Making tax digital
Discussion
Eric Mc said:
Setting up for MTD would have involved you getting new Government Gateway access codes etc.
Interesting. I signed up for MTD in September, got the confirmation email, but no new codes. I will be filing my first return under MTD in the next week or so. Could be interesting!Ugh.
Just got a letter from HMRC saying they didn't receive my submission for the last quarter of 2019. Eventually figured out how to log in, in a browser that works, to the kludge of a system my accountants use.
It seems, somehow I'd managed to populate the VAT calculations spreadsheet, then the spreadsheet to submit to their bridging software, then upload that to the bridging portal, but somehow just missed the final submission button.
That never happened with the much more straightforward system that already worked and everyone else was using in the same way.
Just got a letter from HMRC saying they didn't receive my submission for the last quarter of 2019. Eventually figured out how to log in, in a browser that works, to the kludge of a system my accountants use.
It seems, somehow I'd managed to populate the VAT calculations spreadsheet, then the spreadsheet to submit to their bridging software, then upload that to the bridging portal, but somehow just missed the final submission button.
That never happened with the much more straightforward system that already worked and everyone else was using in the same way.
I've been having a terrible time getting one of my clients set up for VAT MTD. We tried again yesterday for about the third time (over a 9 month period). We can only get to a certain point in the registration process before the HMRC website keeps telling us the the VAT number being entered did not match their records. The client has been registered for VAT since 1989.
Eventually, we phoned HMRC to see what on earth was going on. The chap at HMRC was very helpful but in the end couldn't do anything. He is pretty sure that the problem is at the HMRC end of the process and gave us a "case number" and they will look into what the problem is.
When we first spoke to the HMRC chap, he asked if the business was a partnership or LLP. We said "No, it's a limited company". He then said that the records did not show it as a limited company. The company started life as a partnership but switched to being a limited company about 15 years ago. At that point, the old partnership VAT number was transferred to the new limited company - something which is perfectly legitimate. All ordinary paper correspondence from HMRC in respect of VAT that point in time has always shown the business as a limited company.
HOWEVER, my theory is that, in setting up the VAT MTD system at their end, HMRC has transferred old legacy data about ALL VAT registered businesses into their new software and, somehow, the data they have transferred for this business was based on its original VAT registration as a partnership in 1989.
Therefore, when the current limited company tries to switch to VAT MTD, the HMRC system does not recognise the business as a limited company and thinks it is still a partnership - at which point the registration process stalls.
Eventually, we phoned HMRC to see what on earth was going on. The chap at HMRC was very helpful but in the end couldn't do anything. He is pretty sure that the problem is at the HMRC end of the process and gave us a "case number" and they will look into what the problem is.
When we first spoke to the HMRC chap, he asked if the business was a partnership or LLP. We said "No, it's a limited company". He then said that the records did not show it as a limited company. The company started life as a partnership but switched to being a limited company about 15 years ago. At that point, the old partnership VAT number was transferred to the new limited company - something which is perfectly legitimate. All ordinary paper correspondence from HMRC in respect of VAT that point in time has always shown the business as a limited company.
HOWEVER, my theory is that, in setting up the VAT MTD system at their end, HMRC has transferred old legacy data about ALL VAT registered businesses into their new software and, somehow, the data they have transferred for this business was based on its original VAT registration as a partnership in 1989.
Therefore, when the current limited company tries to switch to VAT MTD, the HMRC system does not recognise the business as a limited company and thinks it is still a partnership - at which point the registration process stalls.
Eric Mc said:
To me, it indicates that such problems will recur over the forthcoming years as software systems and apps get upgraded and MTD based software has to hop and jump about to keep everything compatible.
As you say, fun and games - without end.
Having listened to your comments on the subject I deregistered from VAT this time last year after about 20 years registered.As you say, fun and games - without end.
Thank you very much for your contribution as I feel I've dodged a fairly serious bullet here.
Great news - as if businesses don't have enough to deal with, the good old treasury are pushing on with MTD, with it extending to all VAT registered businesses from April '22, and for all self-assessment tax payers with income over £10k too from April '23. Muppets. 
https://www.accountancydaily.co/finance-bill-2020-...
https://www.accountancydaily.co/finance-bill-2020-...
LeighW said:
Great news - as if businesses don't have enough to deal with, the good old treasury are pushing on with MTD, with it extending to all VAT registered businesses from April '22, and for all self-assessment tax payers with income over £10k too from April '23. Muppets.
https://www.accountancydaily.co/finance-bill-2020-...
To be fair I really like it now - it's fairly simple and painless and I can more easily see dates and past returns.https://www.accountancydaily.co/finance-bill-2020-...
It was a pain to set up though and I did have to upgrade the version of Excel that I had installed to do this.
ETA : I just use this add-on in Excel https://vitaltax.uk other choices are available - depending on the size of your business etc.
Edited by eps on Wednesday 22 July 16:59
LeighW said:
Great news - as if businesses don't have enough to deal with, the good old treasury are pushing on with MTD, with it extending to all VAT registered businesses from April '22, and for all self-assessment tax payers with income over £10k too from April '23. Muppets.
https://www.accountancydaily.co/finance-bill-2020-...
If you can't get ready for MTD on those timescales, maybe you shouldn't be running a business?https://www.accountancydaily.co/finance-bill-2020-...
Its not that complicated.
LeighW said:
Great news - as if businesses don't have enough to deal with, the good old treasury are pushing on with MTD, with it extending to all VAT registered businesses from April '22, and for all self-assessment tax payers with income over £10k too from April '23. Muppets.
https://www.accountancydaily.co/finance-bill-2020-...
I think the fear of doing something is often worse than actually doing it.https://www.accountancydaily.co/finance-bill-2020-...
I was skeptical when it was first proposed, mainly as I just saw the software companies cashing in on pushing their subscription based software.
I ultimately found a great MTD bridging solution. I export my quarterly VAT report from Quickbooks desktop in an excel file. Open that up in the MTD software and press submit. Done.
Very easy and quicker than typing the numbers in the old HMRC website.
The problem is that it involves too much reporting.
This is a typical scenario -
Sole trader with a rental property.
The sole trader will need to submit four quarterly downloads of his entire bookkeeping transactions to HMRC.
After 12 months, he also submits an annual "reconciliation" submission correcting all the errors that will have been included in the quarterly submissions. It is also at this point that the trader will make his annual claims that UK tax law only allows to be made annually, such as loss reliefs or Capital Allowances.
The individual will also need to do the exact same, in a set of separate quarterly and annual submissions, to cover his rental income.
So far, you can see that the individual will be making TEN submissions to HMRC to cover his trading and landlord income and relief claims.
Finally, and completely the opposite of what Chancellor George Osborne announced when he revealed his plans for digital taxation in his 2015 Budget, the individual will STILL need to complete what amounts to a Self Assessment tax return covering EVERYTHING he has already submitted PLUS all the ancillary information about other income (salaries, interest, dividends,etc) that he may have in the year.
So, that makes 11 submissions - replacing 1.
A representative from the Farmers Association told the House of Lords Committee, when they were investigating the previous attempt at this cockeyed system, stated that some farmers will need to be submitting over 20 returns to HMRC on an annual basis (and that is ignoring VAT returns, PAYE returns or returns relating to other government requirements).
The first attempt at introducing the MTD system was cancelled (it should have started on 5 April 2018). It was dumb then and it is dumb now.
This is a typical scenario -
Sole trader with a rental property.
The sole trader will need to submit four quarterly downloads of his entire bookkeeping transactions to HMRC.
After 12 months, he also submits an annual "reconciliation" submission correcting all the errors that will have been included in the quarterly submissions. It is also at this point that the trader will make his annual claims that UK tax law only allows to be made annually, such as loss reliefs or Capital Allowances.
The individual will also need to do the exact same, in a set of separate quarterly and annual submissions, to cover his rental income.
So far, you can see that the individual will be making TEN submissions to HMRC to cover his trading and landlord income and relief claims.
Finally, and completely the opposite of what Chancellor George Osborne announced when he revealed his plans for digital taxation in his 2015 Budget, the individual will STILL need to complete what amounts to a Self Assessment tax return covering EVERYTHING he has already submitted PLUS all the ancillary information about other income (salaries, interest, dividends,etc) that he may have in the year.
So, that makes 11 submissions - replacing 1.
A representative from the Farmers Association told the House of Lords Committee, when they were investigating the previous attempt at this cockeyed system, stated that some farmers will need to be submitting over 20 returns to HMRC on an annual basis (and that is ignoring VAT returns, PAYE returns or returns relating to other government requirements).
The first attempt at introducing the MTD system was cancelled (it should have started on 5 April 2018). It was dumb then and it is dumb now.
Eric Mc said:
The problem is that it involves too much reporting.
This is a typical scenario -
Sole trader with a rental property.
The sole trader will need to submit four quarterly downloads of his entire bookkeeping transactions to HMRC.
After 12 months, he also submits an annual "reconciliation" submission correcting all the errors that will have been included in the quarterly submissions. It is also at this point that the trader will make his annual claims that UK tax law only allows to be made annually, such as loss reliefs or Capital Allowances.
The individual will also need to do the exact same, in a set of separate quarterly and annual submissions, to cover his rental income.
So far, you can see that the individual will be making TEN submissions to HMRC to cover his trading and landlord income and relief claims.
Finally, and completely the opposite of what Chancellor George Osborne announced when he revealed his plans for digital taxation in his 2015 Budget, the individual will STILL need to complete what amounts to a Self Assessment tax return covering EVERYTHING he has already submitted PLUS all the ancillary information about other income (salaries, interest, dividends,etc) that he may have in the year.
So, that makes 11 submissions - replacing 1.
A representative from the Farmers Association told the House of Lords Committee, when they were investigating the previous attempt at this cockeyed system, stated that some farmers will need to be submitting over 20 returns to HMRC on an annual basis (and that is ignoring VAT returns, PAYE returns or returns relating to other government requirements).
The first attempt at introducing the MTD system was cancelled (it should have started on 5 April 2018). It was dumb then and it is dumb now.
Eric, completely agree and this 'drip feeding' of different people having to be MTD-compliant is frustrating. I previously worked for a big accounting software company and the first tranche of MTD legislation created so much hassle for bookkeepers and accountants as you went from a (fairly) universal reporting system to different VAT customers having to file in different ways. This will just resurface all those original headaches and also mean that accountants will be absolutely hammered with sales calls from companies looking to sell them MTD products once again, and then a year or two later for the SA100 clients. This is a typical scenario -
Sole trader with a rental property.
The sole trader will need to submit four quarterly downloads of his entire bookkeeping transactions to HMRC.
After 12 months, he also submits an annual "reconciliation" submission correcting all the errors that will have been included in the quarterly submissions. It is also at this point that the trader will make his annual claims that UK tax law only allows to be made annually, such as loss reliefs or Capital Allowances.
The individual will also need to do the exact same, in a set of separate quarterly and annual submissions, to cover his rental income.
So far, you can see that the individual will be making TEN submissions to HMRC to cover his trading and landlord income and relief claims.
Finally, and completely the opposite of what Chancellor George Osborne announced when he revealed his plans for digital taxation in his 2015 Budget, the individual will STILL need to complete what amounts to a Self Assessment tax return covering EVERYTHING he has already submitted PLUS all the ancillary information about other income (salaries, interest, dividends,etc) that he may have in the year.
So, that makes 11 submissions - replacing 1.
A representative from the Farmers Association told the House of Lords Committee, when they were investigating the previous attempt at this cockeyed system, stated that some farmers will need to be submitting over 20 returns to HMRC on an annual basis (and that is ignoring VAT returns, PAYE returns or returns relating to other government requirements).
The first attempt at introducing the MTD system was cancelled (it should have started on 5 April 2018). It was dumb then and it is dumb now.
Eric Mc said:
The problem is that it involves too much reporting.
This is a typical scenario -
Sole trader with a rental property.
The sole trader will need to submit four quarterly downloads of his entire bookkeeping transactions to HMRC.
After 12 months, he also submits an annual "reconciliation" submission correcting all the errors that will have been included in the quarterly submissions. It is also at this point that the trader will make his annual claims that UK tax law only allows to be made annually, such as loss reliefs or Capital Allowances.
The individual will also need to do the exact same, in a set of separate quarterly and annual submissions, to cover his rental income.
So far, you can see that the individual will be making TEN submissions to HMRC to cover his trading and landlord income and relief claims.
Finally, and completely the opposite of what Chancellor George Osborne announced when he revealed his plans for digital taxation in his 2015 Budget, the individual will STILL need to complete what amounts to a Self Assessment tax return covering EVERYTHING he has already submitted PLUS all the ancillary information about other income (salaries, interest, dividends,etc) that he may have in the year.
So, that makes 11 submissions - replacing 1.
A representative from the Farmers Association told the House of Lords Committee, when they were investigating the previous attempt at this cockeyed system, stated that some farmers will need to be submitting over 20 returns to HMRC on an annual basis (and that is ignoring VAT returns, PAYE returns or returns relating to other government requirements).
The first attempt at introducing the MTD system was cancelled (it should have started on 5 April 2018). It was dumb then and it is dumb now.
Nail on head Eric. As for the 'it's not that hard' comment, well no, for VAT maybe it isn't. It is however, pretty pointless. For self-assessment? I deal with many, many self-employed people, my accountancy practice has almost three hundred clients, and I can tell you that this is pretty much unworkable. Not every self-employed person is tech savvy (by a long shot!), not everyone wants to spend their time doing admin when it could be better spent earning money. This means they'll need to pay someone to do it for them. There aren't enough accountants or book-keepers in the land! And for what purpose? HMRC claim it is to reduce errors. Don't make me laugh. This is a typical scenario -
Sole trader with a rental property.
The sole trader will need to submit four quarterly downloads of his entire bookkeeping transactions to HMRC.
After 12 months, he also submits an annual "reconciliation" submission correcting all the errors that will have been included in the quarterly submissions. It is also at this point that the trader will make his annual claims that UK tax law only allows to be made annually, such as loss reliefs or Capital Allowances.
The individual will also need to do the exact same, in a set of separate quarterly and annual submissions, to cover his rental income.
So far, you can see that the individual will be making TEN submissions to HMRC to cover his trading and landlord income and relief claims.
Finally, and completely the opposite of what Chancellor George Osborne announced when he revealed his plans for digital taxation in his 2015 Budget, the individual will STILL need to complete what amounts to a Self Assessment tax return covering EVERYTHING he has already submitted PLUS all the ancillary information about other income (salaries, interest, dividends,etc) that he may have in the year.
So, that makes 11 submissions - replacing 1.
A representative from the Farmers Association told the House of Lords Committee, when they were investigating the previous attempt at this cockeyed system, stated that some farmers will need to be submitting over 20 returns to HMRC on an annual basis (and that is ignoring VAT returns, PAYE returns or returns relating to other government requirements).
The first attempt at introducing the MTD system was cancelled (it should have started on 5 April 2018). It was dumb then and it is dumb now.
LeighW said:
Great news - as if businesses don't have enough to deal with, the good old treasury are pushing on with MTD, with it extending to all VAT registered businesses from April '22, and for all self-assessment tax payers with income over £10k too from April '23. Muppets.
https://www.accountancydaily.co/finance-bill-2020-...
https://assets.publishing.service.gov.uk/governmen...https://www.accountancydaily.co/finance-bill-2020-...
Individuals and Small Businesses not paying £13.4 billion tax they should have done. Perhaps that is the incentive for the government to do this...
Further to Eric and Leigh's comments above - with the 11 submissions, how long do we expect it to be before HMRC start using their computer systems to identify potential enquiries, based upon the amount of adjustments/differences between the year end and the interim submissions.
I'm just waiting for the enquiries to land - and someone is going to have to pay for that!
It's going to lead to an interesting few years for the profession, first covid, then this will change the way we need to work more than most people think it will at the moment, we are going to have to be involved on a monthly basis I would say, effectively all the firms that have just focused on doing work at the year end are going to effectively have to catch up with a whole years work by then, as well as educate clients, make sure they are registered properly and the systems work..
I'm just waiting for the enquiries to land - and someone is going to have to pay for that!
It's going to lead to an interesting few years for the profession, first covid, then this will change the way we need to work more than most people think it will at the moment, we are going to have to be involved on a monthly basis I would say, effectively all the firms that have just focused on doing work at the year end are going to effectively have to catch up with a whole years work by then, as well as educate clients, make sure they are registered properly and the systems work..
bigles said:
Further to Eric and Leigh's comments above - with the 11 submissions, how long do we expect it to be before HMRC start using their computer systems to identify potential enquiries, based upon the amount of adjustments/differences between the year end and the interim submissions.
I'm just waiting for the enquiries to land - and someone is going to have to pay for that!
It's going to lead to an interesting few years for the profession, first covid, then this will change the way we need to work more than most people think it will at the moment, we are going to have to be involved on a monthly basis I would say, effectively all the firms that have just focused on doing work at the year end are going to effectively have to catch up with a whole years work by then, as well as educate clients, make sure they are registered properly and the systems work..
Are you in an accountancy practice? If so, out of interest, when was the last time a client of yours had an investigation for income tax or corp tax? I can't remember the last time we had one, literally years ago. I'm just waiting for the enquiries to land - and someone is going to have to pay for that!
It's going to lead to an interesting few years for the profession, first covid, then this will change the way we need to work more than most people think it will at the moment, we are going to have to be involved on a monthly basis I would say, effectively all the firms that have just focused on doing work at the year end are going to effectively have to catch up with a whole years work by then, as well as educate clients, make sure they are registered properly and the systems work..
How will it affect me personally? Well, the continual reporting will make it even more difficult to take holiday - I can only ever manage to take one week off at a time now (there are only four staff in my office). Since the introduction of MTD for VAT, we have ended up filing VAT for another thirty or so clients, who before that managed to file their own VAT returns just fine.
LeighW said:
Are you in an accountancy practice? If so, out of interest, when was the last time a client of yours had an investigation for income tax or corp tax? I can't remember the last time we had one, literally years ago.
How will it affect me personally? Well, the continual reporting will make it even more difficult to take holiday - I can only ever manage to take one week off at a time now (there are only four staff in my office). Since the introduction of MTD for VAT, we have ended up filing VAT for another thirty or so clients, who before that managed to file their own VAT returns just fine.
I’m genuinely interested in understanding how people who use to file their own VAT can no longer do so with MTD.How will it affect me personally? Well, the continual reporting will make it even more difficult to take holiday - I can only ever manage to take one week off at a time now (there are only four staff in my office). Since the introduction of MTD for VAT, we have ended up filing VAT for another thirty or so clients, who before that managed to file their own VAT returns just fine.
The reason I ask is that previous to MTD, you still had to have your VAT calcs worked out. I’m assuming these would have been using a bookkeeping software or a spreadsheet.
Having gone that far, your 99% the way there to filing your VAT using MTD.
Plonk the values in a spreadsheet (if it isn’t already in one), open them up in a MTD bridging software and submit. A quick Google will bring up literally hundreds of solutions and how to’s.
Aside from that, as an accountant, are you not happy for the extra customers coming for your services? Surely you charge an appropriate amount to make profit on all the extra work these changes bring.
As a business owner myself, I also haven’t taken more than 1 weeks holiday at any given time. It just isn’t possible, even with the great staff I have, so that isn’t an issue just specifical to accountants!
Don't assume everybody is like you.
That is one of the greatest failings of humanity. Just because you can do something and find it easy does not mean others do.
As accountants in practice, we deal with a whole array of people - some technically and IT comptetent, others not so.
Those who are not so relay heavilly on their accountants to help them in matters such as this. The problem is that these clients will want their accountant to take on board these filing requirements over and above what they do already. I don't want to be doing this. It eats into my already pressurised time, it creates HUNDREDS of additional deadlines in a calendar year - with all their related penalties and interest charges for failure to meet - coupled with possible professional liability and legal issues regarding responsibility for data submitted on behalf of clients.
If I have 20 clients who want me to submit their VAT MTD for them, all with different quarter periods, that means virtually EVERY month of the year I will have multiple VAT MTDs to file - and that's before we start looking at MTD for Income Tax and NI.
It just becomes impossible to administer and wrecks the system.
I cannot see this working in any way at all. It fell on its face last time it was proposed and will do so again.
That is one of the greatest failings of humanity. Just because you can do something and find it easy does not mean others do.
As accountants in practice, we deal with a whole array of people - some technically and IT comptetent, others not so.
Those who are not so relay heavilly on their accountants to help them in matters such as this. The problem is that these clients will want their accountant to take on board these filing requirements over and above what they do already. I don't want to be doing this. It eats into my already pressurised time, it creates HUNDREDS of additional deadlines in a calendar year - with all their related penalties and interest charges for failure to meet - coupled with possible professional liability and legal issues regarding responsibility for data submitted on behalf of clients.
If I have 20 clients who want me to submit their VAT MTD for them, all with different quarter periods, that means virtually EVERY month of the year I will have multiple VAT MTDs to file - and that's before we start looking at MTD for Income Tax and NI.
It just becomes impossible to administer and wrecks the system.
I cannot see this working in any way at all. It fell on its face last time it was proposed and will do so again.
Eric Mc said:
Don't assume everybody is like you.
That is one of the greatest failings of humanity. Just because you can do something and find it easy does not mean others do.
As accountants in practice, we deal with a whole array of people - some technically and IT comptetent, others not so.
Those who are not so relay heavilly on their accountants to help them in matters such as this. The problem is that these clients will want their accountant to take on board these filing requirements over and above what they do already. I don't want to be doing this. It eats into my already pressurised time, it creates HUNDREDS of additional deadlines in a calendar year - with all their related penalties and interest charges for failure to meet - coupled with possible professional liability and legal issues regarding responsibility for data submitted on behalf of clients.
If I have 20 clients who want me to submit their VAT MTD for them, all with different quarter periods, that means virtually EVERY month of the year I will have multiple VAT MTDs to file - and that's before we start looking at MTD for Income Tax and NI.
It just becomes impossible to administer and wrecks the system.
I cannot see this working in any way at all. It fell on its face last time it was proposed and will do so again.
Eric, I certainly don’t think like that at all. There are certain tasks (lots actually) that I can’t do!! So I’m not pointing fingers, or bigging myself up.That is one of the greatest failings of humanity. Just because you can do something and find it easy does not mean others do.
As accountants in practice, we deal with a whole array of people - some technically and IT comptetent, others not so.
Those who are not so relay heavilly on their accountants to help them in matters such as this. The problem is that these clients will want their accountant to take on board these filing requirements over and above what they do already. I don't want to be doing this. It eats into my already pressurised time, it creates HUNDREDS of additional deadlines in a calendar year - with all their related penalties and interest charges for failure to meet - coupled with possible professional liability and legal issues regarding responsibility for data submitted on behalf of clients.
If I have 20 clients who want me to submit their VAT MTD for them, all with different quarter periods, that means virtually EVERY month of the year I will have multiple VAT MTDs to file - and that's before we start looking at MTD for Income Tax and NI.
It just becomes impossible to administer and wrecks the system.
I cannot see this working in any way at all. It fell on its face last time it was proposed and will do so again.
It was a genuine question, as Leighw said that his clients were filing there VAT perfectly well before MTD.
So these people were not relying on there accountants prior to the change. Given this information I was just couldn’t see how the extra step made much difference.
I get that some groups don’t do any form of IT, or simply don’t understand. That’s what you guys are there for.
As for the wider implications and forecoming changes to MTD, I’ll take them one step at a time. Change is always going to be filled with trepidation. I’m sure in your world you’ll be impacted more than me. I have two separate VAT registered business and other property interests so I will have to keep abreast of these thing aswell.
Anyway, wasn’t meant to be a criticism, more to understand and give my point of view.
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