address the needs of corporate txpayers and "complex buinesses".
We do know that ALL companies and partnerships with turnover of £10m or more are due to come into the MTD reporting regime from April 2020, but no proposals have been released to indicate how this will be achieved.

Thanks (0)
Tornado
By Tornado
03rd Feb 2017 16:39

As I have said on many occasions before, it makes no sense at all for dozens of software developers to work on programs of varying quality which all essentially do the same thing.

If I had been looking at this project at the start, it would have been perfectly clear to me that if approved software is to be specified, then part of the 1300 million pounds allocated to this project should be spent on providing software that perfectly does what HMRC wants it to, and this software would be made available for everyone to use at no cost.

There are many obvious advantages of this approach not least that everyone would be using the same software (probably cloud based) and any changes to tax rates, bands, etc, will be immediately available to all users of the software.

The illogical approach of having dozens of programs that are supposed to be MTD compliant instead of just one that is, is just one of the many reasons why this MTD project will fail in its present anticipated form.

Thanks (2)
Replying to Tornado:
Jonathan@Aiteo
By [email protected]
03rd Feb 2017 16:47

Especially when, in many cases, the quarterly output is going to be a figure for income and another for expenses.

Thanks (0)
avatar
By Jim100
03rd Feb 2017 23:01

I guess they are only interested in looking into personal tax accounts and later they will try to figure how to deal with business tax accounts so many questions but so few answers. Accountants need to know exactly how it works (and costs) now then we can start preparing our clients. This is the ideal time to prepare hence everything should be finalised at this point in time not six months later. Should just put their hands up and postpone it for year.

Do the software providers know what to do ? How can some charge and some won't - doesn't make sense as the sole traders will go to the ones that is free even though the software may not be that great. HMRC must be subsidising the software companies. Maybe its free for the first year.

Thanks (0)
Jennifer Adams
By Jennifer Adams
04th Feb 2017 17:56

I had hoped that with the publication of HMRC's response to the consultation documents that the press would pick this up and appreciate the problems that many taxpayers will have with MTD and the cost for all including the economy as a whole.
But apart from a few lines in The Times I've not seen anything. And those few paragraphs were all saying how great it will be etc etc.
It was mentioned on Moneybox under the heading of 'tax simplification' and again its all how great its going to be, how helpful to taxpayers etc:
http://www.bbc.co.uk/programmes/b08byfhs
... they confirm that only 1/4 of small businesses use accounting software and actually say that businesses are going to be forced to use software under MTD
Some accweb members have commented that they are going to write to their MP's. Unfortunately its too late for that. MP's tried very hard but to no avail. See my blog (MP's tried their best), https://www.accountingweb.co.uk/community/blogs/jaadams/mtd-mps-tried-th...
MTD was debated a year ago following a petition. Their attempts can be seen here:
https://petition.parliament.uk/petitions/115895

>>> all the comments about not working/clients cant use computers etc have been ignored by HMRC and as I've said before they cant back off now as they've spent a lot of money on implementing MTD.
However...we need to be there for our clients. If the clients stay that is. Anyone who has read my blog will know that I am pessimistic for the profession. All clients know someone who is good at computers and if they do still want us to do their returns (sorry... 'updates') then they wont take kindly to an increase in fees. That will mean eating into accountants profits.
HMRC havent given the real reason for quarterly updates - it can only mean quarterly payments in the end.

MTD is being discussed on the BBC Moneybox Live on Weds 3pm

Thanks (0)
Replying to Jennifer Adams:
avatar
By Eric T
04th Feb 2017 22:32

The Moneybox Live discussion on MTD was LAST Wednesday (1 February).

Thanks (0)
Replying to Jennifer Adams:
avatar
By cstwragby
05th Feb 2017 07:17

I am pessimistic too as something has to give at my end. Yes, January is busy but at least by then I have completed a good percentage of accounts and tax returns. I cannot be expected to complete all the clients quarterly accounts (sorry, updates) in a 1 month timescale 4 times a year
If this had been brought out under a Labour Government, there would have been a massive outcry, "interfering in business" etc etc, but as it's under a Tory Government it's been downplayed and/or hushed up

Thanks (1)
Replying to Jennifer Adams:
blue sheep
By Nigel Henshaw
05th Feb 2017 11:22

I just do not understand your being "pessimistic for the profession".
During the past 2 months I have met many clients to introduce them to MTD to show them how this will change their book-keeping from various inefficient systems that they have to more modern cloud based practices using bank feeds etc, allowing us to provide them with more up to date data and give them better business advice.
Not one has even thought that they could do this themselves, none of my clients would submit anything to HMRC without running it past me first, as always they expect us to do it for them. We control the whole process.
I would also question why you feel your fees need to increase, personally I have found that the extra efficiency we gain in using bank feeds etc compensates for the extra work involved, perhaps a minimal increase for the cost of the software.
One thing is for sure we are needed more than ever!

Thanks (0)
Replying to NH:
avatar
By Eric T
05th Feb 2017 11:45

I agree that we will be needed more than ever. My fear is that the sheer logistics of having to check and review all our clients' book=keeping entries every three months within a very limited time span is very daunting - no matter how up to speed the clients become with the new methods.

And of course, in reality some will be absolute whizzos at it and some will be awful. So the workload per client will vary enormously.

That's why I'm pessimistic. I just can't see how it can be managed

Or maybe all your clients are totally switched on internet geniuses. I know most of my clients aren't - and aren't going to become so in 14 months.

Thanks (0)
Replying to Eric T:
blue sheep
By Nigel Henshaw
05th Feb 2017 11:54

Thats the point, they are not "whizzos" but we are!

They do not need to be because they have us

Thanks (0)

Pages