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Why the Broadband USO is critical for Making Tax Digital

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30th Aug 2017
Technology journalist
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There have been numerous technical issues facing the government’s £1.3bn Making Tax Digital (MTD) initiative – but one of the most concerning was an Ofcom study released last year that found only one in four rural homes had access to broadband speeds above 10 megabytes per second.

MTD will, of course, rely on connectivity to work, as businesses, self-employed people and landlords have to start keeping digital records and providing quarterly updates to HMRC.

To tackle this, the government has proposed a Broadband Universal Service Obligation (USO), which gives people the “right to request an affordable broadband connection, at a minimum speed, from a designated provider, up to a reasonable cost threshold”. With so many different factors in play, however, this isn’t an easy obligation to adhere to.

And now, the Association of Accounting Technicians (AAT), which has over 140,000 members, 60% of whom work for an SME, submitted its response to the USO consultation to the Department for Digital, Culture Media and Sport (DCMS).

The AAT has over 4,250 licensed accountants who provide accountancy services to more than 400,000 British businesses, and it believes that the USO is vital to ensuring rural businesses are able to file their quarterly updates as well as more remote urban businesses, or those who are located in broadband black spots.

Exemption process remains ‘unclear’

Phil Hall, AAT’s head of public affairs and public policy told AccountingWEB that as MTD requirements will legally oblige all businesses with a turnover above the VAT threshold – including most SMEs – to digitally provide four quarterly tax updates a year from 2019, it seemed reasonable that they should have the capability to do so.

Those that can’t file their updates because they do not have any access may gain an exemption from MTD, but Hall says that the process for doing this remains unclear.

“It seems unreasonable that businesses may not be able to benefit from digitisation simply because of where they are located,” he said.

Hall stated that this goes against the very nature of what MTD is about. In the government’s own words, it is part of plans to make it “easier for individuals and businesses to get their tax right and keep on top of their affairs”.

If businesses have to exempt themselves and use the older method of tax returns, how can HMRC match its ambition to become one the most digitally advanced tax administrations in the world?

What does the USO cover?

In addition to a proposed minimum download speed of 10Mbps, the USO also includes 1Mbps upload speed, minimum standards for latency, maximum sharing between customers, and a data cap of at least 100GB per month.

Under the new Digital Services Act 2017, every household and business have the right to request a broadband connection at a minimum speed, up to a reasonable cost threshold – no matter where they live or work.

Counting the costs

The current proposals suggest that where it costs less than £3,400 to provide access to a 10Mbps broadband connection, the cost is met by industry. Where it is above this threshold, the additional cost is met by the individual or business concerned.

Hall believes that in a handful of extreme cases, this cost could be as high as £45,000.

In its response the AAT is suggesting that, where the cost is above the threshold, instead of the individual or business having to meet all the additional costs, they should instead pay half – with the other half being met by an industry pot made up from the likes of BT, Virgin, TalkTalk and Sky.

The body also believes there should be a small reduction in the cost threshold from £3,400 to £3,350 – this is because it said that the average cost per property in the final one per cent of households needing a connection, ranges from £2,780 (for standard broadband) to £3,350 (for ‘superfast’ broadband).

Finally, the AAT has reiterated that as the USO is funded by taxpayers it should clearly be restricted to individuals and businesses that cannot otherwise access these speeds from any other provider.

 

Are you a business or firm in a rural area? How is your broadband speed, and do you think your connection will withstand the transition to Making Tax Digital?

Replies (6)

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By Briar
31st Aug 2017 13:27

My download is 1mps and upload 0.6mps. 3 miles from nearest Open Reach cabinet (in Cumbria). Microwave broadband is unreliable (due to rain and mist!). Mobiles don't work well either.

MTD be almost impossible until Government (and HMRC) realises that we not all well connected.

Thanks (3)
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By Di
31st Aug 2017 14:05

No hope of having broadband here per BT and Open reach. We are the last ones on the line from the exchange and access to the lines are along marshy fields, all the engineers run a mile when there's a problem on our line. Spoke to local MP got nowhere. Not sure what's going to happen when MTD comes in...... relocate?

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Stepurhan
By stepurhan
01st Sep 2017 10:40

“right to request an affordable broadband connection, at a minimum speed, from a designated provider, up to a reasonable cost threshold”

Isn't that just an exercise in vagueness. Whilst I see there are proposals for minimum speeds, how are "designated provider" and "reasonable cost threshold" going to be defined?

Another case of the government making a commitment but expecting other people (either ISPs or the end customer paying a high "reasonable" cost) to pay for it.

Thanks (1)
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By Mr J Andrews
01st Sep 2017 15:57

Brainwashing at it's best.
Here's something you don't want. Here's something else to help you with what you didn't want to use in the first place. And by the way , it's going to cost you.

Thanks (1)
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By Arbitrary
17th Sep 2017 20:12

My rural broadband speed (synchronisation) is found on test to be 600k. The actual download speed for files is about 90k per second. It just about works and breaks down with some frequency. What is this nonsense about 10Meg synchronisation? I am about three miles from the cabinet which is fibre enabled. I am not isolated as there are plenty of houses on the route. Why doesn't the government simply provide fibre to everyone? It is now a basic necessity of life like tarmac roads. Infrastructure is terribly important. No wonder the UK economy is incredibly inefficient.

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Replying to Arbitrary:
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By Briar
18th Sep 2017 23:27

Totally agree (see my previous post). You are not alone!!

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