Making Tax Digital

[Murph7355]

Eric Mc said:

...

We are in an era of "Rule by Decree" - and we haven't even noticed.

Where taxes are concerned, I don't think we have ever been in any other. Never in a couple of thousand years.

HMRC have always behaved in an idiotic, adversarial fashion. We apparently exist to feed them.

[Eric Mc]

Maybe not everyone's cup of tea but the proceedings of the Lords enquiries into MTD are quite interesting - especially the representation by Professor Richard Murphy.

http://www.parliamentlive.tv/Event/Index/4b2851b5-...

[13m]

I've just had an email from our tax advisors saying that they are busy making their systems compliant with MTD. They presumably feel confident that it is happening.

[jonamv8]

13m said:

I've just had an email from our tax advisors saying that they are busy making their systems compliant with MTD. They presumably feel confident that it is happening.

Same here - its a go it would seem.

[markcoznottz]

There's always a reason isn't there, and it has to be about either shrinking headcount which is happening, or increasing tax take to actually pay for system. Is the more regular tax reporting to allow the new fancy computer system to 'catch ' unusual turnover aberrations?

[Eric Mc]

13m said:

I've just had an email from our tax advisors saying that they are busy making their systems compliant with MTD. They presumably feel confident that it is happening.

I would ask them what are they making their system compliant with - since HMRC has not released any technical information on their system.



That's the single biggest peroblem. HMRC are not being clear at all about the technical and legal aspects of this whole mess.

[Eric Mc]

More representations and questions on the topic before the House of Lords Committee.

NOT ONE of the six people who made representations today and at the previous session have been enthusiastic about this whole MTD process.

http://parliamentlive.tv/Event/Index/3f6020cd-d08d...

[Eric Mc]

Further update from HMRC. It's extremely light on detail but does show some of the COMPULSORY requirements that will be incorporated in the legislation (which they are still in the middle of drafting) with 11 months to go before implementation -


https://www.gov.uk/government/publications/bringin...

[Rovinghawk]

I find the current system overly bureaucratic & difficult to understand/fully comply with.

For my engineering business there are new requirements every day (mostly pointless, all generating revenue for non-productive office bods). For the rental business there's tightening of taxation, increases in regulations, ever-greater legal hurdles and councils deciding that licensing will lead to new revenue streams.

The proposed new system with its increased workload & increased accountants' fees will (in conjunction with the problems listed above) have a decent chance of tipping the balance so that it's no longer worthwhile for me to be in business.

Along with presumably many thousands of others deciding that work is no longer worth it, how will this benefit the economy?

[Eric Mc]

It won't benefit the economy one jot.

As for accountants' fees - many accountants are struggling to see how they can play any meaningful role in this system. I know a few who are contemplating retiring.

Fees WILL go up because there will be fewer accountancy firms engaging with clients and most that are will be larger firms with the resources to cope with the never ending submissions that will be required. And larger forms tend to charge quite a bit more than smaller ones

At the moment, HMRC has still not clarified whether accountants will be able to submit on behalf of their clients anyway. Before Christmas, the general assumption based on what information they had given up to then was that accountants (and other agents) were barred from making the actual submissions.

They have not clarified if this is still their preferred option.

[wc98]

Eric Mc said:

Fees WILL go up because there will be fewer accountancy firms engaging with clients and most that are will be larger firms with the resources to cope with the never ending submissions that will be required. And larger forms tend to charge quite a bit more than smaller ones

this is something that appears to have happened in every area of business/commerce . been driven down this road for a long time now. lobbyists certainly appear to be earning their money.

[Eric Mc]

Of course, with an election coming up, it is now absolutely certain that the work on MTD will slow down if not stop altogether. It was held up by the 2015 election and by the 2016 referendum.

The whole thing is on the skids, in my opinion.

[LeighW]

Eric Mc said:

Of course, with an election coming up, it is now absolutely certain that the work on MTD will slow down if not stop altogether. It was held up by the 2015 election and by the 2016 referendum.

The whole thing is on the skids, in my opinion.

Keep your fingers crossed Eric. This was in my news feed today:

https://www.cchdaily.co.uk/making-tax-digital-shou...

[Eric Mc]

I'd like to think that this will be what happens. However, we've already had numerous representations made by interested parties to both parliamentary and House of Lords committees - all more or less saying the same thing over and over. i.e good idea in theory but -

a) not like this

b) not right now

HMRC still want to keep going on as everybody is happy and 100% behind it.

[LeighW]

Eric Mc said:

I'd like to think that this will be what happens. However, we've already had numerous representations made by interested parties to both parliamentary and House of Lords committees - all more or less saying the same thing over and over. i.e good idea in theory but -

a) not like this

b) not right now

HMRC still want to keep going on as everybody is happy and 100% behind it.

Our practice was invited last week by our tax software provider to take part in the pilot scheme, but I needed to nominate two clients who would be willing to join. I genuinely couldn't think of one who wouldn't tell me to "go forth", so we declined.

[Eric Mc]

I'm not surprised.

NOBODY, apart from HMRC, can see any advantage in getting involved in this madcap endeavour. With so much reluctance and disinterest, I cannot see it working.

Even if HMRC insists on it, the scheme will end up collecting vast quantities of junk data which will be totally meaningless.

[ninja-lewis]

Eric Mc said:

It won't benefit the economy one jot.

As for accountants' fees - many accountants are struggling to see how they can play any meaningful role in this system. I know a few who are contemplating retiring.

Fees WILL go up because there will be fewer accountancy firms engaging with clients and most that are will be larger firms with the resources to cope with the never ending submissions that will be required. And larger forms tend to charge quite a bit more than smaller ones

At the moment, HMRC has still not clarified whether accountants will be able to submit on behalf of their clients anyway. Before Christmas, the general assumption based on what information they had given up to then was that accountants (and other agents) were barred from making the actual submissions.

They have not clarified if this is still their preferred option.

Frankly, we shouldn't be determining the future of our tax system based on what's convenient to people in the twilight of their career.

That was clarified more than 12 months ago - agents will have access to client's MTD data and will be able to make submissions on their behalf. The point that has been lost on some agents is that they won't be logging into the client's tax account but instead will receive the data to their own practice management software through HMRC's APIs. Agent authorisation from existing self assessment clients will carry over.

So that's a significant improvement over the limitations of the current web-based service.

Eric Mc said:

Even if HMRC insists on it, the scheme will end up collecting vast quantities of junk data which will be totally meaningless.

That rather misses the point of MTD, at least initially. The short term objective of MTD is to improve the completeness and accuracy of record keeping. Enforcing S12B(2) TMA 1970 in effect.

HMRC's view is that significant amounts loss to carelessness and error will be recovered if taxpayers keep their records up to date. If paperwork goes missing before accounts are compiled its more likely to result in an underpayment of tax since income > expenses.

Digital records and quarterly submissionss are the means to ensure proper records are being kept at least quarterly. They are not after quarterly tax returns but simply to make record keeping part of the business' regular routine. The submissions will be proof that is happening.

Hence professional bodies and others who call for the threshold to be raised or asking about year end accounting adjustments are answering the wrong questions. MTD is very much aimed at the January shoebox brigade who have been indulged by accountants for far too long.

Longer term, it will also tie in with other work underway at HMRC particularly pre-populating personal tax records with information already available to HMRC (eliminating entry errors by taxpayers), better access for agents and Big Data analysis for compliance.

From a broader business perspective, more regular record keeping using modern accounting software would have wider benefits to the economy. Too many small businesses lack even basic information about their performance during the year. They under-charge for their products and services; they persist with throwing good money after bad for too long; and/or they grow faster than their cashflow allows. All too often, these mistakes are recognised too late or not at all. Even a basic business has need for regular P&L monitoring.

For accountants and agents, MTD should be seen as an opportunity to upskill and move away from basic data entry, bookkeeping and compliance. It's happening in every part of the business and there is no good reason why accounting should be an exception.

[PurpleMoonlight]

Eric Mc said:

I'm not surprised.

NOBODY, apart from HMRC, can see any advantage in getting involved in this madcap endeavour. With so much reluctance and disinterest, I cannot see it working.

Even if HMRC insists on it, the scheme will end up collecting vast quantities of junk data which will be totally meaningless.

They love junk data though.

Certain pension schemes have to file an annual Scheme Return. It gives HMRC the pension scheme value and some transactions for the year. Remember, pension schemes are not liable to pay tax as a matter of course.

In the 10 years I have been required to file these not one single item has been queried.

[So]

ninja-lewis said:

From a broader business perspective, more regular record keeping using modern accounting software would have wider benefits to the economy. Too many small businesses lack even basic information about their performance during the year. They under-charge for their products and services; they persist with throwing good money after bad for too long; and/or they grow faster than their cashflow allows. All too often, these mistakes are recognised too late or not at all. Even a basic business has need for regular P&L monitoring.

So you're saying that MTD will provide management accounts? If so, how will the data be interpreted by the small business owner?

[Rovinghawk]

ninja-lewis said:

From a broader business perspective, more regular record keeping using modern accounting software would have wider benefits to the economy. Too many small businesses lack even basic information about their performance during the year. They under-charge for their products and services; they persist with throwing good money after bad for too long; and/or they grow faster than their cashflow allows. All too often, these mistakes are recognised too late or not at all. Even a basic business has need for regular P&L monitoring.

For accountants and agents, MTD should be seen as an opportunity to upskill and move away from basic data entry, bookkeeping and compliance. It's happening in every part of the business and there is no good reason why accounting should be an exception.

If it's that good for businesses then I'm sure they'd do it by choice rather than coercion.