Making Tax Digital

I'm given to understand that MTD becomes compulsory by April 2019 - can anyone confirm that?

Isn't there a cutoff for small business? Many VAT registered companies are still too small for accounting software and many who have moved to accounting software do not want to be dictated to by software suppliers to upgrade (and increase fees) just to have software which sends VAT returns automatically? For very many years I have used my Government Gateway for this........it suits my purpose very well and I really don't want the issues to transferring to newer, fancier, bells and whistles, ££££, software.

TIA
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Comments

  • antrobus
    antrobus Posts: 17,386 Forumite
    I'm given to understand that MTD becomes compulsory by April 2019 - can anyone confirm that?

    ...

    As part of MTD, businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software. This will start from their first VAT period starting on or after 1 April 2019.

    https://www.gov.uk/government/news/hmrc-publishes-more-information-on-making-tax-digital
  • So using an accountancy package.....which is digital, so appears to be MTD compliant, but submitting returns using the Government Gateway.......this isn't compliant?
  • Pennywise
    Pennywise Posts: 13,468
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    Officially, HMRC are still clinging on to the April 2019 introduction. In reality, it's highly unlikely it will happen. There are still far too many unknowns and the sheer scale of it, so late in the day, means HMRC systems will probably be nowhere near ready for it. Most likely scenario is it being put back a while but having the facility available sometime in 2019 for those who want to do it.

    Don't forget though, it's not ALL vat registered businesses, only those with turnover over the VAT registration thresholds, so HMRC need to keep the old system for smaller businesses who have voluntarily registered for VAT - if they're keeping the old system for smaller voluntary registered businesses, they may as well keep for the others too!

    I'd really wait and see for some news nearer the time. It's already been put back so many times, and watered down so much, I'd put money on nothing being compulsory next year. Under the latest proposals, HMRC will receive nothing more than they do already - the initial proposals for sending the actual transactional data have already been scrapped. All that is required under current proposals is that the same few VAT return figures which you manually enter via their website now have to be transmitted automatically from software - there are many software conversion apps being written which take your desktop software, spreadsheet or whatever and simply convert the totals into the format required by HMRC anyway. So one way or another, highly unlikely you'll need to buy expensive all singing, all dancing software.

    MTD for business is another foul up from HMRC proving yet again they don't actually understand how businesses work. They were told years ago it wouldn't work, and year by year they've been forced to water down their proposals. Just a lot of worry and time wasted for nothing.
  • Pennywise - your post is wonderful - thank you. BUT......I've have been told that I "MUST" upgrade my current software before the end of August to comply!! When I questioned this on webchat - I was told I had to upgrade to be GDPR compliant. Then I had a message to say it wasn't compulsory. I can't help thinking that some software suppliers are jumping on the bandwagon!
    Even given that.........the hard sell I'm getting is extreme! Do I give in and upgrade or not?
  • antrobus
    antrobus Posts: 17,386 Forumite
    Pennywise wrote: »
    ...

    MTD for business is another foul up from HMRC proving yet again they don't actually understand how businesses work. They were told years ago it wouldn't work, and year by year they've been forced to water down their proposals. Just a lot of worry and time wasted for nothing.

    It works in Estonia. :)
  • Pennywise
    Pennywise Posts: 13,468
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    Do I give in and upgrade or not?

    I'd be VERY wary of upgrading so early as you have no way of knowing if your software will be RTI compliant when the time comes. Already one popular accounting software which originally said they'd be compliant has pulled out of RTI completely. I think you're right to think that they're just doing the hard sell by frightening you into upgrading.

    GDPR is a completely different matter - it's up to you as the business owner to check your own GDPR compliance, not a third party as they won't know what personal information you hold and process nor how you protect it. It's possible (in fact highly likely) that you can be GDPR compliant with your existing system. It would be interesting to know the reasons why they say it's not compliant yet their upgraded version is! Sounds again more like the hard sell than any genuine reason.
  • Pennywise
    Pennywise Posts: 13,468
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    antrobus wrote: »
    It works in Estonia. :)

    Yes, and other countries too I believe. The difference being they may have a competent "fit for purpose" tax authority and almost certainly have a less complex tax regime than the UK. Considering RTI for payroll brought in a few years ago is still suffering huge problems, I won't hold my breath for MTD for VAT/accounts working any time soon!
  • Pennywise wrote: »
    I'd be VERY wary of upgrading so early as you have no way of knowing if your software will be RTI compliant when the time comes. Already one popular accounting software which originally said they'd be compliant has pulled out of RTI completely. I think you're right to think that they're just doing the hard sell by frightening you into upgrading.

    GDPR is a completely different matter - it's up to you as the business owner to check your own GDPR compliance, not a third party as they won't know what personal information you hold and process nor how you protect it. It's possible (in fact highly likely) that you can be GDPR compliant with your existing system. It would be interesting to know the reasons why they say it's not compliant yet their upgraded version is! Sounds again more like the hard sell than any genuine reason.

    At the present time, I'm using HMRC Basic PAYE Tools.

    I cannot see any reason why my present accounting software should NOT be GDPR compliant and surely any new upgrades which include PAYE with RTI are far LESS likely to be GDPR compliant?

    However, none of this gives me a valid reason for updating before 31st August!

    Thanks for all your help.
  • Right now I simply type a few numbers into the gov website for my VAT return.

    Do I really need to buy a subscription software package?

    The gov website lists 100s of options. It's all a bit overwhelming.
  • Pennywise
    Pennywise Posts: 13,468
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    simonchase wrote: »
    Right now I simply type a few numbers into the gov website for my VAT return.

    Do I really need to buy a subscription software package?

    The gov website lists 100s of options. It's all a bit overwhelming.

    If your t/o is above the VAT registration threshold, you have to "upgrade" your HMRC government gateway account and the new online account doesn't have the "fill in the boxes" functionality - you just get new login details which you enter into compliant software so you can submit your VAT returns by clicking a button in your software. The whole point is to avoid people typing in numbers as HMRC believe that's where lots of mistakes are made. Hence why they want to reduce manual re-keying and reduce/eliminate use of hand written records and spreadsheets. You should have received notification from HMRC of the changes which give instructions as to how to upgrade/set up your new user account.

    As for buying software, I understand that some firms are making "bridging" software available as an add-in to excel spreadsheets, so if you're using a spreadsheet, at least for the short term, you could buy bridging software to link your spreadsheet to HMRC systems. (Not sure how long that's going to be allowed - pretty sure I heard it was just temporary!).

    All, assuming HMRC impose it in April as planned. They're being absolutely criticised left, right and centre at the moment so are under pressure to ditch the compulsory aspect this year and make it voluntary for another year or two to allow more time for them, software firms, and businesses to be ready as they've been ridiculously slow to publish what their requirements are and have moved the goalposts several times, so many software simply isn't ready (and HMRC's beta testing systems aren't actually fully working either!).
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