Making Tax Digital

WEEN_NASTY

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.

CLAPTON

WEEN_NASTY wrote: »

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.

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

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

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

CLAPTON wrote: »

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?

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

WEEN_NASTY wrote: »

Accounting software is not easy to use despite what HMRC and the software companies say.

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_3

I wonder how big the bung was that went from the software vendors to the HMRC goons?

WEEN_NASTY

GingerBob wrote: »

I wonder how big the bung was that went from the software vendors to the HMRC goons?

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

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

Good for you. Were you aware that there are 5,299,000 other small businesses in the UK?

Wayne_O_Mac

WEEN_NASTY wrote: »

Good for you. Were you aware that there are 5,299,000 other small businesses in the UK?

Are you aware that 5,300,000 minus 1 does not equal 5,299,000?