Making Tax Digital
Discussion
Alucidnation said:
So, not the "we are all doomed" scenario then.
Well, they've seen sense, haven't they and back pedalled massively on the original plans. There are still lots of issues remaining in respect of the severely watered down version that remains - but at least the bonkers timetable they had been telling us was immutable turned out to be very mutable indeed.It's amazing what a good kick in the teeth from the voters can achieve..
I have to do my first self assessment for my sole trader business this year and I'm a bit nervous as never done it before.
It's pretty straightforward BUT I worked as a PAYE employee for 2.5 months of tax year 2016-2017 AND received basic jobseekers for 6 months and a enterprise allowance fund while I started up.my business.
What o can't find an explanation for is if I have to put that in my self assessment as HMRC already have all that online record, is my self assessment just for income through the business?
I also hope it's straightforward with all this issue at HMRC.
I think 8 may be due a rebate too from the 2.5 months my tax code was for a salary of about £40k and now I'm under tax threshold.
It's pretty straightforward BUT I worked as a PAYE employee for 2.5 months of tax year 2016-2017 AND received basic jobseekers for 6 months and a enterprise allowance fund while I started up.my business.
What o can't find an explanation for is if I have to put that in my self assessment as HMRC already have all that online record, is my self assessment just for income through the business?
I also hope it's straightforward with all this issue at HMRC.
I think 8 may be due a rebate too from the 2.5 months my tax code was for a salary of about £40k and now I'm under tax threshold.
No - you need to include on the self assessment ALL your income from ALL sources INCLUDING income that has already been dealt with under PAYE.
So, you need to include -
Your salary and the PAYE deducted from it (as per the P45)
your self employment income and expenditure (showing whether it made a profit or loss) and any capital allowances you intend to claim for equipment etc
any other income such as interest received or dividends
So, you need to include -
Your salary and the PAYE deducted from it (as per the P45)
your self employment income and expenditure (showing whether it made a profit or loss) and any capital allowances you intend to claim for equipment etc
any other income such as interest received or dividends
Cool. That helps.
Finding that specific info is really difficult. I've got a few bookkeeping and business start-up books eta and nowhere does anyone tell you what you need to put into a self assessment. It's always just vague talk of profits/expenditure etc.
It's quite hard to get the info you have just said. It sounds obvious but if you don't know it can be quite scary.
Though I realise if you get it wrong you'll get a bill for more from HMRC later.
I just want to get my first one right.
It does seem a bit daft that people need to tell HMRC info they already have but I realise the onus needs to be on the person and not HMRC.
Part of the issue is I can't afford an accountant or bookkeeper so I have to learn it all myself and I'm terrified of getting it wrong.
Finding that specific info is really difficult. I've got a few bookkeeping and business start-up books eta and nowhere does anyone tell you what you need to put into a self assessment. It's always just vague talk of profits/expenditure etc.
It's quite hard to get the info you have just said. It sounds obvious but if you don't know it can be quite scary.
Though I realise if you get it wrong you'll get a bill for more from HMRC later.
I just want to get my first one right.
It does seem a bit daft that people need to tell HMRC info they already have but I realise the onus needs to be on the person and not HMRC.
Part of the issue is I can't afford an accountant or bookkeeper so I have to learn it all myself and I'm terrified of getting it wrong.
Eric Mc said:
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?
That was my first thought too. My business trades under the VAT threshold, but since I supply B2B only, it makes sense to be VAT registered. 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?
Does anyone know yet what is going to be involved in the MTD for VAT? Presume you'll have to submit details of every purchase and every sale during the quarter? They already get totals of sales and purchases from the current VAT system, so they must be wanting full itemised detail from the new one?
I do all my accounts in spreadsheet only, so it's going to be a pig to get it all in a system that posts to MTD (unless there'll be a way of copy and pasting from my spreadsheet, which should have all the necessary info in it). I seem to recall there was a request made to HMRC at one point to provide/allow posting from excel spreadsheets, doubt they'll want to allow that though.
Also, I'm going to guess that the deadlines for submitting the quarterly VAT returns will be tightened right up with MTD. Currently, they give a full month+7 days before the return needs to be filed, and then it's a few more days before they take payment (if done by direct debit). With MTD, I expect they'll want the quarterly submission finalised within a couple of days of the end of the quarter. There'll be no reason not to afterall, and if it's anything like the PAYE RTI you'll probably be expected to make submissions continually throughout the quarter as the sales/purchases happen. Which is simply unrealistic for a small business to keep up with.
My next guess is that they'll then be after their VAT payment much sooner than the current month +7 days + a few more for the DD run. In their eye's once you've submitted/finalised your quarter, and know the total, no reason why you shouldn't be making payment. Suspect this is what it's all about really - improving their cashflow by a month. Trouble is, most B2B transactions are on account - my standard terms are 30 days net, like many others. So all my sales in the last month of the quarter I don't generally receive payment for until the end of the month after (i.e. just before the VAT payment is due to HMRC under the current system). If that happens to be a bumper month, and the VAT becomes due straight away, the cash flow implications could cripple me.
Simple answer is, "we don't know yet".
Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
In the massive reshuffle that happened in January 2017, this was drastically reduced in scope to just totals for each quarter (a bit like current VAT returns).
Now that they are saying MTD is primarilly for VAT (at least at first) we have not been told if they are reverting to the original "full fat" version of MTD or the "skinny" version. As you imply, the skinny version is very much what VAT returns are at the moment. So the question has to be, why bother?
The main difference between an MTD VAT return and a current VAT return (which is actually digital already) is that you will not be able to go to your Government Gateway access point to make the return. In fact the Government Gateway is going to be shut down to make way for MTD. Instead, you will have to make the MTD VAT Return using 3rd party commercial software.
That is why I mentioned the possibility that there might be two separate VATY systems running parallel to each other - the current one for small traders and the MTD for those with turnovers exceeding the VAT Registration Threshold.
By and large, the filing and payment deadlines are staying the same - but the additional 7 days you are given at the moment to submit the return will go (it was originally brought in to encourage those who were still submitting VAT returns on paper to switch to electronic filing. It was left in place even when electronic filing became compulsory.
Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
In the massive reshuffle that happened in January 2017, this was drastically reduced in scope to just totals for each quarter (a bit like current VAT returns).
Now that they are saying MTD is primarilly for VAT (at least at first) we have not been told if they are reverting to the original "full fat" version of MTD or the "skinny" version. As you imply, the skinny version is very much what VAT returns are at the moment. So the question has to be, why bother?
The main difference between an MTD VAT return and a current VAT return (which is actually digital already) is that you will not be able to go to your Government Gateway access point to make the return. In fact the Government Gateway is going to be shut down to make way for MTD. Instead, you will have to make the MTD VAT Return using 3rd party commercial software.
That is why I mentioned the possibility that there might be two separate VATY systems running parallel to each other - the current one for small traders and the MTD for those with turnovers exceeding the VAT Registration Threshold.
By and large, the filing and payment deadlines are staying the same - but the additional 7 days you are given at the moment to submit the return will go (it was originally brought in to encourage those who were still submitting VAT returns on paper to switch to electronic filing. It was left in place even when electronic filing became compulsory.
kwittery?mjb1 said:
I do all my accounts in spreadsheet only, so it's going to be a pig to get it all in a system that posts to MTD (unless there'll be a way of copy and pasting from my spreadsheet, which should have all the necessary info in it). I seem to recall there was a request made to HMRC at one point to provide/allow posting from excel spreadsheets, doubt they'll want to allow that though.
I have a relatively simple business (no staff other than me), I used to do all my accounts and VAT in a spreadsheet, but 18 months ago moved to Xero online accounts (other vendors are available), mostly what eventually did in my custom spreadsheets for me was trying to get my head around EU VAT. Yes it costs me a monthly fee (£25-£30-ish I think) but I save so much time now it's amazing, easily a full day a month, and more in VAT return months. I literally just click a couple of buttons in Xero and the VAT return is done and submitted for me, I then log on to my online banking and pay HMRC whatever VAT I owe. I imagine (hope?) that the big boys like Xero are actually being engaged by HMRC and they are working together so that the same transaction info I'm entering now (they have a mobile app by the way which makes on-the-go expenses even easier) can also feed the MTD requirements when that comes in.
There are some inflexibilities to cope with when entering everything into something like Xero, and it has some odd limitations (e.g. no easy way to add a mark up on purchases that I reinvoice to a client) that you would think their programmers would just get on top of when lots of people are asking for it in their support forums, but on the whole moving from custom spreadsheet to Xero has worked out great for me.
Eric Mc said:
Simple answer is, "we don't know yet".
Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
Crikey, I hadn't realised the full extent of their original proposal. I thought they just wanted itemised transactions not all the supporting paper trail as well. Utterly ridiculous.Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
mjb1 said:
Eric Mc said:
Simple answer is, "we don't know yet".
Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
Crikey, I hadn't realised the full extent of their original proposal. I thought they just wanted itemised transactions not all the supporting paper trail as well. Utterly ridiculous.Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
ICAEW communicated in February 2016 that HMRC had confirmed that updates would be summary information, not transactional. The only question was whether the summaries would be similar to the categories on Income/Coporation Tax returns and/or simple three line accounts (turnover, expenses and profit/loss) hence the consultation held in 2016.
The same rumour mill took mentions by HMRC of services like Receipt Bank and other apps to mean that invoices and receipts would have to be stored digitally rather simply using them as a means of automating data entry.
Remember MTD is about moving businesses to keeping up-to-date accounting records digitally, ending shoe-box accounting and the annual shock of tax bills.
kev1974 said:
I have a relatively simple business (no staff other than me), I used to do all my accounts and VAT in a spreadsheet, but 18 months ago moved to Xero online accounts (other vendors are available), mostly what eventually did in my custom spreadsheets for me was trying to get my head around EU VAT. Yes it costs me a monthly fee (£25-£30-ish I think) but I save so much time now it's amazing, easily a full day a month, and more in VAT return months. I literally just click a couple of buttons in Xero and the VAT return is done and submitted for me, I then log on to my online banking and pay HMRC whatever VAT I owe.
I imagine (hope?) that the big boys like Xero are actually being engaged by HMRC and they are working together so that the same transaction info I'm entering now (they have a mobile app by the way which makes on-the-go expenses even easier) can also feed the MTD requirements when that comes in.
There are some inflexibilities to cope with when entering everything into something like Xero, and it has some odd limitations (e.g. no easy way to add a mark up on purchases that I reinvoice to a client) that you would think their programmers would just get on top of when lots of people are asking for it in their support forums, but on the whole moving from custom spreadsheet to Xero has worked out great for me.
Yep, all the major software providers are taking part in the current pilots. Xero said last November that if you're using Xero then “you’re pretty much there for MTD”: you're already keeping the digital records required by MTD while Xero add the necessary function to submit quarterly updates.I imagine (hope?) that the big boys like Xero are actually being engaged by HMRC and they are working together so that the same transaction info I'm entering now (they have a mobile app by the way which makes on-the-go expenses even easier) can also feed the MTD requirements when that comes in.
There are some inflexibilities to cope with when entering everything into something like Xero, and it has some odd limitations (e.g. no easy way to add a mark up on purchases that I reinvoice to a client) that you would think their programmers would just get on top of when lots of people are asking for it in their support forums, but on the whole moving from custom spreadsheet to Xero has worked out great for me.
ninja-lewis said:
mjb1 said:
Eric Mc said:
Simple answer is, "we don't know yet".
Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
Crikey, I hadn't realised the full extent of their original proposal. I thought they just wanted itemised transactions not all the supporting paper trail as well. Utterly ridiculous.Originally, the submissions for MTD were going to include every single transaction - not just the numbers and details but copies of the actual underlying documents, such as sales invoices, purchase invoices, bank statements etc.
ICAEW communicated in February 2016 that HMRC had confirmed that updates would be summary information, not transactional. The only question was whether the summaries would be similar to the categories on Income/Coporation Tax returns and/or simple three line accounts (turnover, expenses and profit/loss) hence the consultation held in 2016.
The same rumour mill took mentions by HMRC of services like Receipt Bank and other apps to mean that invoices and receipts would have to be stored digitally rather simply using them as a means of automating data entry.
Remember MTD is about moving businesses to keeping up-to-date accounting records digitally, ending shoe-box accounting and the annual shock of tax bills.
kev1974 said:
I have a relatively simple business (no staff other than me), I used to do all my accounts and VAT in a spreadsheet, but 18 months ago moved to Xero online accounts (other vendors are available), mostly what eventually did in my custom spreadsheets for me was trying to get my head around EU VAT. Yes it costs me a monthly fee (£25-£30-ish I think) but I save so much time now it's amazing, easily a full day a month, and more in VAT return months. I literally just click a couple of buttons in Xero and the VAT return is done and submitted for me, I then log on to my online banking and pay HMRC whatever VAT I owe.
I imagine (hope?) that the big boys like Xero are actually being engaged by HMRC and they are working together so that the same transaction info I'm entering now (they have a mobile app by the way which makes on-the-go expenses even easier) can also feed the MTD requirements when that comes in.
There are some inflexibilities to cope with when entering everything into something like Xero, and it has some odd limitations (e.g. no easy way to add a mark up on purchases that I reinvoice to a client) that you would think their programmers would just get on top of when lots of people are asking for it in their support forums, but on the whole moving from custom spreadsheet to Xero has worked out great for me.
Yep, all the major software providers are taking part in the current pilots. Xero said last November that if you're using Xero then “you’re pretty much there for MTD”: you're already keeping the digital records required by MTD while Xero add the necessary function to submit quarterly updates.I imagine (hope?) that the big boys like Xero are actually being engaged by HMRC and they are working together so that the same transaction info I'm entering now (they have a mobile app by the way which makes on-the-go expenses even easier) can also feed the MTD requirements when that comes in.
There are some inflexibilities to cope with when entering everything into something like Xero, and it has some odd limitations (e.g. no easy way to add a mark up on purchases that I reinvoice to a client) that you would think their programmers would just get on top of when lots of people are asking for it in their support forums, but on the whole moving from custom spreadsheet to Xero has worked out great for me.
It's all wonderful and lovely.
Not only were the software manufacturers "assisting" HMRC - they were actually helping to drive it (what a surprise). In fact, one of the main originators at HMRC who came up with the idea is now working for Sage.
It's so marvelous that most of it has been scrapped. The EARLIEST we MIGHT see it in operation is 2020. I doubt that this will even happen. HMRC will have its plate full with all sorts of issues - including a massive restructuring of VAT and customs regulations which will have to take place because of Brexit. They have also lost a number of key IT contractors because of their own changes to IR35 rules. Talk about shooting themselves in the foot.
I am pretty sure that Mel Stride will quietly squash this whole nonsense eventually.
Not only were the software manufacturers "assisting" HMRC - they were actually helping to drive it (what a surprise). In fact, one of the main originators at HMRC who came up with the idea is now working for Sage.
It's so marvelous that most of it has been scrapped. The EARLIEST we MIGHT see it in operation is 2020. I doubt that this will even happen. HMRC will have its plate full with all sorts of issues - including a massive restructuring of VAT and customs regulations which will have to take place because of Brexit. They have also lost a number of key IT contractors because of their own changes to IR35 rules. Talk about shooting themselves in the foot.
I am pretty sure that Mel Stride will quietly squash this whole nonsense eventually.
ninja-lewis said:
Yep, all the major software providers are taking part in the current pilots. Xero said last November that if you're using Xero then “you’re pretty much there for MTD”: you're already keeping the digital records required by MTD while Xero add the necessary function to submit quarterly updates.
The API for a Ltd company has yet to be published (Self employment API is available for testing in the HMRC Sandbox) so I would take that with a pinch of salt. 
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
Traders MUST BUY (not yet invented) commercial software to do the new style returns. The Free software suggestion made by HMRC seems to have been quietly forgotten.
The new VAT returns will contain summary details of all underlying transactions making up the total s in the VAT return boxes i.e. the VAT return is no longer going to be a submission of totals only
The software will allow HMRC to send stuff electronically to the trader - such as penalty notifications and warnings etc
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.
HMRC has not outlined any information as to how or what agents can do in regard to making MTD VAT submissions.
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
Traders MUST BUY (not yet invented) commercial software to do the new style returns. The Free software suggestion made by HMRC seems to have been quietly forgotten.
The new VAT returns will contain summary details of all underlying transactions making up the total s in the VAT return boxes i.e. the VAT return is no longer going to be a submission of totals only
The software will allow HMRC to send stuff electronically to the trader - such as penalty notifications and warnings etc
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.
HMRC has not outlined any information as to how or what agents can do in regard to making MTD VAT submissions.
Edited by Eric Mc on Sunday 17th September 11:03
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff