Making Tax Digital
Discussion
Major major announcement today by new Secretary of the Treasury, Mel Stride -
Mel Stride, Financial Secretary to the Treasury and Paymaster General said:
Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
Under the new timetable:
only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
they will only need to do so from 2019
businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
This is absolutely BRILLIANT news and proves that the whole thing was a misguided and lunatic concept.
Mel Stride, Financial Secretary to the Treasury and Paymaster General said:
Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
Under the new timetable:
only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
they will only need to do so from 2019
businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
This is absolutely BRILLIANT news and proves that the whole thing was a misguided and lunatic concept.
Eric Mc said:
Major major announcement today by new Secretary of the Treasury, Mel Stride -
Mel Stride, Financial Secretary to the Treasury and Paymaster General said:
Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
Under the new timetable:
only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
they will only need to do so from 2019
businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
This is absolutely BRILLIANT news and proves that the whole thing was a misguided and lunatic concept.
Hah, beat me to it Eric. Mel Stride, Financial Secretary to the Treasury and Paymaster General said:
Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
Under the new timetable:
only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
they will only need to do so from 2019
businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
This is absolutely BRILLIANT news and proves that the whole thing was a misguided and lunatic concept.
Linky:
https://www.gov.uk/government/news/next-steps-on-t...
PurpleMoonlight said:
What does keeping digital records for VAT mean though?
Isn't it obvious?It is to HMRC.
What they mean by this is presenting the quarterly information to HMRC in a digital format that THEY approve.
They are restricting the submissions to VAT only up to April 2020. However, what this means is that the VAT return will have to be summarised and submitted using third party commercial software and not the HMRC VAT "screens" that are currently available to VAT registered entities.
How and when the current VAT submission system is actually decommissioned and will no longer be available is not mentioned in this press release.
The good news is that MTD for other taxes i.e. Income Tax - is postponed until AT LEAST April 2020.
Eric Mc said:
This is absolutely BRILLIANT news and proves that the whole thing was a misguided and lunatic concept.
I've been following this thread purely to learn about what's happening with this situation even though I am and will always be a PAYE employee. (If I'm honest I slightly stalk you Eric as you explain various business/tax/accounting things very well and I find it all very interesting for no other reason than learning is a good thing) I've picked out your last paragraph and just wanted to ask if you considered that they might have genuinely listened to feedback and even though they thought they were being ambitious, they've adapted and responded well? Or am I just being nieve? It seems they did a 'throw it at the wall and see what sticks' approach.
It's a genuine questions, not meant to be antagonistic...
Rovinghawk said:
Eric Mc said:
This is absolutely BRILLIANT news and proves that the whole thing was a misguided and lunatic concept.
Thank you for the information throughout the thread.hondafanatic said:
I've been following this thread purely to learn about what's happening with this situation even though I am and will always be a PAYE employee. (If I'm honest I slightly stalk you Eric as you explain various business/tax/accounting things very well and I find it all very interesting for no other reason than learning is a good thing)
I've picked out your last paragraph and just wanted to ask if you considered that they might have genuinely listened to feedback and even though they thought they were being ambitious, they've adapted and responded well? Or am I just being nieve? It seems they did a 'throw it at the wall and see what sticks' approach.
It's a genuine questions, not meant to be antagonistic...
During World War 2 Winston Churchill said "You can always count on Americans to do the right thing - eventually.I've picked out your last paragraph and just wanted to ask if you considered that they might have genuinely listened to feedback and even though they thought they were being ambitious, they've adapted and responded well? Or am I just being nieve? It seems they did a 'throw it at the wall and see what sticks' approach.
It's a genuine questions, not meant to be antagonistic...
I think, in this case, we can apply the same epithet to HM Treasury.
Reality finally hit home, I reckon. The schedule they were promoting was WAY too ambitious and it was highly likely that their own systems would never be ready in time. Indeed, I think 2020 is still pushing it a bit,
And just to show how much they underestimate what is involved, their old and fairly reliable self assessment software has collapsed this year due to some of the permutations now existing in tax calculations because of changes to bank interest and dividend income zero rate tax thresholds.
They have admitted that many 2016/17 tax returns already submitted will result in incorrect tax calculations BY THE HMRC SOFTWARE.
Now that they know there is a problem, they will reject any further internet submissions that give rise to an incorrect calculations and the advice is to send the returns in on paper. This means that for tax year 2016/17, HMRC will be receiving more paper tax returns compared to 2015/16 and 2014/15 - AND ALL DOWN TO FAILINGS IN THEIR OWN SYSTEMS.
They HOPE to have a fix in place by the end of October.
In normal circumstances, paper returns sent in after October will receive an automatic and unappealable £100 penalty. This year, they will waive the penalty IF THE TAXPAYER REMEMBERS TO WRITE AN EXPLANATION AS TO WHY THE PAPER RETURN IS GOING IN AFTER 31 OCTOBER in the "white spaces" area of the tax return.
This is a bit of a disaster waiting to hit the fan sometime between 1 November 2017 and 31 January 2018.
Well that all makes sense and I appreciate the comprehensive reply. I was being genuine about your input to PH. There are few people who either start threads or reply that I'll happily take as 'read'. I've absolutely no professional requirement to know about this kind of topic but as I tell my pupils, take any and every opportunity to learn something new and always appreciate someone's inner geek 
and by god is there some fascinating geek threads on this forum (geek is a good thing - it's in the bible - the geek will inherit the earth)
Most of the time I take the 'it's better to be thought a fool then open one's mouth and have it confirmed' so I appreciate your time to reply.
and by god is there some fascinating geek threads on this forum (geek is a good thing - it's in the bible - the geek will inherit the earth)Most of the time I take the 'it's better to be thought a fool then open one's mouth and have it confirmed' so I appreciate your time to reply.
No problem.
The reason I started this thread was because of the woeful lack of reporting that was going on in respect of MTD in the mainstream media. Even today, the news that it has been more or less dropped for the foreseeable future has not made any mainstream media news. The only media that has reported it are specialist tax and accounting magazines and websites and, to give them their credit, BBC Radio 4 in their "Money Box" and "Money Box Live" programmes.
I know there quite a few people on PH who run their own businesses so this was relevant to them - so I thought they deserved to know.
Because of the massive uncertainty surrounding what ACTUALLY was involved in MTD, and the original looming implementation date of 6 April 2018, I thought that people needed to know what was happening.
The reason I started this thread was because of the woeful lack of reporting that was going on in respect of MTD in the mainstream media. Even today, the news that it has been more or less dropped for the foreseeable future has not made any mainstream media news. The only media that has reported it are specialist tax and accounting magazines and websites and, to give them their credit, BBC Radio 4 in their "Money Box" and "Money Box Live" programmes.
I know there quite a few people on PH who run their own businesses so this was relevant to them - so I thought they deserved to know.
Because of the massive uncertainty surrounding what ACTUALLY was involved in MTD, and the original looming implementation date of 6 April 2018, I thought that people needed to know what was happening.
Reprieve and another u turn the day before the summer recess, here's from the hmrc themselves:
Three million of the smallest businesses and landlords will be able to move to the new digital system for keeping tax records at a pace that is right for them, Ministers announced today as they set out the next steps for the Finance Bill.
The government has listened to concerns raised by parliamentarians, in particular the Treasury Select Committee, businesses and professional bodies about the pace of change and is taking steps to ensure a smooth transition to a digital tax system.
Making Tax Digital will help bring the tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HMRC. Roll out for Making Tax Digital has been amended to ensure businesses have plenty of time to adapt to the changes.
Mel Stride, Financial Secretary to the Treasury and Paymaster General said:
Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
Under the new timetable:
only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
they will only need to do so from 2019
businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
HMRC are fully committed to supporting businesses in this transition. HMRC has already begun piloting the Making Tax Digital services and will continue to do so, testing the system extensively with businesses. It will start to pilot MTDfB for VAT by the end of this year, starting with small-scale, private testing, followed by a wider, live pilot starting in Spring 2018. This will allow for well over a year of testing before any businesses are mandated to use the system.
Ministers also confirmed today that the Finance Bill will be introduced as soon as possible after the summer recess. This will legislate for all policies that were included in the pre-election Finance Bill, raising over £16 billion across the next five years to fund our vital public services.
Three million of the smallest businesses and landlords will be able to move to the new digital system for keeping tax records at a pace that is right for them, Ministers announced today as they set out the next steps for the Finance Bill.
The government has listened to concerns raised by parliamentarians, in particular the Treasury Select Committee, businesses and professional bodies about the pace of change and is taking steps to ensure a smooth transition to a digital tax system.
Making Tax Digital will help bring the tax system into the 21st century by providing businesses with a modern, streamlined system to keep their tax records and provide information to HMRC. Roll out for Making Tax Digital has been amended to ensure businesses have plenty of time to adapt to the changes.
Mel Stride, Financial Secretary to the Treasury and Paymaster General said:
Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.
We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.
Under the new timetable:
only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
they will only need to do so from 2019
businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.
This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.
As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.
All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.
HMRC are fully committed to supporting businesses in this transition. HMRC has already begun piloting the Making Tax Digital services and will continue to do so, testing the system extensively with businesses. It will start to pilot MTDfB for VAT by the end of this year, starting with small-scale, private testing, followed by a wider, live pilot starting in Spring 2018. This will allow for well over a year of testing before any businesses are mandated to use the system.
Ministers also confirmed today that the Finance Bill will be introduced as soon as possible after the summer recess. This will legislate for all policies that were included in the pre-election Finance Bill, raising over £16 billion across the next five years to fund our vital public services.
Edited by tescorank on Saturday 5th August 09:33
That's what was released about three weeks ago - which I commented on above.
There are LOADS of issues that still need to be clarified.
i) MTD is for the first few years going to be about VAT only. So they are stating that only businesses that exceed the VAT threshold need to adopt MTD. The problem there is that there are lots of businesses that are registered for VAT even though they trade below the Registration threshold. Are they going to have to comply with VAT MTD even though their turnovers are below the current £85,000? If not, then does HMRC plan to run two separate but parallel VAT systems, one MTD compliant and the current non MTD compliant systems for smaller traders?
ii) originally. MTD was specifically aimed at sole traders and partnerships. Now that it is being aimed at VAT rather than Income Tax, does that mean that limited companies will have to comply with VAT MTD requirements at least a year earlier than the old (now abandoned) timetable had suggested?
iii) there are also many businesses that trade above (well above, in some cases) the VAT registration threshold but, because of the nature of what they do, are not required to register for VAT. What about them? Will they be exempted from MTD even though they are sizeable businesses purely because they aren't required to register for VAT.
iv) there are many entities that have to register for VAT (schools, local government bodies, police forces etc) that are not businesses. Are they required to comply with MTD for VAT? Because up to now, the word "business" has been bandied about as if it is only trading entities that have to register for VAT . That is not the case.
v) how does an MTD VAT system cope with the following VAT systems which are currently allowed -
Flat Rate Scheme
Annual Accountuing for VAT
Monthly Accounting for VAT
MTD is all about quarterly returns. VAT registered traders can opt for alternative ways for submitting their VAT. Will these alternative (and very useful) schemes now become a thing of the past?
As ever, more questions have been raised by the MTD u-turn than were answered.
There are LOADS of issues that still need to be clarified.
i) MTD is for the first few years going to be about VAT only. So they are stating that only businesses that exceed the VAT threshold need to adopt MTD. The problem there is that there are lots of businesses that are registered for VAT even though they trade below the Registration threshold. Are they going to have to comply with VAT MTD even though their turnovers are below the current £85,000? If not, then does HMRC plan to run two separate but parallel VAT systems, one MTD compliant and the current non MTD compliant systems for smaller traders?
ii) originally. MTD was specifically aimed at sole traders and partnerships. Now that it is being aimed at VAT rather than Income Tax, does that mean that limited companies will have to comply with VAT MTD requirements at least a year earlier than the old (now abandoned) timetable had suggested?
iii) there are also many businesses that trade above (well above, in some cases) the VAT registration threshold but, because of the nature of what they do, are not required to register for VAT. What about them? Will they be exempted from MTD even though they are sizeable businesses purely because they aren't required to register for VAT.
iv) there are many entities that have to register for VAT (schools, local government bodies, police forces etc) that are not businesses. Are they required to comply with MTD for VAT? Because up to now, the word "business" has been bandied about as if it is only trading entities that have to register for VAT . That is not the case.
v) how does an MTD VAT system cope with the following VAT systems which are currently allowed -
Flat Rate Scheme
Annual Accountuing for VAT
Monthly Accounting for VAT
MTD is all about quarterly returns. VAT registered traders can opt for alternative ways for submitting their VAT. Will these alternative (and very useful) schemes now become a thing of the past?
As ever, more questions have been raised by the MTD u-turn than were answered.
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