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VAT data shift creates problems for taxpayers

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The transfer of VAT records from a legacy HMRC mainframe to a new platform has created payment problems for taxpayers and submission issues for tax agents.

3rd Jun 2021
Tax Writer Taxwriter Ltd
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HMRC has many old legacy computer systems, some of which date from before the merger of the Inland Revenue and Customs & Excise, which formed HMRC in April 2005.

In 2016 HMRC’s information technology strategy set out the new basis for IT systems supporting tax administration on three core platforms:

  • Individuals Tax management platform (ITMP) – for all personal taxes
  • Enterprise Tax Management Platform (ETMP) – for all business taxes
  • Customs Declaration Services (CDS) – replaces CHIEF for import and export

There are also cross-cutting platforms that allow functions to work across all taxes such as: debt management, case management, data and risk analytics. 

Email issues anticipated

In Agent Update 82, issued in February 2021, HMRC hinted of the problems to come when the VAT main frame is decommissioned and the data is moved on to ETMP.

HMRC is required under the banking regulations to hold a valid contact point for all taxpayers paying by direct debit. This is so HMRC can warn the taxpayer in advance of the date that direct debits will be taken from their account and of the amount to be taken.

HMRC says: “Due to the very short timeframe between submission of the VAT return and payment of the tax, we are unable to send postal notifications to customers. Instead, we’ll have to use customers’ email addresses to inform them.”

Tax agents were asked to urge clients to provide HMRC with a functioning email address, by updating the business’ VAT registration details held within the business tax account (BTA).

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Replies (15)

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ghm
By TaxTeddy
03rd Jun 2021 14:20

An IT migration issue at HMRC? Who would have thought?

Thanks (9)
By SteveHa
03rd Jun 2021 15:40

Quote:
Tax agents were asked to urge clients to provide HMRC with a functioning email address, by updating the business’ VAT registration details held within the business tax account (BTA).

Tax Agents do not have access to their clients’ BTA, so can’t update email addresses in the BTA on behalf clients. An email address belonging to the tax agent does not meet the bank regulation requirements.

And here is the root of many HMRC failures. Beg agents for help, whilst actively preventing agents from helping. HMRC can go [email protected]£& themselves.

Thanks (21)
Replying to SteveHa:
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By JacquiMBurns
08th Jun 2021 14:26

All my clients have a fully functioning email address on their BTA yet HMRC still insist on sending, as you say, long letters full of utterly incomprehensible (to the average client) instructions/details to the clients' home address which, if I am very lucky, the client then sends to me to deal with hopefully before the final date to do so.
Why does HMRC think that clients appoint agents? It is because the client does doesn't want to be bothered by HMRC, so they appoint an Agent who can deal with these matters.

Thanks (0)
Replying to SteveHa:
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By JacquiMBurns
08th Jun 2021 14:26

All my clients have a fully functioning email address on their BTA yet HMRC still insist on sending, as you say, long letters full of utterly incomprehensible (to the average client) instructions/details to the clients' home address which, if I am very lucky, the client then sends to me to deal with hopefully before the final date to do so.
Why does HMRC think that clients appoint agents? It is because the client does doesn't want to be bothered by HMRC, so they appoint an Agent who can deal with these matters.

Thanks (0)
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By cmiskin
03rd Jun 2021 16:37

After the transfer agents must file from the agent services account (ASA), not the older AOS portal, but you need to check in the old portal to see whether transferred.

Thanks (2)
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By spuddle
04th Jun 2021 10:32

After some trial and error....to file VAT returns for non-MTD clients that have been moved....presuming everyone can see the same thing on their ASA - it is still titled the "Agent Services Account" - you need to login to the ASA, select "Making Tax Digital for VAT" and then "Manage your client's VAT details". The next screen asks for the client's VAT number. You can then select the VAT return period and enter the data.

Thanks (1)
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By spuddle
04th Jun 2021 10:32

After some trial and error....to file VAT returns for non-MTD clients that have been moved....presuming everyone can see the same thing on their ASA - it is still titled the "Agent Services Account" - you need to login to the ASA, select "Making Tax Digital for VAT" and then "Manage your client's VAT details". The next screen asks for the client's VAT number. You can then select the VAT return period and enter the data.

Thanks (0)
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By jamiea4f
04th Jun 2021 10:55

So basically the usual HMRC IT related [***] up then. Move along, nothing new here...

Thanks (1)
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By Hugo Fair
04th Jun 2021 11:07

As the Soft Machine put it ... Out-Bl00dy-Rageous! Not the article which nicely pulls together what we've all been reporting for weeks, but the complacency within HMRC.

If they didn't think of these issues before starting migration then the contract should have severe penalties for those who think 'agile' means never having to plan ahead!

If they did think at all, then there were simple ways to avoid the major snafu ... by grouping all the accounts (by any category such as size, or registration number, or address - it doesn't matter) they would have been able to control and target messages (about what was about to happen and what to do about it) to manageable sub-groups in a TIMELY manner. Instead they opted for the 'easy' way chosen, irrespective of the foreseeable resultant chaos, probably because some halfwit saw it as a good opportunity to 'nudge' businesses to update their email addresses!

And why are they still "currently working on a solution to prevent this incorrect message"? It should take 5 minutes to implement a workaround (even if only temporary, such as replacing the current text with "Sorry there is an error for which the explanation is here" and a link) ... given that this is but a text string (not code that needs testing after changing)!

I could go on, but the only valid excuse would be if these mistakes were being made by unsupervised work-experience students on NMW ... not supposed IT experts on a daily remuneration that could be better spent by burning cash to keep warm next winter.

Thanks (3)
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By North East Accountant
04th Jun 2021 12:42

Surely this migration should have been done long before MTD for VAT and not after.

Thanks (3)
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By JacquiMBurns
04th Jun 2021 13:46

Why can't they ask accountants & other VAT users what they need & what problems they are having & try & fix those first before starting up a new system which only imbeds the problems & gives users even less of what they need?

Thanks (0)
Morph
By kevinringer
04th Jun 2021 16:40

HMRC told us they had to migrate all VAT businesses to the new ETMP system because the old one was too old to support. HMRC also told us that clients needed to move onto MTD to go onto the new ETMP system. But HMRC are now moving all non-mandated clients to the new ETMP system with proves that none of the clients needed to be MTD! It was all a big lie.

Thanks (2)
Morph
By kevinringer
04th Jun 2021 16:44

I've got loads of registration changes currently pending with HMRC. I had a conversation with a 'variations' officer about a non-mandated client and the officer was saying that HMRC staff can update non-mandated clients on the old mainframe system easily but they're struggling to update on the new ETMP system because there are far more steps. In some cases they can't update at all and have to refer it to a higher technical level. So the new ETMP system is creating problems for HMRC's own staff as well as the rest of us.

Thanks (0)
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By drakeltd
04th Jun 2021 18:28

"HMRC told us they had to migrate all VAT businesses to the new ETMP system because the old one was too old to support."

No - the people who could support it are getting older, perhaps.
There plenty of contractors available at the moment that could help out, but they have been shafted by IR35 - so HMRC is on its own.

The next issue HMRC will have is that the new system cannot cope with the volumes - its happened many times in the past. Hence why mainframe systems are still going strong within banks and insurance companies across the world.

Yes, someone mentioned try the new system out on a subset of the tax-payers. This is called running a pilot, which proves the system and mitigates risks. However prior to a pilot it is customery to perform other levels of testing, which clearly have not covered these situations, which are quite fundamental functional errors.
It suggests to me that woefully inadequate control has been exercised in the project. If these basic functions are invalid, then many more issues will emerge.

Thanks (0)
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By Ian McTernan CTA
07th Jun 2021 12:44

Both letters ask the taxpayer to log into their BTA and update their email address

And there is the issue. Most clients don't have and don't want a BTA.

Most clients don't want anything to do with HMRC which is why they appoint agents.

HMRC then exclude agents from being able to interact with HMRC on the client's behalf.

They then send out letters full of jargon expecting taxpayers to read them or at least tell their agent they got it, but don't bother sending a copy to the agent (who might actually do something about whatever the issue is).

Then HMRC wonder why things are going wrong...so decide penalties must be imposed!

Thanks (1)