Making Tax Digital
Discussion
Interesting that one of the long established and simple digital software book-keeping providers, VT, has decided to opt out of developing their product for MTD. In other words, HMRC's push to get smaller businesses into digital recording of their records has actually caused a lot of smaller businesses to lose their digital book-keeping software.
Was that what the government intended?
Was that what the government intended?
Eric Mc said:
Interesting that one of the long established and simple digital software book-keeping providers, VT, has decided to opt out of developing their product for MTD. In other words, HMRC's push to get smaller businesses into digital recording of their records has actually caused a lot of smaller businesses to lose their digital book-keeping software.
Was that what the government intended?
One look at the VT website suggests to me that they've resisted going digital for a long time!Was that what the government intended?
jammy-git said:
One look at the VT website suggests to me that they've resisted going digital for a long time!
I've used VT for many years and it's a fantastic product. Excellent value and easy to use. I know their website isn't exactly state of the art but they do keep up with the various regulations and (not insubstantial) changes required due to varying standards on accounts etc. Their VT Accounts software is an excel add-on and again is excellent. Fully compliant with FRS 105 & 102. As a software provider they clearly know what they're doing.It's a real shame they will no longer improve and support VT Transaction as many thousands of small businesses use it and love the simple nature of how it works and it's low (one off) cost. I also wonder if in turn they will step away from VT Accounts or if some accountants will look to other products, especially if they want an integrated bookkeeping package they can use alongside for their clients.
I can see bookkeeping being the domain of Sage, Xero & Quickbooks in a couple of years time if we are not careful and I'm not sure its the best idea!
And guess which companies are putting pressure on government going down this route?
This is yet another example of big boy bully companies working with government to create a monopolistic domination of the market. It is the ugly side of capitalism and works against the oft trumpeted benefits of capitalism - choice and competitive pricing.
This is yet another example of big boy bully companies working with government to create a monopolistic domination of the market. It is the ugly side of capitalism and works against the oft trumpeted benefits of capitalism - choice and competitive pricing.
Eric Mc said:
Interesting that one of the long established and simple digital software book-keeping providers, VT, has decided to opt out of developing their product for MTD. In other words, HMRC's push to get smaller businesses into digital recording of their records has actually caused a lot of smaller businesses to lose their digital book-keeping software.
Was that what the government intended?
Perhaps the developer decided to call it a day and this was a good time to do it. VT Transaction + has been developed using Visual Basic 6. This development environment is getting on for 20 years old. Microsoft ended support for this platform in 2005. That's an incredible lack of investment from the developer. in keeping the software up to date.Was that what the government intended?
You would be surprised how many (albeit very small) business clients are reluctant to pay £20+ a month for a bookkeeping system. There are tens of thousands of businesses who still give their accountant a bag of invoices once a year. To many of these the £250+ a year the software would cost is significant and they see no value from it.
I know you might say, well they would have up to date management info and a better idea of how they are performing etc etc, but the truth of it is they already know. These are plumbers, hairdressers, window cleaners etc etc. They know how they're doing from how full their diary is and how much money they have at the end of the month; a set of Xero management accounts is not useful or relevant to them, even if they understood them!
I know you might say, well they would have up to date management info and a better idea of how they are performing etc etc, but the truth of it is they already know. These are plumbers, hairdressers, window cleaners etc etc. They know how they're doing from how full their diary is and how much money they have at the end of the month; a set of Xero management accounts is not useful or relevant to them, even if they understood them!
PurpleMoonlight said:
RTI not working again this morning.
Thank goodness I ran all my monthly payrolls last week.In another news item, HMRC admits that the self employed and buy to let landlords on average understate their profits by 40%. It was always blindingly obvious to me that Self Assessment was a disaster. At long last HMRC admits it - and we now know the real reason why they are floundering around looking for an alternative system.
Any system that starts with the word "Self" is bound to encourage deceit and untruthfulness.
Eric Mc said:
In another news item, HMRC admits that the self employed and buy to let landlords on average understate their profits by 40%. It was always blindingly obvious to me that Self Assessment was a disaster. At long last HMRC admits it - and we now know the real reason why they are floundering around looking for an alternative system.
I'd be interested to know how they arrive at that "average".My guess is that included in that is all the self-employed who avoid tax entirely. I don't think proper self-employed people, registered for self-assessment, under declare profits by anything like that percentage. They know full well that HMRC has benchmarks and a lot of people are basically honest (or scared).
There is also the matter that SA taxpayers often under-claim their costs.
When you consider that any slippage re-enters the economy, probably with a 20% VAT charge, I don't think the self-employed are really a problem are they? They might however constitute an opportunity, because they are easier to scare and tax more heavily than corporations.
It's been interesting watching this thread develop.
Cheers Eric!
From the perspective of a omb, dealing with the tax authorities has seen a significant change in attitude to single traders, almost a reversing ie we now serve them, along with an element of making it up on the fly when speaking to them directly...was that fly or lie...
Add in the reluctance of some of the major banks to "continue" business accounts that generate less than their baseline income targets (ie no use of overdraft or loan/credit facilities) and it really is becoming a pia, come end of year I'm out.
#remind to send self a sms redundancy text, lol.
Cheers Eric!
From the perspective of a omb, dealing with the tax authorities has seen a significant change in attitude to single traders, almost a reversing ie we now serve them, along with an element of making it up on the fly when speaking to them directly...was that fly or lie...
Add in the reluctance of some of the major banks to "continue" business accounts that generate less than their baseline income targets (ie no use of overdraft or loan/credit facilities) and it really is becoming a pia, come end of year I'm out.
#remind to send self a sms redundancy text, lol.
So said:
I'd be interested to know how they arrive at that "average".
My guess is that included in that is all the self-employed who avoid tax entirely. I don't think proper self-employed people, registered for self-assessment, under declare profits by anything like that percentage. They know full well that HMRC has benchmarks and a lot of people are basically honest (or scared).
There is also the matter that SA taxpayers often under-claim their costs.
When you consider that any slippage re-enters the economy, probably with a 20% VAT charge, I don't think the self-employed are really a problem are they? They might however constitute an opportunity, because they are easier to scare and tax more heavily than corporations.
I actually disagree.My guess is that included in that is all the self-employed who avoid tax entirely. I don't think proper self-employed people, registered for self-assessment, under declare profits by anything like that percentage. They know full well that HMRC has benchmarks and a lot of people are basically honest (or scared).
There is also the matter that SA taxpayers often under-claim their costs.
When you consider that any slippage re-enters the economy, probably with a 20% VAT charge, I don't think the self-employed are really a problem are they? They might however constitute an opportunity, because they are easier to scare and tax more heavily than corporations.
No doubt , like with any average, there will be some who are pretty much 100% honest and some who are 100% dishonest. I would say that the 40% figure represents those who actually complete SA returns. There must be many who don't submit any sort of return at all - and as a result don't appear in the "average" calculation at all.
HMRC may have benchmarks they can apply across the board to various self employment activities. Indeed, I know they once did because they used to publish them so that traders had an idea of the type of metrics they should be achieving. These ratios etc were published in documents called Business Enterprise Notes - or BENS. We used to keep a stack of them in the office and they were very helpful. That was BEFORE Self Assessment was introduced.
Once SA came in, the BENs were abandoned. We were told by the Inland Revenue (as was) that they would have sophisticated algorithms built into the SA system that would automatically throw up wayward figures without the need for human intervention by Inland Revenue staff. This was in 1995.
I can categorically state I know of not one HMRC enquiry or investigation that was triggered by ratios, margins or other metrics that did not comply with Revenue expectations for the relevant business sector. All investigations I have come across in the 24 years of Self Assessment based submissions have been down to HMRC picking up an omission of data of which they were already aware, such as a capital disposal or a missing bank interest amount. No investigations were related to odd figures in a profit or loss account or balance sheet.
So, the promise of automatic, software generated investigations and enquiries has never materialised. This was a significant pillar of how SA was supposed to work. It obviously failed in this area, hence their lack of trust in the SA figures they receive.
Eric Mc said:
I can categorically state I know of not one HMRC enquiry or investigation that was triggered by ratios, margins or other metrics that did not comply with Revenue expectations for the relevant business sector. All investigations I have come across in the 24 years of Self Assessment based submissions have been down to HMRC picking up an omission of data of which they were already aware, such as a capital disposal or a missing bank interest amount. No investigations were related to odd figures in a profit or loss account or balance sheet.
One of our businesses underwent an 18 month full investigation by HMRC. This commence during the GFC in 2009 and, tragically, shortly after the case began, the senior partner we dealt with at our accountants died. It was superb timing.We were never told (and I'm not always sure they actually disclose) the reason the investigation was triggered, but I do recall having several, Kafkaesque conversations with the inspector about why our margins varied month on month. I explained, it was the same reason as the turnover varied and that no day, week or month were pre-planned or, the same and that, therefore, different customers, different product splits and different orders would alter margins. It took about three goes to explain this to someone who I think might have previously assumed all manufacturing and sales businesses ran like Ukranian tractor factories.
They are legally obliged to disclose the reasons why an investigation has been commenced. I always ask and they always tell. Maybe I'm good at charming them 
I'm sure there are cases where they do question submissions based on margins and other ratios. But these investigations are now quite rare - where once upon a time they were actually the most common type of investigation for self employed individuals.
In fact, most of the investigations I've been involved in since striking out on my own have been in regards to people who aren't actually self employed or buy to let landlords.
I'm sure there are cases where they do question submissions based on margins and other ratios. But these investigations are now quite rare - where once upon a time they were actually the most common type of investigation for self employed individuals.
In fact, most of the investigations I've been involved in since striking out on my own have been in regards to people who aren't actually self employed or buy to let landlords.
So said:
And out of those, how many were up to no good?
None. All down to errors or ignorance of what they needed to put on the return.Another important change to UK "taxes" has been kicked into the long grass. It just shows how significant changes to the system are just too hard to implement as they throw up all sorts of complications that were originally not envisaged. This is the second or third time the planned abolition of Class 2 NIC has been cancelled.
Hammond delays NICs overhaul
The Treasury has announced that Class 2 NICs, which were due to be scrapped next April, will now stay in place until 12 months later. The move is expected to save around £200m. Treasury officials said the delay had been caused after "legitimate concerns" were raised that self-employed workers on low incomes would see their pension entitlements and benefits hit. The LITRG said of the Treasury’s move: “This is a welcome announcement that shows the government is listening.”
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff