Making tax digital
Discussion
Committee of MPs now issuing warnings about the failure of MTD -
https://www.accountingweb.co.uk/tech/tech-pulse/mp...
https://www.accountingweb.co.uk/tech/tech-pulse/mp...
Eric Mc said:
Committee of MPs now issuing warnings about the failure of MTD -
https://www.accountingweb.co.uk/tech/tech-pulse/mp...
As per my post last Friday.https://www.accountingweb.co.uk/tech/tech-pulse/mp...
Eric Mc said:
How long before MTD gets canned?
A good question.IMO a significant part of the issue is very basic indeed - what does "making tax digital" actually mean? I don't mean what do the words mean; I mean what does the concept mean.
I anticipate the greatest hurdle to any "electronification" of taxes is the absurd complexity of UK tax system. This is highlighted by the complexity of individual tax affairs where different concepts interact. The "bonkers band" from £100k to £125k is a classic example, having a special definition of "adjusted net income" and allowances coming and going.
Many of the various stealth taxes just make everything harder to follow. Which is, of course, the whole point of them.
Panamax said:
Eric Mc said:
How long before MTD gets canned?
A good question.IMO a significant part of the issue is very basic indeed - what does "making tax digital" actually mean? I don't mean what do the words mean; I mean what does the concept mean.
I anticipate the greatest hurdle to any "electronification" of taxes is the absurd complexity of UK tax system. This is highlighted by the complexity of individual tax affairs where different concepts interact. The "bonkers band" from £100k to £125k is a classic example, having a special definition of "adjusted net income" and allowances coming and going.
Many of the various stealth taxes just make everything harder to follow. Which is, of course, the whole point of them.
- reduction in staffing costs by having electronic delivery
- ability to collect more taxes through better knowledge / knowing the detail of everyone's accounts
I can't see how the first is true in reality (certainly not with VAT where HMRC still received the figures digitally and MTD has made no effective difference at all...
so, the key reason must be a desire to get to the point where they know / control all the financial data...
can't possibly see anything going wrong with that - and it totally misses the point that anyone who wishes to be dodgy will simply ensure that they feed in fake figures - not sure how HMRC believe that MTD will suddenly mean that all those cash businesses will start reporting all those transactions digitally etc. so all it will effectively do is penalise the honest folks by making their lives more complicated!
akirk said:
presumably there are only two possible drivers for HMRC:
- reduction in staffing costs by having electronic delivery
- ability to collect more taxes through better knowledge / knowing the detail of everyone's accounts
I can't see how the first is true. With VAT HMRC still received the figures digitally and MTD has made no difference at all.
So, the key reason must be a desire to get to the point where they know / control all the financial data...!
Agreed. I think their ultimate objective would be to "look through" the interface and sniff around inside peoples' books of account just as if they were doing a tax audit. - reduction in staffing costs by having electronic delivery
- ability to collect more taxes through better knowledge / knowing the detail of everyone's accounts
I can't see how the first is true. With VAT HMRC still received the figures digitally and MTD has made no difference at all.
So, the key reason must be a desire to get to the point where they know / control all the financial data...!
The original concept, as oulined in 2015, was that small businesses (sole traders, partnerships, buy to let landlords etc) would upload to HMRC, every quarter, their entire book-keeping data for the relevant quarter.
Therefore, in theory, HMRC would automatically have in their records absolutely EVERY transaction recorded by the business in any given trading period.
The crazy thing is that they would not be able to do anything practical with that data UNTIL final, annuallised figures were submitted with accounting corrections, capital allowance claims, loss relief claims etc submitted separately.
In other words, despite George Osborne's claim that the annual tax return would be abolished by quarterly submissions, in reality, it couldn't be as quarterly data on its own is not enough to arrive at taxable profits. Annual summaries will always be required.
As mentioned above, if they wanted to open a tax inquiry (we don't have tax "audits" in the UK) they have all the information they need to hand.
Therefore, in theory, HMRC would automatically have in their records absolutely EVERY transaction recorded by the business in any given trading period.
The crazy thing is that they would not be able to do anything practical with that data UNTIL final, annuallised figures were submitted with accounting corrections, capital allowance claims, loss relief claims etc submitted separately.
In other words, despite George Osborne's claim that the annual tax return would be abolished by quarterly submissions, in reality, it couldn't be as quarterly data on its own is not enough to arrive at taxable profits. Annual summaries will always be required.
As mentioned above, if they wanted to open a tax inquiry (we don't have tax "audits" in the UK) they have all the information they need to hand.
none of which acknowledges the fact that any dodgy business out there runs two sets of books anyway - the point at which dodgy behaviour / fraud takes place is not in finalising the accounts from a set of otherwise accurate figures, it is in choosing what those figures are in the first place...
ahh - but we will have the bank accounts - yes the bank account that is acknowledged, submitted, etc. - not any of the others, or the cash accounts, or etc...
there is a huge danger in over-controlling data in that in their hubris the data controllers (HMRC) believe that they know everything, whereas the dodgy folks have simply given them the picture they want them to see and established it more formally as the official picture!
ahh - but we will have the bank accounts - yes the bank account that is acknowledged, submitted, etc. - not any of the others, or the cash accounts, or etc...
there is a huge danger in over-controlling data in that in their hubris the data controllers (HMRC) believe that they know everything, whereas the dodgy folks have simply given them the picture they want them to see and established it more formally as the official picture!
Eric Mc said:
Politicians have a naive view that the best way to prevent crime is to create more law or regulations.
Only one point you missed there. We need to send more people to jail and give them longer sentences - so they can be let out even earlier to reduce prison overcrowding.As you suggest, there's a distinct lack of joined-up thinking.
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