Making Tax Digital

[mjb1]

Eric Mc said:

Update -

more waffly information released by HMRC

MTD for VAT coming in for all returns after April 2019 (1 year and 5 months from now)

Excel will now NOT be allowed

The current VAT Gateway system is being discontinued

Eric Mc said:

plasticpig said:

Their will be free software available. The user might have to click through some adverts and it will be pretty limited in functionality but it will be free and be fully compliant. It will undoubtedly include an option to import data from Excel.

HMRC stated last week that there will be no fee software for the initial VAT version of MTD. Free software was always intended for the tiny traders only - those with turnovers of £10,000 or less. The accounting profession and other interested parties fought hard to have MTD restricted to those over the VAT threshold. This bastardised version of MTD for VAT is partly in response to this pressure

What HMRC has not clarified anywhere is what happens for traders who are VAT registered but whose turnover is below the compulsory registration threshold. There are many smaller traders who are registered for VAT even though their sales have not reached the point where they would be legally obliged to register.

At the moment, it seems that they will also have to register for MTD VAT even though they are below the supposed turnover threshold for MTD.

The only alternative would be for HMRC to keep two separate VAT submission systems operating in parallel - the current simple and easy Government Gateway system and the new more sophisticated and detailed MTD version.

I don't think HMRC wants to do this but, as ever, they have failed to put any real detail into any of their statements.

They sound pretty clear on their intentions - ALL businesses that need to submit a VAT return will have to follow the MTD process, they're abolishing the existing gateway service, so there won't be any other option, regardless of whether or not your turnover is below the threshold. However, they've done so much back pedalling so far, I'm anticipating a reprieve on them closing down the existing service for a while longer.

I'm going to be seriously affected by this - small business owner (one man band), comfortably below the VAT threshold, but I have to be registered as all my sales are b2b, and 95% of them will want to reclaim the VAT. I do all my accounting in Excel spreadsheets - As long as you have a modicum of skill to setup the formatting correctly, it's very quick and easy to use. And I can tailor it to work exactly the way I want it to - not how some software gimp thinks I should be doing it. Sometimes I can get a bit behind with my Excel book keeping, but when it's got close to the VAT deadline, I can input a quarters worth of sales and purchases in a couple of hours. Then it's just a case of totalling a couple of columns (done automatically already), and then I have the figures for the traditional return. I fail to believe that a piece of accountancy software can be quicker than Excel for data entry. I simply do not understand why HMRC can't accept the data from a properly formatted spreadsheet? Even if that means copying and pasting it into some kind of app that does the actual submission.

It only takes a modest amount of skill to understand the basics of the VAT system and how to get Excel to do what's needed. I accept that it's not idiot proof, but if you can't understand enough to do it yourself, then you should be using a book keeper anyway.

HMRC provide their basic tools for PAYE RTI (which works perfectly fine for my needs), don't see why they are refusing to do something similar for VAT?

[jammy-git]

Maybe I'll put together a website that you can copy and paste info from Excel and then have it submit to HMRC...

[Eric Mc]

I think that far too many of you have been suckered into becoming lackies for HMRC.

The purpose of business is not to supply data to government bodies OR to pay tax - it's to be successful in the business they do.

The level of success desirable should be up to the person running the business or their shareholders - not a government department.
If you think governments are bringing this stuff in to help businesses, you are naive in the extreme.

All I can say is God help us - so many of you have been duped in this way. I never thought that people would sleepwalk in such a manner into allowing government so much access to their affairs.

[K12beano]

^^^ Exactly

There's a typical "thing" going round the internet - aimed at America (of course) - about how all their government departments are a "Service".

Having listed half a dozen, where the narrator queries why it's a service - like the "Tax Service" or whatever, he meets a farmer who is talking about how he gets a bull in to "service" his herd and the reason for the word "Service" in all the government department names starts to make sense.....

[Eric Mc]

What is obvious is that MTD has turned out to be a far tougher proposition than the politicians realised. We've already seen significant row back on some aspects of it and we have seen a complete reassessment of the time scales for implementing - something the realists (i.e. businesses and professional bodies) had been telling the government was needed from the moment the details began to emerge of the requirements HMRC was intending to place on all but the tiniest of businesses and landlords.

We shall see how this all pans out in the end. I fully expect something like MTD will eventually emerge from the ongoing car crash that the current version h(although fundamental aspects of the current proposals keeps changing all the time). I just don't think most small businesses or landlords are ready for it yet. A more realistic target would be having a timetable that was -

a) voluntary

b) compatible with what happens now

c) didn't really kick in for another ten years (I'll be safely retired by then - hee..hee...)

[mjb1]

According to this article: https://www.accountingweb.co.uk/tax/hmrc-policy/mt... the only data that gets submitted to HMRC is the exact same totals that go onto the current VAT return! So what's the point? The only change appears to be that you have to use accounting software to do the submission, which presumably HMRC thinks is going to reduce errors. Guessing this is all just the thin end of the wedge.

Also, that article implies that VAT registered businesses below the threshold won't be forced into MTD VAT. The comments are also telling, people suggesting that Excel could well be capable of submitting directly with the right VBA code.

[Eric Mc]

I have asked for clarification regarding the below the threshold VAT registered businesses. If they are exempted from MTD, that does mean that HMRC will have to keep their current Gateway system open in order to allow those businesses to continue to file VAT returns the old fashioned way. One of the key reasons they have stated that they wanted MTD was that they could close the Gateway system down.

So - we will end up with two separate filing systems for VAT returns, depending on whether the business trades above or below the VAT registration threshold.

There is of course, no detail as to what happens to a business that is at or near the threshold and wanders above or below it from time to time.

And of course, the VAT threshold usually increases each year.

And all this needs to be fully set up and ready to go in less than a year and a half.

[PF62]

mjb1 said:

the only data that gets submitted to HMRC is the exact same totals that go onto the current VAT return! So what's the point?

Try reading a little deeper - https://www.gov.uk/government/consultations/making...

"HMRC believes that businesses and HMRC could benefit from the submission of supplementary data. While the simplicity of the ‘9 Box’ VAT return has advantages for businesses in terms of reduced administrative burdens, because HMRC receives no information about how the figures in the return are arrived at, it is difficult for HMRC to target its ‘downstream’ compliance activity at customers most likely to be non-compliant.

HMRC will permit, and functional compatible software will provide for, the voluntary submission of supplementary VAT data as part of a VAT return or a voluntary update."

So if you don't voluntarily submit the supplementary data...

Eric Mc said:

There is of course, no detail as to what happens to a business that is at or near the threshold and wanders above or below it from time to time.

From the same document -

"The MTD requirements for VAT will apply to any VAT registered business with a taxable turnover over the VAT registration threshold.

This requirement will remain, even if they fall below the threshold at a later date. The requirement will cease upon deregistration."

Edited by PF62 on Wednesday 20th September 21:32

[Eric Mc]

PF62 said:

From the same document -

"The MTD requirements for VAT will apply to any VAT registered business with a taxable turnover over the VAT registration threshold.

This requirement will remain, even if they fall below the threshold at a later date. The requirement will cease upon deregistration."

Edited by PF62 on Wednesday 20th September 21:32

So, this "above the threshold" threshold is not really meaningful then? Even if you fall below the threshold you have to stay on MTD for VAT unless you deregister completely.

And if your re-register later below the threshold you are straight onto MTD?


And have you found out about new businesses that decide to register for VAT even though they aren't over the compulsory threshold. Will they be obliged to go onto MTD VAT immediately, even though they fall below the threshold..

That still leaves the below the threshold VAT registered businesses bumbling along using the old system.

Nice and simple, isn't it.

This will be a massive incentive for businesses artificially suppressing sales to keep out of VAT. This happens already and will now only get worse.

I think HMRC seems on a mission to DESTROY business in the UK, not encourage it.

[Welshbeef]

Eric Mc said:

So, this "above the threshold" threshold is not really meaningful then? Even if you fall below the threshold you have to stay on MTD for VAT unless you deregister completely.

And if your re-register later below the threshold you are straight onto MTD?


And have you found out about new businesses that decide to register for VAT even though they aren't over the compulsory threshold. Will they be obliged to go onto MTD VAT immediately, even though they fall below the threshold..

That still leaves the below the threshold VAT registered businesses bumbling along using the old system.

Nice and simple, isn't it.

This will be a massive incentive for businesses artificially suppressing sales to keep out of VAT. This happens already and will now only get worse.

I think HMRC seems on a mission to DESTROY business in the UK, not encourage it.

Suppress = more undisclosed income/cash in hand jobs.

[Welshbeef]

Maybe the govt is readying the way for tax simplification where there is VAT off the vat rather than a threshold which pretty much keeps many builders just below

[Eric Mc]

I've often thought that the VAT registration threshold in the UK was way too high. However, every year the government raises the threshold so reducing the threshold doesn't seem to be on their agenda.

[mondeoman]

So I'm below the threshold, but registered anyway, use excel and my banks downloadable monthly statements and a couple of macros, takes me about 20 mins to do the current return.

So now I've got to splurge time and money on proprietary software that does just one thing, just to satisfy hmrc? That's fking nuts.

[Eric Mc]

It seems, for the moment, that you will be able to keep submitting VAT returns the current way, even after April 2019. However, if you go over the magic threshold you will have to switch to MTD. Also, it seems, if you de-register and then re-register at a later date, you will have to go onto MTD even if your turnover is below whatever the threshold is at that time.

Keeping two separate VAT systems open at HMRC is nuts, as far as I'm concerned.

[plasticpig]

Eric Mc said:

It seems, for the moment, that you will be able to keep submitting VAT returns the current way, even after April 2019. However, if you go over the magic threshold you will have to switch to MTD. Also, it seems, if you de-register and then re-register at a later date, you will have to go onto MTD even if your turnover is below whatever the threshold is at that time.

Keeping two separate VAT systems open at HMRC is nuts, as far as I'm concerned.

The VAT return will likely change after Brexit anyway. Why collect data on EC sales and purchases when we won't be part of it anymore? I suspect what HMRC are actually after in their supplementary data is something equivalent to the data provided by the ESL (VAT 101) for internal sales in the UK.

[Eric Mc]

I'm sure aspects of the VAT return will have to change after Brexit - although it may not be for quite a while. The EC Sales and Purchases data became necessary with the arrival of the Single Market in 1993 and it became the only way to record "Exports" and "Imports" to and from other EU countries as these transactions would no longer appear on normal import and export documentation.

It depends on what arrangements are made after Brexit as to whether sales and purchases between the EU and the UK will be part of normal sales and purchases between the UK and all foreign countries or whether a separate system will be in place covering sales and purchases between the UK and the EU.

We just don't know at the moment.

I have a funny feeling that the current VAT return layout will remain essentially unchanged for many years.

[JagLover]

Eric Mc said:

AT the moment 90% of VAT returns are filed using the Government Gateway boxes only - i.e. the underlying data is not sourced directly from any software the trader might be using. The boxes are completed manually by either the trader or his/her agent This will mean that all traders must acquire new software to comply.

It might be 90% that are submitted in this fashion, but that doesn't mean that a very significant proportion of those returns couldn't be easily submitted under the new system.

All of the VAT returns in this office are submitted using the agent portal but only a very small minority are prepared on excel.

I have known clients who prepare their own returns to make such errors as claim VAT on rates payments or treat IPT as if it were VAT. I imagine a data mining exercise on the detailed VAT report might turn up some interesting errors for the Revenue and with the "administrative burden" of simply requiring everyone to use proper accounting software and then have the facility to submit the VAT return using that software.

[Eric Mc]

JagLover said:

Eric Mc said:

AT the moment 90% of VAT returns are filed using the Government Gateway boxes only - i.e. the underlying data is not sourced directly from any software the trader might be using. The boxes are completed manually by either the trader or his/her agent This will mean that all traders must acquire new software to comply.

It might be 90% that are submitted in this fashion, but that doesn't mean that a very significant proportion of those returns couldn't be easily submitted under the new system.

All of the VAT returns in this office are submitted using the agent portal but only a very small minority are prepared on excel.

I have known clients who prepare their own returns to make such errors as claim VAT on rates payments or treat IPT as if it were VAT. I imagine a data mining exercise on the detailed VAT report might turn up some interesting errors for the Revenue and with the "administrative burden" of simply requiring everyone to use proper accounting software and then have the facility to submit the VAT return using that software.

That's why they used to send VAT Inspectors out to businesses. They stopped most of that about 10 to 15 years ago.

That's why they invented Flat Rate VAT for small traders (it eliminated virtually all Input VAT errors) Flat Rate VAT has now been effectively abandoned.

Effectively, HMRC wants 100% access to 100% of business records 100% of the time.

Under the current law they don't have that right.

Once MTD goes through, they will.

[JagLover]

Eric Mc said:

That's why they used to send VAT Inspectors out to businesses. They stopped most of that about 10 to 15 years ago.

That's why they invented Flat Rate VAT for small traders (it eliminated virtually all Input VAT errors) Flat Rate VAT has now been effectively abandoned.

Effectively, HMRC wants 100% access to 100% of business records 100% of the time.

Under the current law they don't have that right.

Once MTD goes through, they will.

Personally I think it is a rather old fashioned view that HM Revenue and Customs should be required to employ thousands of people to check accounting records when simple data analysis by computer can do so using modern technology.

There will still be a need for both VAT inspections and tax investigations but if basic errors can be detected with the minimum of Revenue staff time it should be celebrated.

[Rovinghawk]

JagLover said:

Personally I think it is a rather old fashioned view that HM Revenue and Customs should be required to employ thousands of people to check accounting records when simple data analysis by computer can do so using modern technology.

There will still be a need for both VAT inspections and tax investigations but if basic errors can be detected with the minimum of Revenue staff time it should be celebrated.

I don't care about HMRC staff time- I care about my time. Why should I work more so that they can work less?