Making Tax Digital
Discussion
HMRC are putting 100% faith in the software industry to come up with software and apps which will allow small businesses and landlords to record and summarise their record keeping electronically. I have no problem with this. My main issue is that we aren't quite there yet. And we aren't suddenly going to be there by 1 April 2018.
ICAEW has stated that at the moment only 25% of small businesses use dedicated accounting software for their business record keeping and bookkeeping.
Quite a few more do use spreadsheets (which for many is more than adequate). However, HMRC has categorically stated that simple spreadsheets are not compliant with their new requirements.
As for landlords, if a landlord uses a spreadsheet they are quite computer savvy. Well over 50% of landlords do absolutely nothing in-year regarding recording their rental income. If they are using an agent to manage their property/properties, the percentage who record absolutely nothing is more like 80%.
Having to diligently record all your rental income and expenditure (and tax related claims) on an effectively daily basis is going to be a massive culture shock for many landlords.
ICAEW has stated that at the moment only 25% of small businesses use dedicated accounting software for their business record keeping and bookkeeping.
Quite a few more do use spreadsheets (which for many is more than adequate). However, HMRC has categorically stated that simple spreadsheets are not compliant with their new requirements.
As for landlords, if a landlord uses a spreadsheet they are quite computer savvy. Well over 50% of landlords do absolutely nothing in-year regarding recording their rental income. If they are using an agent to manage their property/properties, the percentage who record absolutely nothing is more like 80%.
Having to diligently record all your rental income and expenditure (and tax related claims) on an effectively daily basis is going to be a massive culture shock for many landlords.
HMRC have simplified accounting for small businesses by allowing "Cash Accounting" i.e. ignoring normal accounting rules and the entire accruals system of accounting (which is the bedrock of basic bookkeeping and accounting).
HMRC have decided that small businesses can keep misleading and inconsistent accounts for tax purposes and any other users of accounts can go hang.
HMRC have decided that small businesses can keep misleading and inconsistent accounts for tax purposes and any other users of accounts can go hang.
Do you really think that unethical landlords who fail to declare their rental income will suddenly have a change of heart and start declaring their income just because HMRC have made it HARDER for them to declare it?
Crooks break the rules - whatever those rules are. Making more rules doesn't suddenly make dishonest people honest.
There seems to be a fundamental lack of understanding of human nature at HMRC.
Crooks break the rules - whatever those rules are. Making more rules doesn't suddenly make dishonest people honest.
There seems to be a fundamental lack of understanding of human nature at HMRC.
loafer123 said:
Eric Mc said:
Do you really think that unethical landlords who fail to declare their rental income will suddenly have a change of heart and start declaring their income just because HMRC have made it HARDER for them to declare it?
Crooks break the rules - whatever those rules are. Making more rules doesn't suddenly make dishonest people honest.
There seems to be a fundamental lack of understanding of human nature at HMRC.
I think the point is that the data will be able to identify non-declaration patterns, particularly by spotting the gap between expenditure data from Banks and tax data at the HMRC.Crooks break the rules - whatever those rules are. Making more rules doesn't suddenly make dishonest people honest.
There seems to be a fundamental lack of understanding of human nature at HMRC.
It's a flawed concept created by flawed logic and a deep misunderstanding as to what actually makes people tick.
I posted up this thread precisely because HMRC are not making any real effort to get this information out into the wider community - precisely where it needs to be. It's all well and good them seeking opinions of accountants and tax consultants. They need to be shouting this from the rooftops and REALLY alerting the public as to what their plans are.
The mainstream media should be all over this. To me, this is as significant if not even more significant than Brexit or Trump, both of which are total dominating the headlines at the moment. The ONLY mainstream media outlet that is providing any information at this at all is BBC Radio 4.
I sometimes wonder if this country sleepwalking into a totalitarionist state.
The mainstream media should be all over this. To me, this is as significant if not even more significant than Brexit or Trump, both of which are total dominating the headlines at the moment. The ONLY mainstream media outlet that is providing any information at this at all is BBC Radio 4.
I sometimes wonder if this country sleepwalking into a totalitarionist state.
ninja-lewis said:
A
HMRC have increasing access to tremendous amounts of data and the power to request further data. Information from DVLA, Land Registry, eBay, airlines, mobile phone companies, Sky TV, Legal Aid Board and dozens of other sources enable them to carry out "lifestyle profiling". If your tax return isn't in keeping with your lifestyle, you can expect Tax Inspectors to be taking a closer look at your affairs.
You say that as if it is a good thing.HMRC have increasing access to tremendous amounts of data and the power to request further data. Information from DVLA, Land Registry, eBay, airlines, mobile phone companies, Sky TV, Legal Aid Board and dozens of other sources enable them to carry out "lifestyle profiling". If your tax return isn't in keeping with your lifestyle, you can expect Tax Inspectors to be taking a closer look at your affairs.
Why should they?
Why are we allowing it?
That is the big issue. The many suffer because the few misbehave.
Government works when there is trust between the state and the citizen. If that trust is destroyed, the system falls apart.
The Treasury Select Committee has specifically stated that this is a major worry about these proposals.
I am still very surprised that HMRC has so far failed to make their promised January statement on MTD. They have 48 hours now to make that statement. If they don't do this, the legislation required to enact these proposals will not be allowed into the 2017 Budget.
Government works when there is trust between the state and the citizen. If that trust is destroyed, the system falls apart.
The Treasury Select Committee has specifically stated that this is a major worry about these proposals.
I am still very surprised that HMRC has so far failed to make their promised January statement on MTD. They have 48 hours now to make that statement. If they don't do this, the legislation required to enact these proposals will not be allowed into the 2017 Budget.
As I said yesterday - something is going on at HMRC. This is from the Accounting Web site -
"Word has reached AccountingWEB through a couple of independent sources that the planned Making Tax Digital software vendor meeting this morning has been cancelled.
HMRC was expected to update the software community in this meeting with the summary of responses to the six Making Tax Digital consultations. HMRC postponed the conference call Friday afternoon, without announcing a new date.
The government announced in the Autumn Statement that HMRC will publish its MTD response in January. What this means for MTD and the planned rollout is anyone’s guess? Stay tuned to AccountingWEB for all the latest news on Making Tax Digital".
"Word has reached AccountingWEB through a couple of independent sources that the planned Making Tax Digital software vendor meeting this morning has been cancelled.
HMRC was expected to update the software community in this meeting with the summary of responses to the six Making Tax Digital consultations. HMRC postponed the conference call Friday afternoon, without announcing a new date.
The government announced in the Autumn Statement that HMRC will publish its MTD response in January. What this means for MTD and the planned rollout is anyone’s guess? Stay tuned to AccountingWEB for all the latest news on Making Tax Digital".
NONE of this should be happening without a serious concerted effort to simplify tax which, alas, I do not see happening any time soon.
John Whiting has been chairing the Office of Tax Simplification since 2007. Since the OTS was set up, the UK tax code has doubled in size. So that hasn't worked very well. He's stepping down soon. I bet he thinks that was all a waste of time.
Placing the massive burden of tax compliance (which require knowledge and understanding) onto ordinary, untrained, citizens is downright deceitful and unfair and should be opposed.
John Whiting has been chairing the Office of Tax Simplification since 2007. Since the OTS was set up, the UK tax code has doubled in size. So that hasn't worked very well. He's stepping down soon. I bet he thinks that was all a waste of time.
Placing the massive burden of tax compliance (which require knowledge and understanding) onto ordinary, untrained, citizens is downright deceitful and unfair and should be opposed.
Funny how those who ARE talking about it in the media don't seem to see it that way.
We shall see what is in store today or tomorrow. Time is running out for HMRC to get this statement out. If they don't do it today or tomorrow, it will not be able to insert the legislation changes necessary into the March 2017 Budget. That is why the concrete proposals (following the foreshortened consultation period) need to be announced in the next 36 hours.
Otherwise MTD is a dead duck - at least for the next 12 months.
We shall see what is in store today or tomorrow. Time is running out for HMRC to get this statement out. If they don't do it today or tomorrow, it will not be able to insert the legislation changes necessary into the March 2017 Budget. That is why the concrete proposals (following the foreshortened consultation period) need to be announced in the next 36 hours.
Otherwise MTD is a dead duck - at least for the next 12 months.
As a matter of interest - today I am running monthly payrolls. Normally, within seconds of submitting the details to HMRC I get an acknowledgement e-mail confirming that the submission has been made. This morning it looks like their computers are unable to send out these e-mails - perhaps due to the annual Self Assessment rush.
I'll be very, very annoyed if HMRC starts issuing penalties for non-submission of payroll information purely because their system can't cope.
I noticed over the weekend that the e-mail confirmation of the Self Assessment submissions I made took hours before they came through.
If they cannot cope with fairly mundane stuff like payrolls every month, what chance do they have with dealing with 10 million plus submissions of every single transaction of every single sole trader/partnership/partner/landlord every three months?
It does make me wonder
I'll be very, very annoyed if HMRC starts issuing penalties for non-submission of payroll information purely because their system can't cope.
I noticed over the weekend that the e-mail confirmation of the Self Assessment submissions I made took hours before they came through.
If they cannot cope with fairly mundane stuff like payrolls every month, what chance do they have with dealing with 10 million plus submissions of every single transaction of every single sole trader/partnership/partner/landlord every three months?
It does make me wonder
They have mentioned "apps" - quite a lot actually. Of course, they themselves won't be creating any apps. They are expecting the commercial software sector to come up with these.
The meeting that was scheduled for this morning was to be with these very companies - presumably so they could thrash out what these apps will need to do and , most importantly for these third party suppliers, where the responsibility for security of the data lies. HMRC has been adamant that any breaches of security of data being submitted to them via these apps will not be their responsibility. This has not enamoured their plans to potential app suppliers.
You can see how this is turning into a bugger's muddle of the highest order.
No wonder this morning's meeting was cancelled.
The meeting that was scheduled for this morning was to be with these very companies - presumably so they could thrash out what these apps will need to do and , most importantly for these third party suppliers, where the responsibility for security of the data lies. HMRC has been adamant that any breaches of security of data being submitted to them via these apps will not be their responsibility. This has not enamoured their plans to potential app suppliers.
You can see how this is turning into a bugger's muddle of the highest order.
No wonder this morning's meeting was cancelled.
What did you actually look up?
Nobody knows for certain the detail they want but all the talks I've attended have emphasised that they will want details of individual transactions.
Maybe they will back off some of the excessive detail they originally mentioned but they haven't clarified anything properly yet - which is pretty disgraceful.
Nobody knows for certain the detail they want but all the talks I've attended have emphasised that they will want details of individual transactions.
Maybe they will back off some of the excessive detail they originally mentioned but they haven't clarified anything properly yet - which is pretty disgraceful.
It ain't - that's one of the problems. Iris, one of the biggest suppliers of software in the accounting world has said that it will not start any development work on MTD related software until HMRC sets out clearly what it is they actually want from everyone.
The Chartered Institute of taxation made this statement a week or so ago -
CIOT president Bill Dodwell commented: “digitalisation and quarterly reporting will be a huge change affecting millions of taxpayers. With a change this big it is more important to do it right than to do it quickly.
“So the Treasury Select Cmmittee is right to call for a delay in the project’s implementation. Rushing it through to deliver by April 2018 is just too short a timescale. There are hundreds of different providers of accounting software – in many cases adapted for specific industries and trades. Right now we have no idea how many of these will be ready and tested in time.
“The introduction of Making Tax Digital should be deferred for at least a year to allow a smoother and more effective transition to digital record keeping, giving businesses sufficient time to prepare for the significant administrative, technological and financial implications associated with the move to digital accounting.
Dodwell added: “The Treasury Select Committee is right to call for comprehensive pilots of the proposed system. There has been some limited piloting to date, but they need to be more extensive, with a range of taxpayers and tax advisers, and especially with those who naturally struggle with IT and firms with complex systems that need to be adapted. The pilots need to cover the whole reporting cycle and address behavioural issues rather than simply digital functioning. Pilots will need to build up gradually, bringing in a wider range of users.
“We are also pleased that the committee agrees with us that the threshold for Making Tax Digital and quarterly reporting should be raised substantially from the proposed £10,000. A consensus is growing that the VAT threshold of £83,000 would be a more sensible cut-off point.
“We think HMRC will need to consult thoroughly with businesses, their tax advisers and professional bodies and relevant charities in the period up to full implementation to ensure it works for HMRC, taxpayers and their representatives.”
The Chartered Institute of taxation made this statement a week or so ago -
CIOT president Bill Dodwell commented: “digitalisation and quarterly reporting will be a huge change affecting millions of taxpayers. With a change this big it is more important to do it right than to do it quickly.
“So the Treasury Select Cmmittee is right to call for a delay in the project’s implementation. Rushing it through to deliver by April 2018 is just too short a timescale. There are hundreds of different providers of accounting software – in many cases adapted for specific industries and trades. Right now we have no idea how many of these will be ready and tested in time.
“The introduction of Making Tax Digital should be deferred for at least a year to allow a smoother and more effective transition to digital record keeping, giving businesses sufficient time to prepare for the significant administrative, technological and financial implications associated with the move to digital accounting.
Dodwell added: “The Treasury Select Committee is right to call for comprehensive pilots of the proposed system. There has been some limited piloting to date, but they need to be more extensive, with a range of taxpayers and tax advisers, and especially with those who naturally struggle with IT and firms with complex systems that need to be adapted. The pilots need to cover the whole reporting cycle and address behavioural issues rather than simply digital functioning. Pilots will need to build up gradually, bringing in a wider range of users.
“We are also pleased that the committee agrees with us that the threshold for Making Tax Digital and quarterly reporting should be raised substantially from the proposed £10,000. A consensus is growing that the VAT threshold of £83,000 would be a more sensible cut-off point.
“We think HMRC will need to consult thoroughly with businesses, their tax advisers and professional bodies and relevant charities in the period up to full implementation to ensure it works for HMRC, taxpayers and their representatives.”
After a quick glance I would say this -
the start date is still 1 April 2018
Spreadsheets WILL be allowed but MUST be linked to compatible software (whatever that may be)
Businesses with turnovers under the VAT threshold only need to submit a very basic quarterly summary (totals only - income/expenditure/profit/loss)- this is a MAJOR concession.
It's still an imposition but some serious reversals have been included compared to the initial proposals.
the start date is still 1 April 2018
Spreadsheets WILL be allowed but MUST be linked to compatible software (whatever that may be)
Businesses with turnovers under the VAT threshold only need to submit a very basic quarterly summary (totals only - income/expenditure/profit/loss)- this is a MAJOR concession.
It's still an imposition but some serious reversals have been included compared to the initial proposals.
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