Making Tax Digital
Discussion
My accountant came to see me last week and mentioned this is on the back burner but might come in. He then advised me that if this comes in he is going to call it a day and close up shop. He will sell his client list and walk away. Crazy really.
Apparently the person who is in charge of this little project has sampled something daft like a dozen businesses to see if this is a good route to go! Big sample size then!
On top of that they have not factored in for people who actually over pay tax!!! So their estimated increase in tax income is going to be way off. The system is suggested to have (or be) costing up to 3 billion pounds and it is expected to save IRO £200M per year...
Apparently the person who is in charge of this little project has sampled something daft like a dozen businesses to see if this is a good route to go! Big sample size then!
On top of that they have not factored in for people who actually over pay tax!!! So their estimated increase in tax income is going to be way off. The system is suggested to have (or be) costing up to 3 billion pounds and it is expected to save IRO £200M per year...
red_slr said:
My accountant came to see me last week and mentioned this is on the back burner but might come in. He then advised me that if this comes in he is going to call it a day and close up shop. He will sell his client list and walk away. Crazy really.
Apparently the person who is in charge of this little project has sampled something daft like a dozen businesses to see if this is a good route to go! Big sample size then!
On top of that they have not factored in for people who actually over pay tax!!! So their estimated increase in tax income is going to be way off. The system is suggested to have (or be) costing up to 3 billion pounds and it is expected to save IRO £200M per year...
If it were implemented and worked it would save many, many times that amount I would imagine.Apparently the person who is in charge of this little project has sampled something daft like a dozen businesses to see if this is a good route to go! Big sample size then!
On top of that they have not factored in for people who actually over pay tax!!! So their estimated increase in tax income is going to be way off. The system is suggested to have (or be) costing up to 3 billion pounds and it is expected to save IRO £200M per year...
GT03ROB said:
So said:
If it were implemented and worked.
.... it would be a bloody miracle..... in which case it might just... So said:
save many, many times that amount I would imagine.
The government will in effect be the accountant for micro businesses. They upload their sales and expenses and the government will tell them how much tax to pay. It will bring a lot of businesses into the net that currently don't pay tax in time, in full or at all.
What makes you think that this overly complex and costly system will fix that problem?
HMRC has yet to demonstrate or explain in detail in what way they think making people submit at least FIVE returns every year (some will be submitting up to 20 - depending on their circumstances) will magically mean they will collect more tax.
HMRC has yet to demonstrate or explain in detail in what way they think making people submit at least FIVE returns every year (some will be submitting up to 20 - depending on their circumstances) will magically mean they will collect more tax.
Eric Mc said:
What makes you think that this overly complex and costly system will fix that problem?
HMRC has yet to demonstrate or explain in detail in what way they think making people submit at least FIVE returns every year (some will be submitting up to 20 - depending on their circumstances) will magically mean they will collect more tax.
It probably won't be "this" system, but there WILL be a system.HMRC has yet to demonstrate or explain in detail in what way they think making people submit at least FIVE returns every year (some will be submitting up to 20 - depending on their circumstances) will magically mean they will collect more tax.
I am not sure what the current state of play is, but ten or so years ago I went out with a group of IT bods, who were working with HMRC integrating its systems with other government departments, including DVLA, to gather more data. Eventually everyone will be on the radar and they'll have a pretty good idea whether any individual looks "right" from a tax perspective. I believe they do this already with something they call a "spidergram" when they are investigating someone.
It will become a legal requirement to file online tax data quarterly (or whatever) unless you can demonstrate and be verified as PAYE, unemployed or dead. Any business below X turnover will automatically have HMRC do its tax calcs unless they can demonstrate the need to opt out. Tax will be taken regularly by DD. Only bigger businesses will use accountants and they too will have to file online quarterly.
All of the above will enable HMRC to plug the big holes that currently exist in the tax take.
[/]Big Brother
Pie in the sky nonsense I'm afraid.
I am only concerned with the "system" that HMRC has invented for NOW - not some utopian alternative "X" years in the future.
I am not at all impressed with any reasoning that HMRC has set out for this shambolic mess.
Changes are all well and good and would be accepted if -
a) they improved the business and help make it ruin more efficiently and profitably
b) the data collecting and submission requirements did not impinge on the business to the point where it had the opposite effect to a)
c) the data that HMRC obtained was of a higher quality than what they currently get
d) HMRC actually used this data to improve their efficiency in tax assessing and collecting
I can assure you that HMRC has failed utterly (so far) to put case forward to justify what they intend to force on small businesses and landlords
And why does HMRC think that these changes will suddenly generate more tax income to them?
I am only concerned with the "system" that HMRC has invented for NOW - not some utopian alternative "X" years in the future.
I am not at all impressed with any reasoning that HMRC has set out for this shambolic mess.
Changes are all well and good and would be accepted if -
a) they improved the business and help make it ruin more efficiently and profitably
b) the data collecting and submission requirements did not impinge on the business to the point where it had the opposite effect to a)
c) the data that HMRC obtained was of a higher quality than what they currently get
d) HMRC actually used this data to improve their efficiency in tax assessing and collecting
I can assure you that HMRC has failed utterly (so far) to put case forward to justify what they intend to force on small businesses and landlords
And why does HMRC think that these changes will suddenly generate more tax income to them?
Rovinghawk said:
So said:
Agreed.
But there is so much tax slipping through the net right now they have a strong incentive to make it work.
May I ask what you do for a living? ie Do what is your involvement with MTD?But there is so much tax slipping through the net right now they have a strong incentive to make it work.
Rovinghawk said:
I was curious as to why you seem in favour of this crap.
I am not in the slightest bit in favour. I am merely pointing out that the Treasury perceives that SMEs are significantly under-paying tax and they will sooner or later address that problem. Given the moves they have made already and the ease with which collated data can be used to detect and enforce it is only a matter of time before a MTD type initiative is introduced.Eric Mc said:
HMRC are trying to force businesses to keep records to THEIR requirements.
That is just an over the top situation. Keeping records should be to the requirements that suit the business - not the tax authorities.
As long as the accounts produce profits/losses etc that are in line with what the tax legislation requires, that is all that should be needed. HMRC should not be proscribing the detail of HOW those records should be maintained.
They obviously have decided that they do not trust businesses to follow the rules.
The great mistake they are making is that, despite the over the top requirements they are specifying - there is no guarantee that the information they get will be any better than what they had before. In fact, I expect it will be much worse.
So - what will have been achieved - apart from driving many businesses OUT of businesses - or into the black economy?
Why is Ninja so supportive of all this?
Has he been fooled into thinking that this is going to somehow make things better for
a) businesses
b) HMRC
The extent of Ninjas latest post indicates to me that he does not have a clue how smaller businesses operate.
Is he trying to flog software by any chance?
I'm not flogging software.That is just an over the top situation. Keeping records should be to the requirements that suit the business - not the tax authorities.
As long as the accounts produce profits/losses etc that are in line with what the tax legislation requires, that is all that should be needed. HMRC should not be proscribing the detail of HOW those records should be maintained.
They obviously have decided that they do not trust businesses to follow the rules.
The great mistake they are making is that, despite the over the top requirements they are specifying - there is no guarantee that the information they get will be any better than what they had before. In fact, I expect it will be much worse.
So - what will have been achieved - apart from driving many businesses OUT of businesses - or into the black economy?
Why is Ninja so supportive of all this?
Has he been fooled into thinking that this is going to somehow make things better for
a) businesses
b) HMRC
The extent of Ninjas latest post indicates to me that he does not have a clue how smaller businesses operate.
Is he trying to flog software by any chance?
Edited by Eric Mc on Saturday 22 April 22:20
What I do alongside working in with SMEs practice with is mentor small local businesses and startups (above and below the VAT threshold, sole trader and ltd company, generally <5 employees) and one of the biggest problems I encounter is small businesses that simply don't know how they're performing. It's not because they're too stupid or too busy but because their accountant doesn't give them the tools and information they need in a timely manner. Hence one of the first improvements I work with them to implement is a usable management information system. For some of them, a simple spreadsheet that tracks daily income (perhaps dis aggregated by key product groups/services) and expenditure suffices (the type of businesses I deal with in retail and hospitality do weekly bookkeeping).
The feedback is overwhelmingly positive:
- they feel more in control and more responsive to pricing/cash flow issues
- it drives a discipline that applies to other areas of the business
- unlike Simplex books, some simple formulas allow them to track and project rolling sales against VAT thresholds - a big improvement on their previous accountants who would only warn them long after the fact or tell them they have nothing to worry about (while failing to submit any of the VAT paperwork!)
Increasingly most of them want to jump straight to software, especially those in 'gig' economy or trying self employment for the first time:
- they feel more at home with a browser/app experience than with Excel
- it matches how they manage the rest of their business - entirely run from their phone/tablet wherever they are
- no-one else is going to keep the books - their partner has their own career/business
- it side steps limited knowledge of double entry book keeping
This is the big picture HMRC are looking at. The economy is experiencing perhaps its greatest upheaval ever thanks to automation and new ways of working, which will lead to people having multiple careers, sometimes at the same time and new businesses rapidly replacing old businesses. The economy can't afford another IT contractors or BTL landlord situation here - we need HMRC and businesses to be be fit and ready to meet the challenges of 2018, not 1998 or 1978 and they need to be ready to do so now, not eventually in 2028.
So said:
It probably won't be "this" system, but there WILL be a system.
I am not sure what the current state of play is, but ten or so years ago I went out with a group of IT bods, who were working with HMRC integrating its systems with other government departments, including DVLA, to gather more data. Eventually everyone will be on the radar and they'll have a pretty good idea whether any individual looks "right" from a tax perspective. I believe they do this already with something they call a "spidergram" when they are investigating someone.
It is called Connect and it has been operational since 2010. As of 2013/14 it had recovered over £3 billion tax with a 37.5:1 return on investment. It generates over 80% of all HMRC investigates and is used to corroborate tip offs with. It's not just public sector data. HMRC also have access to third party data from eBay, merchant acquirers, insurance companies and mortgage providers amongst others. It uses a array of mathematical techniques including Social Network Analysis and the results can be visualised in HMRC's Integrated Compliance Environment. As well as directly pursuing individuals and businesses identified, it's also being using to direct voluntary disclosure facilities at specific high risk sectors/areas.I am not sure what the current state of play is, but ten or so years ago I went out with a group of IT bods, who were working with HMRC integrating its systems with other government departments, including DVLA, to gather more data. Eventually everyone will be on the radar and they'll have a pretty good idea whether any individual looks "right" from a tax perspective. I believe they do this already with something they call a "spidergram" when they are investigating someone.
Eric Mc said:
What makes you think that this overly complex and costly system will fix that problem?
HMRC has yet to demonstrate or explain in detail in what way they think making people submit at least FIVE returns every year (some will be submitting up to 20 - depending on their circumstances) will magically mean they will collect more tax.
Explanations published in March:HMRC has yet to demonstrate or explain in detail in what way they think making people submit at least FIVE returns every year (some will be submitting up to 20 - depending on their circumstances) will magically mean they will collect more tax.
http://data.parliament.uk/writtenevidence/committe...
http://data.parliament.uk/writtenevidence/committe...
Plenty of information out there if you actually bother to look for it.
So said:
Rovinghawk said:
I was curious as to why you seem in favour of this crap.
I am not in the slightest bit in favour. I am merely pointing out that the Treasury perceives that SMEs are significantly under-paying tax and they will sooner or later address that problem. Given the moves they have made already and the ease with which collated data can be used to detect and enforce it is only a matter of time before a MTD type initiative is introduced.Are they LYING to us?
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff