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  • FIRST POST
    • WEEN_NASTY
    • By WEEN_NASTY 11th Oct 16, 10:26 AM
    • 47Posts
    • 15Thanks
    WEEN_NASTY
    Making Tax Digital
    • #1
    • 11th Oct 16, 10:26 AM
    Making Tax Digital 11th Oct 16 at 10:26 AM
    Just wondered how many of you out there are aware of HMRC's Making Tax Digital plans?
    From 2018 to 2020 all businesses, including self employed, rental and companies will be required to use accounting software and make 4 quarterly submissions and one final submission annually instead of the current one return.
    The government have driven the plan to reduce the £6.4b tax gap which they say is primarily caused by non agent using taxpayer errors. They believe the new system will reduce errors although errors work both ways and errors one way would suggest evasion.
    Many small businesses and accountants are horrified at the proposals. Government legislation has brought in a raft of red tape recently including payroll RTI and workplace pensions. Many people lack the digital skills and time to use digital tools. They are busy trying to survive in volatile times.
    The government are stubbornly progressing with their plans despite warnings by The Treasury Select Committee, ABAB, Ex HMRC Management and heads of taxation at CIOT and ACCA.
    The big problem is that no one appears to have heard of this. It is the biggest change in the tax system since 1945 and has the potential to cause distress and cost (new IT, software subs and accountants fees) to £5.3 million businesses.
    Small businesses account for 60% of private sector employment and turnover of combined £1.8 trillion. Why is our government trying to disrupt them?
    Make your voice heard HMRC consultation docs https://www.surveymonkey.co.uk/r/5VCKXLP
    Petition
    https://petition.parliament.uk/petitions/167738


    Other reading
    https://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news-parliament-2015/making-tax-digital-publication-chairs-statement-16-17/


    http://www.accountingweb.co.uk/tax/hmrc-policy/mtd-faces-growing-delay-demand


    http://www.accountingweb.co.uk/tax/hmrc-policy/making-tax-digital-the-legal-hurdles


    Thanks for reading.
Page 1
    • CLAPTON
    • By CLAPTON 11th Oct 16, 10:36 AM
    • 40,910 Posts
    • 29,652 Thanks
    CLAPTON
    • #2
    • 11th Oct 16, 10:36 AM
    • #2
    • 11th Oct 16, 10:36 AM
    Just wondered how many of you out there are aware of HMRC's Making Tax Digital plans?
    From 2018 to 2020 all businesses, including self employed, rental and companies will be required to use accounting software and make 4 quarterly submissions and one final submission annually instead of the current one return.
    The government have driven the plan to reduce the £6.4b tax gap which they say is primarily caused by non agent using taxpayer errors. They believe the new system will reduce errors although errors work both ways and errors one way would suggest evasion.
    Many small businesses and accountants are horrified at the proposals. Government legislation has brought in a raft of red tape recently including payroll RTI and workplace pensions. Many people lack the digital skills and time to use digital tools. They are busy trying to survive in volatile times.
    The government are stubbornly progressing with their plans despite warnings by The Treasury Select Committee, ABAB, Ex HMRC Management and heads of taxation at CIOT and ACCA.
    The big problem is that no one appears to have heard of this. It is the biggest change in the tax system since 1945 and has the potential to cause distress and cost (new IT, software subs and accountants fees) to £5.3 million businesses.
    Small businesses account for 60% of private sector employment and turnover of combined £1.8 trillion. Why is our government trying to disrupt them?
    Make your voice heard HMRC consultation docs https://www.surveymonkey.co.uk/r/5VCKXLP
    Petition
    https://petition.parliament.uk/petitions/167738


    Other reading
    https://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news-parliament-2015/making-tax-digital-publication-chairs-statement-16-17/


    http://www.accountingweb.co.uk/tax/hmrc-policy/mtd-faces-growing-delay-demand


    http://www.accountingweb.co.uk/tax/hmrc-policy/making-tax-digital-the-legal-hurdles


    Thanks for reading.
    Originally posted by WEEN_NASTY
    difficult to see why making a submission every 3 months is much harder than one each year
    the same information has to be collected so inputting it shouldn't be difficult
    how much data does a small business have to input?
    • WEEN_NASTY
    • By WEEN_NASTY 11th Oct 16, 10:55 AM
    • 47 Posts
    • 15 Thanks
    WEEN_NASTY
    • #3
    • 11th Oct 16, 10:55 AM
    • #3
    • 11th Oct 16, 10:55 AM
    Currently businesses may use all types of records including Excel and Cashbooks. Under the new system they will not be allowed meaning taxpayers will have to purchase software and use that to record expenses and income. Accounting software is not easy to use despite what HMRC and the software companies say.
    Currently businesses get nine months from the end of their year which will be changed to 4 real time quarters and a final submission. This will cause great concern to seasonal businesses too.
    If you are a business who uses manual/Excel you will have a better understanding of the implications of this.
    You can make business digital but you can't MAKE people!
    • WEEN_NASTY
    • By WEEN_NASTY 11th Oct 16, 11:01 AM
    • 47 Posts
    • 15 Thanks
    WEEN_NASTY
    • #4
    • 11th Oct 16, 11:01 AM
    • #4
    • 11th Oct 16, 11:01 AM
    Just to add, the current system uses an online system whereby the small percentage of taxpayers who don't use an accountant just enter the transaction totals in designated boxes on the HMRC website.
    The new proposals will entail using designated software and abandoning the whole old system.
    • Pennywise
    • By Pennywise 11th Oct 16, 11:07 AM
    • 8,177 Posts
    • 14,244 Thanks
    Pennywise
    • #5
    • 11th Oct 16, 11:07 AM
    • #5
    • 11th Oct 16, 11:07 AM
    difficult to see why making a submission every 3 months is much harder than one each year
    the same information has to be collected so inputting it shouldn't be difficult
    how much data does a small business have to input?
    Originally posted by CLAPTON
    Just one point to consider (there are MANY more!). A great number of the smallest businesses use book-keepers and accountants to "write up" their book-keeping - the proverbial "carrier bag job" because they haven't the time or ability to do it themselves. At the moment, those book-keepers/accountants have 10 months to do the book-keeping, accounts preparation and tax return preparation of their client base. It's impossible for them to do three months' worth for all their clients within a one month window - especially when some information, such as bank statements or supplier invoices may not be received until, say, 10th of the month - that just leaves 20 days, or 3 working weeks. You simply can't fit a gallon into a pint pot!

    Keeping with the same theme, it could be counter-productive for HMRC to encourage people to do their own book-keeping if they're neither interested nor capable. Currently, book-keepers and accountants effectively "police" small businesses, by not putting through expenses which are clearly not allowable - popular items are holidays, physiotherapy, clothing, gym memberships, costs of family cars, etc. Even where a business does their own book-keeping, the accountant will be looking for and removing this kind of thing. If, as HMRC want, your typical tradesman or market trader is going to do their own by some super-charged app, then there's no-one "policing" what's being submitted, so HMRC will find themselves with a huge workload in checking returns and if they don't they may find the "tax gap" actually increases due to poorer quality of submissions.

    As I say, that's just one aspect, there are many, many more reasons why the MTD initiative has all the hallmarks of a costly failure. Mostly down to the arrogance of HMRC who are simply not listening to what they're being told (they never learn as it's history repeating itself!).
    • Pennywise
    • By Pennywise 11th Oct 16, 11:10 AM
    • 8,177 Posts
    • 14,244 Thanks
    Pennywise
    • #6
    • 11th Oct 16, 11:10 AM
    • #6
    • 11th Oct 16, 11:10 AM
    Accounting software is not easy to use despite what HMRC and the software companies say.
    Originally posted by WEEN_NASTY
    Indeed, especially for the poor sods who use Sage or Quickbooks, which are the market leaders. Both are fine for book-keepers/accountants who are qualified/experienced, but a train crash for the typical "one man" band business who doesn't know one end of a double entry from another.
    • GingerBob
    • By GingerBob 11th Oct 16, 12:15 PM
    • 3,050 Posts
    • 1,289 Thanks
    GingerBob
    • #7
    • 11th Oct 16, 12:15 PM
    • #7
    • 11th Oct 16, 12:15 PM
    I wonder how big the bung was that went from the software vendors to the HMRC goons?
    • WEEN_NASTY
    • By WEEN_NASTY 11th Oct 16, 12:24 PM
    • 47 Posts
    • 15 Thanks
    WEEN_NASTY
    • #8
    • 11th Oct 16, 12:24 PM
    • #8
    • 11th Oct 16, 12:24 PM
    I wonder how big the bung was that went from the software vendors to the HMRC goons?
    Originally posted by GingerBob


    Indeed. HMRC asking software companies to advise on MTD is like leaving Dracula in charge of the blood bank. They stand to make millions on the back of taxpayer (customers according to HMRC).


    It's like a feeding frenzy and is nothing short of disgusting.


    If you are self employed this will affect you. Find out now and make your voice heard.
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 11th Oct 16, 2:32 PM
    • 1,942 Posts
    • 1,061 Thanks
    TheCyclingProgrammer
    • #9
    • 11th Oct 16, 2:32 PM
    • #9
    • 11th Oct 16, 2:32 PM
    Doesn't bother me. With decent bookkeeping software much of this stuff can be a click of a few buttons. It takes my 5 minutes to double-check and submit my quarterly VAT return and even less time to submit my monthly payroll.
    • WEEN_NASTY
    • By WEEN_NASTY 11th Oct 16, 3:50 PM
    • 47 Posts
    • 15 Thanks
    WEEN_NASTY
    Good for you. Were you aware that there are 5,299,000 other small businesses in the UK?
    • Wayne O Mac
    • By Wayne O Mac 11th Oct 16, 4:52 PM
    • 116 Posts
    • 142 Thanks
    Wayne O Mac
    Good for you. Were you aware that there are 5,299,000 other small businesses in the UK?
    Originally posted by WEEN_NASTY
    Are you aware that 5,300,000 minus 1 does not equal 5,299,000?
    • WEEN_NASTY
    • By WEEN_NASTY 11th Oct 16, 5:11 PM
    • 47 Posts
    • 15 Thanks
    WEEN_NASTY
    Are you aware that 5,300,000 minus 1 does not equal 5,299,000?
    Originally posted by Wayne O Mac
    Thanks for that. (Must not shoot off replies).
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 11th Oct 16, 5:18 PM
    • 1,942 Posts
    • 1,061 Thanks
    TheCyclingProgrammer
    Good for you. Were you aware that there are 5,299,000 other small businesses in the UK?
    Originally posted by WEEN_NASTY
    Did you want our opinions or did you just want everyone to agree with you?

    If you want to run a business, you have a responsibility to at least learn the basics of how to keep records and do things like submit a tax return. Or pay an accountant to do it all for you. There are lots of good online accounting packages that can help too and they aren't all complicated.
    Last edited by TheCyclingProgrammer; 11-10-2016 at 5:20 PM.
    • WEEN_NASTY
    • By WEEN_NASTY 11th Oct 16, 5:44 PM
    • 47 Posts
    • 15 Thanks
    WEEN_NASTY
    Did you want our opinions or did you just want everyone to agree with you?

    If you want to run a business, you have a responsibility to at least learn the basics of how to keep records and do things like submit a tax return. Or pay an accountant to do it all for you. There are lots of good online accounting packages that can help too and they aren't all complicated.
    Originally posted by TheCyclingProgrammer

    Where did I say you weren't entitled to an opinion? I was pointing out to you that there are other businesses that do not have the digital skills that you obviously do. By the way what is your profession if you don't mind me asking?
    Many businesses do have the basic skills required for bookkeeping its current format. Bookkeeping that have served them accurately for many years. If you try and empathise you may realise that not every taxpayer has digital skills or has the finances to pay an accountant.
    • Apodemus
    • By Apodemus 12th Oct 16, 7:13 AM
    • 299 Posts
    • 211 Thanks
    Apodemus
    If you want to run a business, you have a responsibility to at least learn the basics of how to keep records and do things like submit a tax return. Or pay an accountant to do it all for you. There are lots of good online accounting packages that can help too and they aren't all complicated.
    Originally posted by TheCyclingProgrammer
    I agree, but there is more to it than that. For the very smallest businesses (and this includes a lot of small not-for-profit companies limited by guarantee), a quarterly return and accountants fees would be disproportionate to the level of activity in the enterprise.

    If the Government's view is that these enterprises should either close or convert to another legal form, then fair enough. However, I view these as valuable stepping stones in building entrepreneurial spirit and experience and would rather the Government reduced red-tape barriers to entry. I believe that the public benefits in terms of open-ness and accountability of the Ltd company format are such that we should encourage as many smaller entities to adopt that legal form as possible - quarterly tax reporting, using expensive software will work against this.
    • CLAPTON
    • By CLAPTON 12th Oct 16, 7:47 AM
    • 40,910 Posts
    • 29,652 Thanks
    CLAPTON
    I agree, but there is more to it than that. For the very smallest businesses (and this includes a lot of small not-for-profit companies limited by guarantee), a quarterly return and accountants fees would be disproportionate to the level of activity in the enterprise.

    If the Government's view is that these enterprises should either close or convert to another legal form, then fair enough. However, I view these as valuable stepping stones in building entrepreneurial spirit and experience and would rather the Government reduced red-tape barriers to entry. I believe that the public benefits in terms of open-ness and accountability of the Ltd company format are such that we should encourage as many smaller entities to adopt that legal form as possible - quarterly tax reporting, using expensive software will work against this.
    Originally posted by Apodemus
    maybe the answer is cheap software
    • Pennywise
    • By Pennywise 12th Oct 16, 7:51 AM
    • 8,177 Posts
    • 14,244 Thanks
    Pennywise
    I believe that the public benefits in terms of open-ness and accountability of the Ltd company format are such that we should encourage as many smaller entities to adopt that legal form as possible - quarterly tax reporting...
    Originally posted by Apodemus
    But it's not limited companies that are being affected here. It's landlords, sole traders and partnerships, those businesses who are less likely to have skills to do their own book-keeping or use software!

    Illogically, the MTD regime for limited companies (generally larger and more able to weather additional hassle/costs) will come in later.

    It's one of the many points made to HMRC by accountants etc that they've got this the wrong way round. Usually, fundamental charges are made to those best placed to manage it, i.e. larger businesses, and then it trickles down to smaller firms once the inevitable glitches have been ironed out, but in this case, they're doing it "bottom up", starting with the people least able to have the time/money to be guinea pigs.
    Last edited by Pennywise; 12-10-2016 at 7:54 AM.
    • Clifford_Pope
    • By Clifford_Pope 12th Oct 16, 8:41 AM
    • 2,963 Posts
    • 2,892 Thanks
    Clifford_Pope
    Won't they have to guarantee proper internet connection to every single property before this can be made mandatory?
    Or are they trying to encourage the cash-only black economy in rural areas?
    • Apodemus
    • By Apodemus 12th Oct 16, 10:07 PM
    • 299 Posts
    • 211 Thanks
    Apodemus
    maybe the answer is cheap software
    Originally posted by CLAPTON
    Perhaps, but there is not a lot wrong with the current HMRC software, so why force people to use third-party software at all? The current joint filing to Companies House and HMRC is a welcome simplification for smaller entities.
    • strongboes
    • By strongboes 12th Oct 16, 10:54 PM
    • 69 Posts
    • 47 Thanks
    strongboes
    I have signed up here, it is new and seems pretty cool and super cheap. What do people think?

    https://taxodapp.com/
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