Making Tax Digital
Discussion
The key word is "currently". Once they have their foot in the door, digitally speaking, they will push it open all the way.
Indeed, when MTD was first outlined, it was couched on the basis that it would be 100% disclosure with full document back-up from day 1.
Obviously, there has been a lot of water under the bridge since this time last year when this is what was being told at professional update lectures. Their present stance is that they DON'T want all that mass of detail - yet.
But I have no doubt that this is the start of a process which will eventually lead to full disclosure as a matter of course to the government of all your business and financial details together with all your personal data - and all held in one spot.
It's a Russian hackers wet dream.
Indeed, when MTD was first outlined, it was couched on the basis that it would be 100% disclosure with full document back-up from day 1.
Obviously, there has been a lot of water under the bridge since this time last year when this is what was being told at professional update lectures. Their present stance is that they DON'T want all that mass of detail - yet.
But I have no doubt that this is the start of a process which will eventually lead to full disclosure as a matter of course to the government of all your business and financial details together with all your personal data - and all held in one spot.
It's a Russian hackers wet dream.
There are still massive amounts of this that are unclear - despite what others may say on here.
I am not optimistic that this the scaled back VAT only version of MTD will be ready for implementation in April 2019. We've already had one massive hiccup in the introduction of the system and I expect a few more.
At the moment, they can't even get the well established Self Assessment system to work properly.
I am not optimistic that this the scaled back VAT only version of MTD will be ready for implementation in April 2019. We've already had one massive hiccup in the introduction of the system and I expect a few more.
At the moment, they can't even get the well established Self Assessment system to work properly.
PF62 said:
Of course a spreadsheet is a digital record, but does it "keep records in a digital form as required by the regulations"?
Does it "receive information from HMRC via the API platform in relation to a relevant entity’s compliance with obligations under the regulations."?
Does it "contain a specific data set of supplementary information"?
If not, I am not sure that it ticks the box required by MTD of being "functional compatible software".
Originally HMRC said Excel was not compliant.Does it "receive information from HMRC via the API platform in relation to a relevant entity’s compliance with obligations under the regulations."?
Does it "contain a specific data set of supplementary information"?
If not, I am not sure that it ticks the box required by MTD of being "functional compatible software".
Then they said it could be used as the basis of the MTD submission - but not the submission itself (which had to be made using specific MTD software).
I'm sure they'll change their minds again at some point.
Welshbeef said:
Eric Mc said:
That's all right then. Bad law affecting a smallish sector of the working population can't really be that bad after all.
What about incomes £100-122k not fairWhat about child benefit earn 1 salary £60k get zero have 2x£49,999 keep it all - not fair
Removing debt financing from the p&l of a rental property only for those not set up as limited or self employed - not fair
Not increasing the state pension age 20 years ago to not have to increase it as much for the future - not fair
Moving the age you can draw private pensions from 55 to a higher age linked to the state pension even though it's a pension pot not a house of cards Ponzi scheme
Not allowing those with a known hereditary problem meaning much shorter life that they can draw pension
Etc
Life isn't fair Eric Mc. but you choose your battles.
We've already seen some major governmental backpedalling on MTD and I fully expect to see more as this nonsense attempts to progress.
It is not the government's job to dictate to businesses the manner and style of their book-keeping. There is a massive conceit at the heart of the whole MTD project that small businesses are -
a) incompetent
b) cheating on their taxes
c) untrustworthy
d) have inadequate and inaccurate accounting
In my experience over 40 years of dealing mainly with smaller business and landlords, their accounting records may be basic on occasion but on the whole, they are not inaccurate. Indeed, accounting standards do not ask for "accuracy" and do not even state that "accuracy" is possible. What they ask for is the accounts to be "true and fair",
Once a professional has reviewed the original bookkeeping entries, it is expected that the final figures will satisfy the "true and fair" test. HMRC and the Inland Revenue before them has always accepted that this was the basis for assessing the tax position of a business or landlord.
Throughout the MTD process, HMRC has thrown out large figures of how much tax they claim they are losing out on due to "erroneous" accounts. Although they have been asked repeatedly, they have been unable to show they have arrived at these figures and what assumptions they have made in their calculation.
The assumption by HMRC is that their stipulated MTD system will magically make dishonest businesses honest and sloppy businesses less sloppy. It will do nothing of the sort. Conscientious businesses will agonise and fret and be stressed out by the requirements. The crooks and careless businesses will continue to be crooks and be careless.
a) incompetent
b) cheating on their taxes
c) untrustworthy
d) have inadequate and inaccurate accounting
In my experience over 40 years of dealing mainly with smaller business and landlords, their accounting records may be basic on occasion but on the whole, they are not inaccurate. Indeed, accounting standards do not ask for "accuracy" and do not even state that "accuracy" is possible. What they ask for is the accounts to be "true and fair",
Once a professional has reviewed the original bookkeeping entries, it is expected that the final figures will satisfy the "true and fair" test. HMRC and the Inland Revenue before them has always accepted that this was the basis for assessing the tax position of a business or landlord.
Throughout the MTD process, HMRC has thrown out large figures of how much tax they claim they are losing out on due to "erroneous" accounts. Although they have been asked repeatedly, they have been unable to show they have arrived at these figures and what assumptions they have made in their calculation.
The assumption by HMRC is that their stipulated MTD system will magically make dishonest businesses honest and sloppy businesses less sloppy. It will do nothing of the sort. Conscientious businesses will agonise and fret and be stressed out by the requirements. The crooks and careless businesses will continue to be crooks and be careless.
So said:
Eric Mc said:
No such thing as a self employed landlord (running a buy to let is not considered to be a trading/employment/business) type activity.
But yes, buy to let landlords are the main people affected by the interest charge restrictions recently introduced.
That was my point. AFAIK only landlords incorporated escape the changes.But yes, buy to let landlords are the main people affected by the interest charge restrictions recently introduced.
JagLover said:
Speaking personally, despite working in practice I don't regard HM Revenue & Customs as "the enemy". If there is a way to legitimately reduce a client's tax liability then we will advise them accordingly, but that is a different matter to turning a blind eye to error or deliberate misstatement.
New technology is not to be feared if used appropriately. Anyone who has renewed their road tax these past few years can see how it can improve the experience of interacting with government agencies to the benefit of both parties.
Don't assume that a simple operation like renewing your road tax is a sign that MTD will be a simple process.New technology is not to be feared if used appropriately. Anyone who has renewed their road tax these past few years can see how it can improve the experience of interacting with government agencies to the benefit of both parties.
And the DVLA has already been the source of a number of serious data and identity breaches. Imagine what will happen when such breaches occur at HMRC.
SunsetZed said:
Eric Mc said:
It is not the government's job to dictate to businesses the manner and style of their book-keeping.
That's your opinion based on how it has historically been done in the UK. Looking at other European countries they place more regulations on business, standard Chart of Accounts in France, changing submission methods in Spain recently etc.And doing something that has a long history of working reasonably well is, to me, a good reason to keep doing it.
And just because other more dictatorial governments might go down a particular path is no reason for ours to copy them.
Even less so now that we have decided to "break free" of foreign rule making. Wasn't that one of the main reasons for Brexit - less oppressive bureaucracy?
And for those who DON'T have the required software, of course it involves extra work, time and cost in order to purchase it, train to use it and integrate it into what they already do. The assumption seems to be that "not having MTD compliant software" means your book-keeping and accounting is poor and inaccurate.
That is a grossly incorrect (not to say - insulting) assumption. Many businesses have perfectly adequate and suitable accounting systems that serve their businesses well. Why should they have to jump top the tune of a government dictat for no additional benefit to themselves?
That is a grossly incorrect (not to say - insulting) assumption. Many businesses have perfectly adequate and suitable accounting systems that serve their businesses well. Why should they have to jump top the tune of a government dictat for no additional benefit to themselves?
steveatesh said:
Is MTD going to affect my business at all or am I exempt?
Thanks in advance!
The simple answer is yes, MTD will affect your business - eventually but not yet. Thanks in advance!
The original plan was -
MTD replaces Self Assessment for individuals and partnerships from April 2018
MTD comes in for VAT probably in April 2019
MTD comes in for limited companies and large partnerships (which were not defined) in April 2020.
The revised plan is -
MTD comes in for VAT only, in April 2019. This applies to ALL VAT registered entities whether sole traders, partnerships (big and small) , limited companies, schools, charities, police forces and any other operation that needs to register for VAT. However, it only applies to VAT registered entities who currently have a turnover exceeding the VAT registration threshold.
If you have registered for VAT voluntarily and are under the compulsory turnover threshold, you can continue filing VAT the "old fashioned way". If you go over the threshold, you then register for MTD and YOU CAN NEVER GO BACK, even if you go back under the threshold. The only way to escape MTD in this circumstance is to de-register for VAT.
MTD will come in for Self Assessment for individuals/partnerships and Corporation Tax for limited companies in April 2020 AT THE VERY EARLIEST. No firm date is known.
SunsetZed said:
Eric Mc said:
You do or you don't agree that governments should stipulate how businesses keep their records?
I think they should have a say in it yes but not define all the minute details for every business.Those who run businesses (whether corporate, sole traders or partnerships) are supposed to prepare their accounts to the accepted accounting standards as set out by the accounting bodies i.e. the Generally Applied Accounting Principles as set out in the Financial Reporting Standards. HMRC's opinion has always been, that as long as accounts were prepared to those standards and adjusted accordingly where tax rules differed from those standards (Capital Allowances being a good example), then the business was compliant with what HMRC required.
MTD is a major step away from that approach and could result in businesses essentially jumping to multiple masters, all with different requirements regarding accounting information.,
plasticpig said:
Eric Mc said:
No good ideas regarding tax have EVER come from France.
Is VAT a bad idea then?Interesting that one of the long established and simple digital software book-keeping providers, VT, has decided to opt out of developing their product for MTD. In other words, HMRC's push to get smaller businesses into digital recording of their records has actually caused a lot of smaller businesses to lose their digital book-keeping software.
Was that what the government intended?
Was that what the government intended?
And guess which companies are putting pressure on government going down this route?
This is yet another example of big boy bully companies working with government to create a monopolistic domination of the market. It is the ugly side of capitalism and works against the oft trumpeted benefits of capitalism - choice and competitive pricing.
This is yet another example of big boy bully companies working with government to create a monopolistic domination of the market. It is the ugly side of capitalism and works against the oft trumpeted benefits of capitalism - choice and competitive pricing.
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