Making Tax Digital

Dal_Whinnie

Pennywise wrote: »

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!
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Unincorporated businesses and landlords with turnover less than £10,000 will be exempt. Also those who are genuinely unable to engage digitally will be exempt.

Pennywise

Dal_Whinnie wrote: »

Unincorporated businesses and landlords with turnover less than £10,000 will be exempt. Also those who are genuinely unable to engage digitally will be exempt.

Yes, so the vast majority of small businesses and landlords won't be exempt. The £10k is turnover, not profit. The £10k limit is also temporary and is likely to be lowered in future so that everyone will have to file electronically.

All you need are two buy to lets and your turnover is over £10,000.

A sole trader with turnover under £10k isn't a business- it's a hobby as if turnover is under £10k, profits will be well under minimum wage levels so it won't be their livelihood.

As for digital exemption, have you ever engaged with HMRC to try to get a business exempt from online filing for payroll/rti or VAT - it's certainly not just a matter of saying "I can't do it" - they want to know why, they want evidence, they challenge your evidence, they argue you should pay a book-keeper or accountant to do it. But even if they accept you can't do it digitally, the new MTD rules will require you to phone through the figures to them every 3 months!

chrismac1

If anyone who works for HMRC is reading this they should consider this:

I will personally be about £5,000 better off in one-off charges, and at least £10,000 a year in extra charges if MTD goes ahead as specified by HMRC. My guess is that Pennywise will also be making more profits, most accountants will.

So why are we fighting this with everything we have got AGAINST our commercial interests?

Because it is bonkers, that's why. HMRC are a million miles away from being a tax authority with the competency levels to make this work. HMRC almost never answer the phone within 10 minutes, almost never reply to a letter within a month.

Let's face it that is hopeless by any measure. So invest the 1.3 billion in that - and more inspectors who actually know the tax law - before doing this idiotic stuff. How hard can it be?

Dal_Whinnie

Pennywise wrote: »

Yes, so the vast majority of small businesses and landlords won't be exempt. The £10k is turnover, not profit. The £10k limit is also temporary and is likely to be lowered in future so that everyone will have to file electronically.
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This change is expected to take out 1.3m of the smallest businesses and the limit is not expected to be reduced.

Pennywise

Many of those 1.3 million are double counted as they'll already be exempt from filing tax returns because of the new £1,000 "sharing economy" exemption for self employed income and property lettings income.

Anyway, there are over 5 million people who are self employed or renting properties, so even if it is 1.3m exempt from MTD, the vast majority won't be exempt, as I said!

HMRC won't run two systems - the old self assessment tax return system will eventually be removed, so sooner or later, those with turnover of under £10k will have to declare their profits digitally - how else would they do it if there's no longer a paper SA return?

chrismac1

It looks now like a backtrack on the backtrack is under way. Having been told about the major icefield ahead, Captain Smith speed until a massive shuddering noise informs him this might be a mistake.

chrismac1

Thanks for that, is in fact the
"Tax Assurance Commissioner and Director General Customer Strategy and Tax Design"

That load of drivel tells you everything you need to know about HMRC. For this purpose I'll refer to Captain Smith at the helm of the Titanic, which keeps things nice and simple!

Pennywise

Excellent news that MTD has been removed from the current Finance Act due to lack of time before the GE.

Let's hope that the new government actually listen to so many people telling them it's a car crash and that they don't plough on regardless with it's introduction next April by announcing it in the next Finance Act after they're in power.

Can't see it happening next April now anyway, and any new Finance Act won't be passed until after the Summer recess, so far too short a time to bring in such a fundamental change. So probably put back a year.

Though it is a good opportunity to put it back a lot further than that. It's introduction has been in indecent haste and even now, less than a year to go, the detail is still now known, making it impossible for businesses and their advisors to prepare.

I'd suggest putting compulsion back say 5 years and allowing a period of it being voluntary, so that those businesses best able to cope with it can be HMRC's guinea pigs.

After all, HMRC argue that it will be helpful for small businesses (but can't explain why they think that and most small business associations argue the opposite), so a period of voluntary adaption allows those keen businesses who apparently want it to have it, and gives a more decent amount of time for the ones who don't want it to adapt.

chrismac1

We should have an election every June just to put a stop to HMRC's daft ideas!

polymaff

http://www.tax.org.uk/media-centre/blog/media-and-politics/government-drop-majority-finance-bill