Making Tax Digital
Discussion
Ziplobb said:
He is even suggesting that he will have to cut the number of clients he deals with in order to do this for the remaining ones simply because he does not want to expand his business by taking on more staff and can increase his income from the customers that remain.
I'm going to be facing the same dilemma. Our practice is very small - four of us in total at my office - and we have about 280 clients in total. We already struggle to take more than a week off at a time due to the constant reporting requirements of HMRC, so I'll either need more staff (where are all these trained accountants going to come from??), or bid some clients farewell. Of course, existing clients aren't going to want to pay larger fees to us either. 
LeighW said:
Ziplobb said:
He is even suggesting that he will have to cut the number of clients he deals with in order to do this for the remaining ones simply because he does not want to expand his business by taking on more staff and can increase his income from the customers that remain.
I'm going to be facing the same dilemma. Our practice is very small - four of us in total at my office - and we have about 280 clients in total. We already struggle to take more than a week off at a time due to the constant reporting requirements of HMRC, so I'll either need more staff (where are all these trained accountants going to come from??), or bid some clients farewell. Of course, existing clients aren't going to want to pay larger fees to us either. One major issue I haven't stated yet is that accountants (and other tax agents) are not going to be allowed submit these quarterly updates from their office servers or computers. Only the taxpayer can make these submissions from their own devices which they will have registered directly with HMRC.
Not only that but the accountants and agents won't even be allowed access to the client's Digital Tax Account during the year - so they won't even be able to check during the tax year what the client has been forwarding to HMRC.
It's only when the final "annual" submission is being made that it is likely (although not yet confirmed) that the accountant/agent will get to see what has been going on.
What on earth are HMRC thinking?
Eric Mc said:
Not familiar with that so can't comment.
Then FYI...https://en.wikipedia.org/wiki/Connect_(computer_sy...
I thought it looked quite interesting but not for this thread I guess.
garyhun said:
Is this purely for businesses or is personal self assessment also on the radar?
When I said "everybody" I meant "everybody" i.e. EVERY taxpayer in the UK.Now, the filing requirements will vary depending on your sources of income.
The important thing about this new system is the creation of the "Digital Tax Account" which EVERY tax payer will have. HMRC claims this will be like your on-line bank account in that you will be able to access it and carry out data updates and transactions at any time from any where in the world.
For those who are MAINLY under PAYE, like the current Self Assessment rules, they MAY not have to do anything at all. In such cases HMRC thinks that the data on the Digital Tax Account will automatically be correct and up to date based on information provided by third parties - such as employers, banks, solicitors etc. HOWEVER, the taxpayer will be required to monitor the information on the Digital Tax Account and will be required to amend or update this data if they believe it isn't correct. Failure to do so could result in penalties.
Examples of the type of changes a "normal" taxpayer might have to update in real time are -
change of job
change of company car
change of other type of taxable benefit
change of marital/civil partnership status
change of address
arrival of a child
death of a spouse
moving in or out of a partner
Particularly of significance would be a Capital Gain in the tax year. Under these new rules, a Capital Gain would need to be updated on the Digital Tax Account within 30 days of the gain being made. And the tax arising would also have to be paid within 30 days.
As you can see, none of this has anything to do with the quarterly submissions I mentioned above. The quarterly update regime is in addition to what I am describing here and is chiefly for sole traders and landlords.
Eric Mc said:
Same here.
One major issue I haven't stated yet is that accountants (and other tax agents) are not going to be allowed submit these quarterly updates from their office servers or computers. Only the taxpayer can make these submissions from their own devices which they will have registered directly with HMRC.
Not only that but the accountants and agents won't even be allowed access to the client's Digital Tax Account during the year - so they won't even be able to check during the tax year what the client has been forwarding to HMRC.
It's only when the final "annual" submission is being made that it is likely (although not yet confirmed) that the accountant/agent will get to see what has been going on.
What on earth are HMRC thinking?
They're thinking this...One major issue I haven't stated yet is that accountants (and other tax agents) are not going to be allowed submit these quarterly updates from their office servers or computers. Only the taxpayer can make these submissions from their own devices which they will have registered directly with HMRC.
Not only that but the accountants and agents won't even be allowed access to the client's Digital Tax Account during the year - so they won't even be able to check during the tax year what the client has been forwarding to HMRC.
It's only when the final "annual" submission is being made that it is likely (although not yet confirmed) that the accountant/agent will get to see what has been going on.
What on earth are HMRC thinking?
"how do we maximise our take whilst not costing the tax paper any more"
Remove the middle men I.e accountants
"who is responsible for most of the greying of tax rules and fudging of current rules?"
Accountants
"How do we simplify the language and process of tax accountancy"
Remove accountants.
?
I know you're straight and reasonable Eric, obviously, but a little less a accountancy in business would be no bad thing.
I logged on to do my tax return for 2015/16 and it told me my income from previous employment and tax paid.
I was sure it was wrong and so went through all of the numbers, bank statements, payslips etc and sure enough....
....they were right.
I also have to do a Partnership Self Assessment for my new business and wanted to verify the treatment of expenses prior to formation. Eventually spoke to a very professional Tax Inspector who told me which way to go and the Partnership and Personal assessments will be linked from now on.
I also have to do the VAT returns for my wife's business. Takes very little time once I set up the spreadsheets properly.
All in all, I find the systems pretty good. Their online chat for questions can be particularly good and you get to keep a download of the conversation for your records.
The system isn't in place yet.
How do you REALLY know they are right?
How do you know when you speak to them that they are going to give you the best advice for YOUR business and your tax affairs. Their imperative is to raise money for the exchequer. I have no problem with that. The country needs to raise money in order to function.
However, they are NOT going to be looking after your best interest and they will not always know what is right for YOU, no matter how helpful they may appear to be.
This is a major calamity in the making and I think the tax shortfall arising as a result of this is going to be a national disaster and scandal of the highest order.
By the way, why are you operating through a partnership in this day and age?
How many partners are in the partnership?
If two, then under this new regime you will be submitting 13 quarterly and annual returns.
How do you REALLY know they are right?
How do you know when you speak to them that they are going to give you the best advice for YOUR business and your tax affairs. Their imperative is to raise money for the exchequer. I have no problem with that. The country needs to raise money in order to function.
However, they are NOT going to be looking after your best interest and they will not always know what is right for YOU, no matter how helpful they may appear to be.
This is a major calamity in the making and I think the tax shortfall arising as a result of this is going to be a national disaster and scandal of the highest order.
By the way, why are you operating through a partnership in this day and age?
How many partners are in the partnership?
If two, then under this new regime you will be submitting 13 quarterly and annual returns.
Eric Mc said:
The system isn't in place yet.
How do you REALLY know they are right?
How do you know when you speak to them that they are going to give you the best advice for YOUR business and your tax affairs. Their imperative is to raise money for the exchequer. I have no problem with that. The country needs to raise money in order to function.
However, they are NOT going to be looking after your best interest and they will not always know what is right for YOU, no matter how helpful they may appear to be.
This is a major calamity in the making and I think the tax shortfall arising as a result of this is going to be a national disaster and scandal of the highest order.
By the way, why are you operating through a partnership in this day and age?
How many partners are in the partnership?
If two, then under this new regime you will be submitting 13 quarterly and annual returns.
I won't be going through my tax affairs with you, Eric. How do you REALLY know they are right?
How do you know when you speak to them that they are going to give you the best advice for YOUR business and your tax affairs. Their imperative is to raise money for the exchequer. I have no problem with that. The country needs to raise money in order to function.
However, they are NOT going to be looking after your best interest and they will not always know what is right for YOU, no matter how helpful they may appear to be.
This is a major calamity in the making and I think the tax shortfall arising as a result of this is going to be a national disaster and scandal of the highest order.
By the way, why are you operating through a partnership in this day and age?
How many partners are in the partnership?
If two, then under this new regime you will be submitting 13 quarterly and annual returns.
I'm sure you're great, but I have accountants and lawyers aplenty for when I need specific advice.
My point is that the systems have been, for me, well connected and useful, and with timely and clear decision making.
In any event, let's face it, accountants are just reprocessing the data they receive - a clear case of Crap In / Crap Out.
You do accountants a great disservice and are rather insulting to the professional qualification.
The whole point of an accountant, especially one who deals with lots of smaller clients, is that no matter what "crap" (a word I would never use for my clients) they might receive, they can their professional skill and knowledge to work out how "wrong" the information they have received is and fill the gaps.
Part of my training (and a lot of my actual work over the years) has been dealing what what are often referred to as "incomplete records".
I am pretty sure an awful lot of data that traders may start submitting on this quarterly basis will be very incomplete - sometimes by design but a lot of the time by pure lack of knowledge. I am absolutely positive that the accounting system (that the taxpayers MUST buy - HMRC are not providing any software for this) will not be smart enough to take the place of an experienced professional.
The whole point of an accountant, especially one who deals with lots of smaller clients, is that no matter what "crap" (a word I would never use for my clients) they might receive, they can their professional skill and knowledge to work out how "wrong" the information they have received is and fill the gaps.
Part of my training (and a lot of my actual work over the years) has been dealing what what are often referred to as "incomplete records".
I am pretty sure an awful lot of data that traders may start submitting on this quarterly basis will be very incomplete - sometimes by design but a lot of the time by pure lack of knowledge. I am absolutely positive that the accounting system (that the taxpayers MUST buy - HMRC are not providing any software for this) will not be smart enough to take the place of an experienced professional.
Eric Mc said:
garyhun said:
Is this purely for businesses or is personal self assessment also on the radar?
When I said "everybody" I meant "everybody" i.e. EVERY taxpayer in the UKUnless there is another article??
skeggysteve said:
Eric Mc said:
When I said "everybody" I meant "everybody" i.e. EVERY taxpayer in the UK.
What about people that don't have a computer? My father doesn't have a computer and has no idea how to use one.No word at all about what large software giant is providing this massive software upgrade to HMRC. Osborne stated back in April 2015 that it would cost the Exchequer £1.7 billion.
The other aspect is the fact that HMRC are expecting the accounting software suppliers to provide compatible book-keeping and accounting software for taxpayers to use.
HMRC have stated categorically that they will NOT be providing a free on-line access to the Digital Tax Account for traders and landlords. They must buy commercial software.
In the past couple of months they have conceded that -
a) they may have to allow spreadsheet software at first - but they don't really want to do this
b) they would provide a one off £500 subsidy to all businesses and landlord who have to buy this software. The subsidy will be given a reduction in the tax liability (which means it is meaningless if you don't have a liability arising)
This is just for the first year. Ongoing upgrades and licences (which will be essential if this software is to keep abreast of accounting and tax changes - which happen every year without fail)will not be subsidised in any way and will have to be paid for by each and every trader and landlord every year.
The other aspect is the fact that HMRC are expecting the accounting software suppliers to provide compatible book-keeping and accounting software for taxpayers to use.
HMRC have stated categorically that they will NOT be providing a free on-line access to the Digital Tax Account for traders and landlords. They must buy commercial software.
In the past couple of months they have conceded that -
a) they may have to allow spreadsheet software at first - but they don't really want to do this
b) they would provide a one off £500 subsidy to all businesses and landlord who have to buy this software. The subsidy will be given a reduction in the tax liability (which means it is meaningless if you don't have a liability arising)
This is just for the first year. Ongoing upgrades and licences (which will be essential if this software is to keep abreast of accounting and tax changes - which happen every year without fail)will not be subsidised in any way and will have to be paid for by each and every trader and landlord every year.
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