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MTD pilot testing

MTD pilot offers escape from SA returns

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2nd Mar 2017
Editor in Chief (interim) AccountingWEB
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Taxpayers who join the Making Tax Digital pilot scheme starting in April won’t have to send HMRC a self-assessment return for 2017-18, HMRC has confirmed.

To encourage 400,000 people to sign up for the “public beta” testing programme starting next month HMRC is offering a “special treat” for participants by excusing them from having to complete an SA return, MTD programme head Theresa Middleton told AccountingWEB last week.

Recognising that filing monthly income and expense updates then having to complete a separate SA return would be the “worst of all worlds”, Middleton said the plan was to let MTD guinea pigs send in details of other income through their personal digital account.

“You’re not opting out of the SA system, but what will happen if you join the pilot is you won’t have to send us a self assessment return for that year,” she said.

In a written clarification for AccountingWEB, HMRC explained: “It is not a question of opting out of the self assessment system. By subscribing to the pilot, and then complying with the conditions (sending in summary updates, End of Year activity, and where appropriate all other tax information) there will be, for the relevant year, no requirement to subsequently submit a self-assessment return because the taxpayer will have already met their statutory obligations.”

Pilot mechanics

The year-long test programme will run from April and be open to volunteers, businesses and landlords.

To make the pilot representative HMRC is approaching certain groups, such as those not currently using accounting software, to encourage them to take part.

The pilot itself will start with a stripped down product that will be upgraded with agile programming methods as the test programme progresses. As new facilities are added, HMRC will look to bring on board other types of organisation.

At a face-to-face meeting with Theresa Middleton and HMRC’s head of digital transformation Bridgid McBride, the latter explained to AccountingWEB how the department works with software companies and their users to bring them on board at “the right time to join the party” in the test phase.

One implication of this approach, however, is that tax agents and accountants may be left out in the cold when the pilot scheme starts, as the application programming interfaces (APIs) that will let them interrogate client data will not be in place.

In his evidence to the House of Lords Economic Affairs Committee last month, IRIS CEO Kevin Dady indicated that his company would not have an MTD-compliant accountant suite ready until the autumn.

Middleton told AccountingWEB: “Our expectation is that the smaller providers of agent software will be ready in April, May and June, and some of the bigger ones are unlikely to be ready until later.”

During the same parliamentary hearings, questions have been raised about the relatively short timescales for testing and the readiness of the HMRC application programming interfaces (APIs) that will allow tax agents to see the contents of their clients’ tax accounts.

Because of the 10 months allowed before a taxpayer has to file their end-of-year confirmation, some tax experts are concerned that the end-to-end system won’t have been tested before it becomes mandatory in April 2018.

Acknowledging that the final review process wouldn’t be tested until after that date, Middleton commented: “Before any mandated customer goes through their end of year, the pilot group will go through their end of year. The pilot group will test the end-of-year process so that by the time you’re mandated it will have been thoroughly tested and tweaked.”

The elements that unincorporated businesses will be mandated to do from April 2018 - subscribing to the digital service, keeping digital records, sending HMRC the data and seeing it replicated in your tax account and paying as you go (if you want to) - will all have been well tested by that date, Middleton confirmed.

And it’s not just the APIs that are proving elusive. According to Middleton, HMRC has been working on a “terms of collaboration” document (including annexes and supporting documentation) that will detail things like free software functionality requirements, security standards, and other elements HMRC wants to see in MTD-compliant applications, such as key legislative requirements. Middleton told us, “HMRC will publish this later this year.”

Questions awaiting answers

AccountingWEB’s meeting with HMRC was part of a continuing effort to help the tax department communicate its plans and guidance around the digital tax project, and AccountingWEB will publish the full set of answers separately.

Some issues await confirmation by ministers, official announcements and publication of further legislation and secondary regulations - some of which may arrive on Budget day next Wednesday (8 March), others in the Finance Bill on 20 March. Until then, we will continue with our enquiries to resolve some of the points raised in this article:

  • Where are the APIs that will allow agents to access data in clients’ personal tax accounts? Agents will need this information to participate in the public beta test programme.
  • If agent APIs aren’t available until the autumn and clients choose to go into the pilot scheme in the spring and interact with HMRC through their personal tax accounts, how will agents ensure the accuracy and completeness of the information provided?
  • Will the free MTD software provided include facilities for taxpayers to authorise their agents to access their online data?
  • When can HMRC specify the legislative, functional and security requirements set out in the “terms of collaboration” document with the software industry? What legal status does this document have, and when will it be made public?

Replies (32)

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Jonathan@Aiteo
By [email protected]
02nd Mar 2017 10:30

Keep banging the drum. Lord Turnbull told HMRC at the Finance sub-committee that they had "hardly moved an inch" and that they are heading for "a major row" with the public.

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By david wilks
02nd Mar 2017 10:41

How on earth is all this supposed to work?
"Issues awaiting confirmation"
"Working on terms of collaboration"
Commercial software not available.
Agents cannot access APIs
This is all so vague and wishy washy. "Oh, I know. Let's make everone use digital reporting to us but we don't have a bloody clue as to how it is going to work." say HMRC.
Anybody thinking of taking part in the pilot will need to be very careful. By the sound of it it is being developed on the hoof. How can the biggest business in the land be so cavalier? How about we start planning another mission to the moon using a "pilot" scheme and make it up as we go along?

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By NYB
02nd Mar 2017 10:42

God I'd rather wait until it is bedded in and all the snags sorted. That's a dream though isn't it as that will never happen. I certainly dont want to be faffing around trying to work with something that doesn't work & it takes me three times as long to do.

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By BristolTaxGuy
02nd Mar 2017 10:53

Bonkers. RTI was managed badly enough and that was with agents doing the submissions! This is a clusterf*ck waiting to happen.

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Replying to BristolTaxGuy:
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By leon0001
02nd Mar 2017 11:13

In slightly less aggressive language we are about to see a real life demonstration of a total catastrophic cascade failure.

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By Peter-S
02nd Mar 2017 11:09

I keep waiting to read something that gives just a glimmer of hope that things are moving in the right direction, potential problems being properly understood etc but the over riding thought is what else can I do if I jack it all in.

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Replying to Peter-S:
Maytuna
By DJKL
02nd Mar 2017 11:26

Peter-S wrote:

I keep waiting to read something that gives just a glimmer of hope that things are moving in the right direction, potential problems being properly understood etc but the over riding thought is what else can I do if I jack it all in.

Well if you want to be a lumberjack I would act now, there is a rush towards this most favoured of occupations for former accountants.

As for me, well once we screw up Brexit, British farmers panic over losing CAP etc, I will buy a greatly devalued very small farm (smallholding) and eke out my pension being as self sufficient in food as possible whilst driving around on say an ancient Ferguson.

No more desk, no more piles of paper, just fresh air and if a small adjoining woodland for firewood the ability to go mad with my Stihl.

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Replying to DJKL:
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By Richard Webb
02nd Mar 2017 21:12

I think you'll find that lion taming is the preferred activity. I've already ordered my hat.

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By RobertD
02nd Mar 2017 11:24

I wonder just how many businesses are going to sign up to this? Didn't they say 90 at the Lords Econ? They certainly won't get the 20% who don't know MTD exists.

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By ireallyshouldknowthisbut
02nd Mar 2017 11:35

Ouch. I will look out for 400,000 tax payers in deep do-do then.

It sounds like HMRC are going ot have to manually process all the non-self employed data to make that work. Which these days is a LOT of data, eg student loans, child benefit, married couples allowance, dividend income none of which will work automatically.

I would hope they would have the OPTION to file an SA which then over-writes whatever garbage has been collected via the other system, so at least agents can get them out of the mess in a low cost and effective manner.

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By SpreadsheetUser
02nd Mar 2017 11:27

I trialled RTI for a year before it become compulsory. Payroll is far different to MTD as payroll already had to be calculated each time, so it wasn't that drastic a change.
Yet we are going to have less than a year for the great change involved in MTD.
Anyone expecting any more news in the Budget next week?

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Replying to SpreadsheetUser:
By Paul D Utherone
16th Mar 2017 11:48

...and yet STILL Jim Harra trots out the introduction of RTI as being equivalent

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Tornado
By Tornado
02nd Mar 2017 11:46

This is such tripe that I no longer particularly care what deep mess HMRC get into.

I will endeavour to ensure that I do the right thing for my clients as far as I can, and that is it.

HMRC can wallow in their own muck as far as I am concerned if they are so arrogant as to ignore the good, well informed advice that has been given to them by those in the Accountancy and other relevant professions.

EDIT : I am not sure that an incentive of not having to do a year end SA Return is actually an incentive. As far as I am concerned, I would rather prepare a single year end Tax Return for a client as I know that it will be accurate and complete and will include information that is often not actually available until after the 5th April each year anyway.

How can the prospect of doing 5 tax returns a year be an incentive to stop doing 1 tax return a year? A monetary incentive might be more attractive ... say a 5% tax discount for taking part in the trial.

Bonkers.

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By free-rider
02nd Mar 2017 11:44

Can anyone point me towards a link where I can register to take part in public pilot?

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By jamiea4f
02nd Mar 2017 11:56

Bearing in mind that HMRC withdrew the free Corporation Tax software, causing many businesses extra work (and expense) presumably because they couldnt keep up with it, I'm sure I'm not alone in predicting that this is going to be a half-arsed error-riddled disaster. If I were thinking of alternative self employment options before, this will certainly hasten them....

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By North East Accountant
02nd Mar 2017 18:23

Who on earth would want to partake in the pilot?

HMRC: We are flying to the moon starting April 17 and will get there by April 2018, GP's wanted to test the rocket.
Guinea Pig (GP): Does it work?
HMRC: Don't worry about that we are going to the moon. We'll make it up as we go under this great concept called "Agile".
GP: Can my advisor help me?
HMRC: No he can't see a thing that you are doing.
GP: He's helped me for years and makes sure that I do it right.
HMRC: It's easy peasy as there are nudges and prompts to ensure that you comply with the 22K odd pages of legislation and you can always read the hundreds of pages of guidance.
GP: But when will I get the time as I am trying to run my business.
HMRC: Just whip out your smart phone, press a few buttons on the app and hey presto, you're done... it will take no time at all.
GP: There are some silly entries on my DTA, which have increased my tax, from an employer that I have nothing to do with. What shall I do?
HMRC: Nothing to do with us. You must get in touch with this employer and ensure they file an amendment.
GP: What if they don't?
HMRC: That's your problem. Pay us the tax or else!
GP to Agent: I have a tax bill for £10K. Help!!!!

Dear HMRC - if you are reading this please, please, please get Agent Services in order NOW. Without us on board to sort out the shambles you are very likely to wreck the tax system entirely.

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Replying to North East Accountant:
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By BristolTaxGuy
02nd Mar 2017 12:08

That conversation made me laugh a lot! Spot on.

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Replying to North East Accountant:
By maz444
02nd Mar 2017 15:14

Brilliant!

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By PHILIP RYAN
02nd Mar 2017 12:02

Making Tax Digital will mean that we (accountants) will have four January's to deal with instead of just the one we have now. Which as we all know is an horrendous time because clients even with 10 months to get themselves organised leave it till the last minute!

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Replying to PHILIP RYAN:
Maytuna
By DJKL
02nd Mar 2017 12:34

Five not four.

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Tornado
By Tornado
02nd Mar 2017 13:19

"Get the men and horses ready to charge down the valley to attack the guns at the end that are pointing this way"

"But sir, what about the guns on the ridge as well that will fire on us as we charge down the valley and most likely wipe us out"

"Guns, I see no guns .... CHARGE!"

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Teignmouth
By Paul Scholes
02nd Mar 2017 12:24

I'd heard through the grapevine that there are 7 software providers working with HMRC on this so, presumably one or all of them will already know about what's expected and how the interfaces will work.

Has anyone any idea if this is correct, and if it is, who they are?

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Replying to Paul Scholes:
By Tim Vane
02nd Mar 2017 13:36

Happy, Grumpy, Sneezy, Sleepy, Bashful, Doc and Iris.

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Jennifer Adams
By Jennifer Adams
02nd Mar 2017 14:12

RobertD says "20% dont know MTD exists" - surely you mean 80% of taxpayers? I've not told my clients as anyone who reads by blog will know.... and I'm not going to tell them until everything is sorted.
Its 5 returns whatever anyone says.
As Paul says there are software providers who know whats going on and we can guess which ones they are - e.g Taxcalc, Digita, Sage, Iris etc etc but I should imagine they are barred from saying anything on pain of not being on the approved list when published.
What I do hope and perhaps John (editor) could find out for us from his contacts - is whether we will learn anything new from the software providers who will be attending Accountex.

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By mabzden
02nd Mar 2017 16:31

Here's a quote from Aweb last month suggesting even the big suppliers have little idea what's going on:

"IRIS CEO Kevin Dady hinted at the developers’ frustration with HMRC to the Lords committee. “It was only announced last week for something we are trying to deliver this year.”"

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Chris M
By mr. mischief
02nd Mar 2017 16:35

I've said this many times, but it is worth repeating. It is very obvious this is going to end in tears. The only objective for a given accountant is to ensure none of the tears are his or hers.

My MTU (Making Tax Up - see earlier posts) methodology guarantees none will be mine.

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By david wilks
02nd Mar 2017 16:57

Come on Harra and Co. You have been up your trees for long enough. Come to my office and see for yourselves the angst, anger, misery and total disbelief you are generating.
MTD - Make The Decision to take up my challenge if you dare.

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By Jack Spratt
02nd Mar 2017 17:20

So I am being offered the opportunity to be let off doing a self assessment tax return - I am quite good at these now as I have ben doing them for some years now.
And in return for being let off the SA ITR I have to do five returns instead.
Can someone explain why this might be a good deal?
They say the are looking for guinea pigs....... are they the little animals that all jump off a cliff together? Oh no those are lemmings.

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Replying to Jack Spratt:
Tornado
By Tornado
02nd Mar 2017 17:48

"They say the are looking for guinea pigs....... are they the little animals that all jump off a cliff together? Oh no those are lemmings."

Guinea pigs are the ones that get eaten in many parts of the world. Quite apt really.

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By Mr J Andrews
02nd Mar 2017 17:40

I'm with JAAdams totally on this. Why tell clients half [ or less than half ] of the story until we get some facts and figures. I like a flutter and would be prepared to bet 2 to 1 on that we'll be LESS wise after 8th and 20th March - Budget and Finance Bill days respectively.
The incentive of not having to file an SA Return by doing quadruple the work is akin to the prize of a mouldy donut for winning a pie eating contest.
It's worrying and annoying that HMRC are 'OFFERING.......PARTICIPANTS' this 'special treat' for taking part in this so called pilot scheme . Where do they get these dumb assed idiotic guinea pigs from ? Is this some kind of oxymoronic selective volunteering ? Do market researchers select 99 audio impaired people out of 100 to come up with meaningful results on the noise level at Heathrow ?
The more I hear and read about MTD , the more I feel our country is succumbing to an inadequate government department reeking of the inability to see or even listen to common sense.
The system smells of wasting taxpayers money. Lest we forget , we need to look back to Jane Ellison {HMRC}'s Foreword to the August 2016 MTD Consultation Document in which she advised :
Opening Paragraph :''BUSINESSES WANT A SIMPLER TAX SYSTEM'' .....'' FREEING BUSINESSES FROM RED TAPE AND ALLOWING THEM TO FLOURISH IS A CENTRAL PART..... OF OUR PLAN FOR BRITAIN''
Second Paragraph : '' THIS IS WHY THE GOVERNMENT .....IS INVESTING £1,300,000,000 .......INTO ONE OF THE MOST DIGITALLY ADVANCED TAX ADMINISTRATIONS IN THE WORLD''
Yes folks £1.3 billion. Imagine what we could do with this funding for our NHS system. It stinks.
Extensive study by Wendy Bradley - in her recent web comments - demonstrate the government's own policy assessment tools strengthen the arguments AGAINST the radical idea of MTD . The conclusion being no justification nor practical reason to pursue the idea.
But James Harra et al show no volte-face on the whim.
'Pilot ' may be apt . Titanic sails on . Sadly , like lemmings , some appear to be trying to get a late boarding. Why are we continuing to pamper to an idea of rounding up our nation's small businesses into enforced quarterly labour - albeit digital - for no practical advantage.

p.s. I'm still awaiting a response to my request to the HMRC Budget Team , a quarter of a year on , for an analysis of the £1,300,000,000.
A lot of money for creating more difficulties for my business and that of my clients. And more red tape to cut through .

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By AndrewV12
03rd Mar 2017 10:29

Taxpayers who join the Making Tax Digital pilot scheme.

Sounds to me the equivalent of a PILOT SCHEME, that sends you to jail on behalf of research and FINDINGS.

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By johnjenkins
06th Mar 2017 16:23

John did you mean to say "monthly income and expenses" or was that a Stokdykian slip.

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