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Presumably HMRC accept (and our professional bodies will no doubt concur) that the vast majority of qualified professional advisers ensure that their clients are submitting reliable figures on the current systems for all taxes. If so does that then lead to a conclusion that the tax gap is predominantly down to unrepresented taxpayers? Yet all the furore over MTD for VAT is being debated by advisers only and HMRC have done NOTHING WHATSOEVER yet to publicise the imminent arrival of MTD VAT to the wider business public. But that then does not make any sense...
According to HMRC at the seminar we attended in November (?) 2016, they see the same level of ‘errors’ right across the board from qualified, other agent and unrepresented tax payers. We didn’t believe them either.
If ‘customers’ are going to be more up to date with their records they will be more inclined to record expenses. Cash jobs will still be cash jobs and the tax gap with expand.
The lack of information from HMRC to the unrepresented tax payers about MTD is a disgrace indeed it is a scandal.
The fact that MTD is an international (OECD) inspired initiative fills me with dread. We are being led into true Orwellian territory. It just feels wrong and we are powerless to do anything about it.
As the tax gap is the difference between estimated amounts due and actual amounts received and considering the result of prepopulating tax returns - less tax collected; is MTD going to lower the tax gap, not by increasing the tax take but by showing how inaccurate the estimates are?
The word 'estimate' appears about 400 times in the Methodology publication.
I didn't have any enthusiasm to check the 'estimate of tax gap" publication.
Thank you Wendy for wading through these publications for us.
It is interesting to note that in the Methodological Annex, page 47 paragraph H.73, HMRC estimate that out of £680 millions of tax lost from 'Moonlighters' an astonishing £590 million is lost solely from under declared lettings.
I don't see how MTD will help with this as these 'Moonlighters' are probably already in the PAYE system and are already obliged to declare such income.
I can think much easier and effective ways to deal with this problem than the MTD solution.
If anything, this estimate just proves how bad HMRC are at the moment in collecting relatively straightforward taxes.
This morning on TV I heard someone pointing out that whilst AI, super computer system, and other technological wonders are promised for the NHS as a cure for its problems, the solutions are much simpler than that. Simply making it easier to get Doctors Appointments and easier access to the service is all that is required.
As with MTD, forget the technology and stick to the basics and the tax gap will then naturally decrease.
Although I acknowledge that we are moving towards digitalisation in many areas of life, I honestly can not see how MTD will close the (estimated) tax gap. If a trader's figures are incorrect on paper, will it not be just as easy for the trader to have them incorrect on a cloud book keeping system? Am I missing something?
You are welcome to refer to to any or all of my previous comments on MTD.
The current plans for MTD, which have already been kicked into the long grass in respect of direct taxation, won't happen.
The VAT plans will be implemented but after the usual initial problems, the rules will be eased to allow keyed input of return data.
I won't be wasting any more time on this subject.
The trouble with MTD and indeed most other Government initiatives is that the decision-makers are not close enough to the coal face to see how things work in practice. They just cannot see the wood for the trees.
Of necessity, they rely on rough estimates and statistics collected in all sorts of ways, some quite dubious, and then treat them as robust data. Policy then takes over and all objections/reservations based on practicalities get steamrollered in the drive to implement the policy in the shortest possible time-frame.
Only years later when the project is seen irrefutably to have failed will any sort of enquiry take place into what happened. People will then ask why all the obvious bad signs were ignored.
The only way to overcome this is for all major changes in the way things are done in the public sector to undergo a proper degree of independent scrutiny first before policy decisions are made. I know we have Impact Assessments but these tend to be conducted by the very people who wish to push through the proposed changes and I suspect that in most cases they make sure the revealed impacts are not severe enough to derail the initiative.
Maybe we should have some sort of independent public enquiry first rather than afterwards once things have gone belly-up.
I also went on the HMRC consultations on MTD
they just didn't get the message that most tax payers, especially those represented by professional firms are actually responsible tax payers trying to do things right, for the vast majority if errors are made they are genuine
they also failed to grasp that someone who currently doesnt comply with the regulations as they are now, will still not comply under a new set of rules
I also went to a HRMC MTD meeting. I pointed out that SA already has a mechanism for dealing with these errors: enquiries. I pointed out that if my clients were typical, the loss of tax from client base would be several thousand a year (I no loner have the figures) but I had not had an enquiry for years. Other agents also said they hadn't had enquiries for a long time. This all suggests HMRC are happy with the tax take from our clients in which case the gap must be mainly attributable to a small number of offenders. If these were all in SA the tax gap per offending taxpayer would be huge and unrealistic so the gap must be with people who are not known to HMRC. These people aren't going to think 'oh no, MTD, I must register with HMRC'. No, these people are going to remain off-radar. How will MTD bring these people to HMRC's notice?
My understanding is that errors tend to be random: eliminating errors that close the tax gap will be offset by eliminating errors that widen the tax gap.
If we're actually talking about VAT-fraud, then individuals who have been intent on committing VAT- fraud in the past, are unlikely to be deterred by digitisation.
I agree with "Open all hours" if taxpayers and their agents are going to be forced into MTD where income = £10,000 then everyone will be more vigilant in keeping track of their receipts, and expenditure claims will rise and the tax gap will widen. In my 40+ years in the profession I have never seen anybody under-declare their income, but when I query with them where are their expenses for stationery and postage, so many have said they don't bother claiming as "I get these in the supermarket with my groceries and don't bother checking through the 1/2 meter long till receipt for everything business related". If MTD for income tax comes in then there will not be so much as a paperclip unclaimed for with a resultant legal loss to the exchequer. As "Tornado" points out there will be Moonlighters, but MTD is not the solution to that problem. Instead the government should force us all to only pay small traders via their bank account and not by cash thus leaving an audit trail.
I see today they are delaying the VAT pilot
I wonder which of these approved suppliers will have a product as close as possible to my current paper records and which does not require use of a mobile telephone.
https://www.gov.uk/government/publications/making-tax-digital-for-busine...
ttps://www.gov.uk/government/publications/software-suppliers-supporting-making-...
Accu-Man
Ajaacts
BTC Software
Bx
Clear Books plc
DataTracks Global Private Limited
eFileReady
Farmplan
Go Simple Software
Intuit
IRIS
Liquid Accounts
PwC
Quickfile Accounting Software
Sage (UK) Limited
Simplifi-HQ Limited
Tax Optimiser
Xero
Does the list include linking software? I ask because https://www.neilsonjamestech.co.uk/ is not included.