Making tax digital
Discussion
Ham_and_Jam said:
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.
Hi, to answer your question, they would either have been using manual records (yes, some people still write things down!), spreadsheets that they could manage, but didn't feel confident enough to link bridging software to, or they were using non MTD compliant software, such as old versions of Sage etc. Some people get set in their ways, they have a system they know and like which works for them, and are reluctant to change. 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.
A lot of people will manage so much on their own, but if it gets too much they just think 'sod this, I'll let my accountant do it'.
I had a look at this subject and thought, "Sod it, I'll get the accountant to do it and suck up the fees". A set-up fee of about £70 and then £100 a year.
Next thing I found the accountant wanted my VAT information in essentially the same format HMRC would require so I'd be paying a middle-man to act as a post box.
I ended up subscribing for TaxCalc's VAT Filer bridging software (£17.50 a year) and created an Excel spreadsheet to interact with it. The key thing is getting "totals" boxes from which the bridging software picks up relevant information. A right royal PITA but once it's done it's done.
I believe you can set up HMRC to collect VAT due by direct debit but I prefer to manage the cash flow myself.
Next thing I found the accountant wanted my VAT information in essentially the same format HMRC would require so I'd be paying a middle-man to act as a post box.
I ended up subscribing for TaxCalc's VAT Filer bridging software (£17.50 a year) and created an Excel spreadsheet to interact with it. The key thing is getting "totals" boxes from which the bridging software picks up relevant information. A right royal PITA but once it's done it's done.
I believe you can set up HMRC to collect VAT due by direct debit but I prefer to manage the cash flow myself.
The new rules are NOTHING to do with VAT MTD.
This is MTD to replace self assessment for Income Tax and National Insurance.
This is the second attempt to bring it in. George Osborne announced the plans in his 2015 Budget with a target implementation date of 5 April 2018.
The whole thing was a disaster and failed to get going. They are having a second attempt now.
This is MTD to replace self assessment for Income Tax and National Insurance.
This is the second attempt to bring it in. George Osborne announced the plans in his 2015 Budget with a target implementation date of 5 April 2018.
The whole thing was a disaster and failed to get going. They are having a second attempt now.
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.
Yes - but a bigger firm (not big 4/top 10 thankfully) - and I do cross over with tax somewhat so do so see IT/CT enquiries still. Not as many, but they're still out there. Its just another tool in their risk assessment armoury of course.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.
(Although I agree a firm of your size with a low risk profile and a good record with HMRC might not see many these days)
They want to abolish Self Assessment. It has been a total disaster in regards to HMRC's ability to review the validity of figures submitted, especially in regards to sole trader accounts and profits.
This is the reason why they want this version of MTD implemented.
They think that uploading a business' entire book-keeping data to HMRC every three months will ensure they get accurate accounting information from sole traders.
They are very naive.
This is the reason why they want this version of MTD implemented.
They think that uploading a business' entire book-keeping data to HMRC every three months will ensure they get accurate accounting information from sole traders.
They are very naive.
LeighW said:
Hi, to answer your question, they would either have been using manual records (yes, some people still write things down!), spreadsheets that they could manage, but didn't feel confident enough to link bridging software to, or they were using non MTD compliant software, such as old versions of Sage etc. Some people get set in their ways, they have a system they know and like which works for them, and are reluctant to change.
A lot of people will manage so much on their own, but if it gets too much they just think 'sod this, I'll let my accountant do it'.
Thanks for the reply. I guess for many they don’t realise just how close they were to completing the process already. A lot of people will manage so much on their own, but if it gets too much they just think 'sod this, I'll let my accountant do it'.
As you say though, there is definitely a number of people who just don’t do technology. I get that. I would have thought that these people are very much your bread and butter though. They will always rely heavily on their accountants.
Eric Mc said:
They want to abolish Self Assessment. It has been a total disaster in regards to HMRC's ability to review the validity of figures submitted, especially in regards to sole trader accounts and profits.
This is the reason why they want this version of MTD implemented.
They think that uploading a business' entire book-keeping data to HMRC every three months will ensure they get accurate accounting information from sole traders.
They are very naive.
I hear your frustrations Eric, but what wil be will be. The current plan might be a pigs ear of how to solve the digital migration, but it’s going to happen, either in its current form or another.This is the reason why they want this version of MTD implemented.
They think that uploading a business' entire book-keeping data to HMRC every three months will ensure they get accurate accounting information from sole traders.
They are very naive.
As an accountant / practice, surely there’s an opportunity for more business. Whether its helping the smallist businesses to digitally submit their returns, or partnering with some of the software companies and flogging their MTD software.
Change can be a pain in the arse, but it can also bring opportunities.
Eric Mc said:
They think that uploading a business' entire book-keeping data to HMRC every three months will ensure they get accurate accounting information from sole traders.
I may be missing the point but the impression I get is HMRC like the idea of the books being "frozen" right from the outset. There's no opportunity to sling figures on a tax return and then scrabble around sorting out the detail if and when HMRC start asking awkward questions.The amount of time HMRC will need to spend on an investigation will be dramatically reduced, making them easier and perhaps more frequent. In recent years the chance of HMRC asking awkward questions seems to have become very small indeed. The need to find a big discrepancy to justify the cost of their work. I suspect "fear of investigation" raises a lot more tax than "actual investigation", so keep taxpayers awake and paying attention.
rockin said:
I may be missing the point but the impression I get is HMRC like the idea of the books being "frozen" right from the outset. There's no opportunity to sling figures on a tax return and then scrabble around sorting out the detail if and when HMRC start asking awkward questions.
The amount of time HMRC will need to spend on an investigation will be dramatically reduced, making them easier and perhaps more frequent. In recent years the chance of HMRC asking awkward questions seems to have become very small indeed. The need to find a big discrepancy to justify the cost of their work. I suspect "fear of investigation" raises a lot more tax than "actual investigation", so keep taxpayers awake and paying attention.
HMRC spend almost no time in investigations - and with this system they will spend even less.The amount of time HMRC will need to spend on an investigation will be dramatically reduced, making them easier and perhaps more frequent. In recent years the chance of HMRC asking awkward questions seems to have become very small indeed. The need to find a big discrepancy to justify the cost of their work. I suspect "fear of investigation" raises a lot more tax than "actual investigation", so keep taxpayers awake and paying attention.
My prediction is that it will fail at the implantation point, just like the previous attempt did.
It is a nonsense.
Eric Mc said:
HMRC spend almost no time in investigations - and with this system they will spend even less.
My prediction is that it will fail at the implantation point, just like the previous attempt did.
It is a nonsense.
When did the previous attempt fail? They switched to VAT first at an early stage in the programme as VAT was already aligned with quarterly reporting for most VAT registered businesses. The Income Tax pilot was launched in April 2018 and has been running at a very small scale while most of the focus was on VAT.My prediction is that it will fail at the implantation point, just like the previous attempt did.
It is a nonsense.
Eric Mc said:
HMRC spend almost no time in investigations -
Exactly, at the moment the process is so costly for HMRC that the chance of them coming out with a net profit is very small. Hence - try to keep taxpayers scared of investigations while carrying out as few as possible. Some accountants try to sell "investigation protection cover" to clients so that in the unlikely event of an HMRC investigation taking place it won't cost the client a fortune. However, my logic is simple - if your books are properly in order there's no reason for an investigation to result in outrageous expense!
ninja-lewis said:
When did the previous attempt fail? They switched to VAT first at an early stage in the programme as VAT was already aligned with quarterly reporting for most VAT registered businesses. The Income Tax pilot was launched in April 2018 and has been running at a very small scale while most of the focus was on VAT.
The proposed MTD system for self employed individuals, partnerships and partners and landlords, i.e. the requirement to upload quarterly book-keeping and accounting data to HMRC, was supposed to have come into effect for tax year 2018/19. It patently didn't - because of the fact that there were multiple objections from the affected parties.People like you were extolling its virtues and claiming that those who opposed it were some kind of idiot luddites. Well, that first attempt fell flat on its face because it was completely cockeyed and unworkable. Little has happened since April 2018 that indicates to me that another attempt will be any more successful.
Eric Mc said:
The sole trader will need to submit four quarterly downloads of his entire bookkeeping transactions to HMRC.
MTD is not SAF-T. People only submit the totals. It is true that sole traders will submit four quarterly summaries (like the VAT). Also if there are adjustments to be made annually those will be submitted. However, the way the system works (and it is live now for some people) is that taxpayers build up their return in HMRC's systems by making a number of submissions and/or amending those submissions.They only need to amend submissions if there are errors, however.
The key to all of this is in fact the digital link that creates an electronic audit trail from the original transactions to the totals submitted to HMRC.
Declaration of interest: I write MTD software.
Eric Mc said:
The proposed MTD system for self employed individuals, partnerships and partners and landlords, i.e. the requirement to upload quarterly book-keeping and accounting data to HMRC, was supposed to have come into effect for tax year 2018/19. It patently didn't - because of the fact that there were multiple objections from the affected parties.
I don't think there has been a massive change from the original proposal to this. HMRC put a lot of resource into preparing for Brexit and that reduced the resource available for this. It is still not all written by HMRC although it does work for a limited number of categories of taxpayers.It was sensible for HMRC to concentrate on VAT as that enables people to learn on what is a relatively simple tax. ITSA is a more complex tax.
We wrote our own API interface from our internal system to MTD VAT - we were one of the smallest companies who did it... simple conclusion - lovely people who were always helpful, dreadful coding and worse documentation - so much so that we will probably move to another method at some point...
HMRC should not be writing code!
HMRC should not be writing code!
akirk said:
dreadful coding and worse documentation -
HMRC are subcontracting as far as I know. I have heard of who to, but it was not important enough to me for me to remember. However, I don't agree with the statement "dreadful coding" or "worse documentation". How specifically would you substantiate that argument?johnhemming said:
MTD is not SAF-T. People only submit the totals. It is true that sole traders will submit four quarterly summaries (like the VAT). Also if there are adjustments to be made annually those will be submitted. However, the way the system works (and it is live now for some people) is that taxpayers build up their return in HMRC's systems by making a number of submissions and/or amending those submissions.
They only need to amend submissions if there are errors, however.
The key to all of this is in fact the digital link that creates an electronic audit trail from the original transactions to the totals submitted to HMRC.
Declaration of interest: I write MTD software.
Still a heck of a lot more work for many people.They only need to amend submissions if there are errors, however.
The key to all of this is in fact the digital link that creates an electronic audit trail from the original transactions to the totals submitted to HMRC.
Declaration of interest: I write MTD software.
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