This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Making Tax Digital

someone
Posts:521
Joined:Mon Feb 13, 2017 10:09 am
Re: Making Tax Digital

Postby someone » Wed Sep 22, 2021 1:48 pm

I think it will push some small traders into the black economy. The compliance burden is such that you're possibly net positive taking a risk and coming clean if you are unlucky enough to get pursued (particularly if you can stay out of SA completely). For people only marginally into taxable income anyway - say 15K/year - ensuring you stay out of MTD (even illegally) might be more important that finding some extra income! And worse (better), those "almost under the limit people" will be net positive as they'll no longer be paying that 500pa in tax.

(Until, of course, the next pandemic...)

I'm very well paid (PAYE) so I cannot really "hide" and I have some silly amounts of bank interest (c100pa) and (2021/22 year for the first time) foreign dividends (c60pa) that I'll have to declare. I'll give those shares away and move to a bank that pays no interest if it gets me out of MTD for a bit longer! (My gross rental income is <1K so fully relieved and I don't include it on my SA and I'm not going to be caught in the first wave)

I just wish HMRC would tell us what they really want with MTD. That way you lot (accountants) and my lot (software developers) might be able to help HMRC design something that will achieve what they want. But at the moment they're claiming things that don't add up at all.

At least for MTDVAT (at least to my extremely limited understand of VAT) the only real change there should have been over what was before was the digital linking part of MTD. There already were quarterly submissions and it was already linked to transactions (I think...) so it shouldn't have been a huge burden other than to the people who were winging it and (presumably) "making tax up". But that doesn't seem to be the case for MTDITSA. I'm a software developer and my wife is an accountant - and we're thinking she'll possibly have to find an accountant in practice to deal with the rental income she gets each year. It's not obvious at this point that it's something you'll be able to DIY whatever HMRC say.

And for historical reasons, I keep all the records for the rental despite only being entitled to a tiny percentage now. Obviously we can move record keeping to her (and possibly we should - she's better qualified than me to do it) but it's not obvious to me *why* we should have to do that nor *how* MTD should work in this circumstance! The quarterly part really doesn't look difficult, it's the year end bits that look hard as there's so much to worry about.

someone
Posts:521
Joined:Mon Feb 13, 2017 10:09 am

Re: Making Tax Digital

Postby someone » Wed Sep 22, 2021 2:03 pm

I must just add that if HMRC think MTDITSA is going to give an accurate estimate of tax due then I wonder why they cannot get my PAYE tax right given that they get the information monthly.

(I know why they cannot - but if it doesn't work for me who other than a negligible amount of income, is entirely PAYE - they why do they think it will work for sole traders except for the very simplest?)

bd6759
Posts:3586
Joined:Sat Feb 01, 2014 3:26 pm

Re: Making Tax Digital

Postby bd6759 » Wed Sep 22, 2021 2:15 pm

Listen out for tomorrow’s announcement …

etf
Posts:771
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Thu Sep 23, 2021 3:42 pm

https://www.gov.uk/government/news/businesses-get-more-time-to-prepare-for-digital-tax-changes

etf
Posts:771
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Thu Sep 23, 2021 3:53 pm

Still not sure I get it; seems bonkers. For landlords, I'm not sure why five filings are required instead of one. The current self assessment system seems to work well from my own experience:

The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.

robbob
Posts:3146
Joined:Wed Aug 06, 2008 4:01 pm

Re: Making Tax Digital

Postby robbob » Thu Sep 23, 2021 4:55 pm

Still not sure I get it; seems bonkers. For landlords, I'm not sure why five filings are required instead of one. The current self assessment system seems to work well from my own experience:
Exactly it is bonkers they will never directly answer your question either

robbob
Posts:3146
Joined:Wed Aug 06, 2008 4:01 pm

Re: Making Tax Digital

Postby robbob » Thu Sep 23, 2021 5:33 pm

Lucy Frazer, Financial Secretary to the Treasury, said: The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.
I have sent emaiil to lucy with my thoughts on the subject :) her email is easy to find - perhaps she weas talking "generally" if she was - she picked the wrong time to say what she said when its linked to the forced mtd mandation that makes no sense.

etf
Posts:771
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Thu Sep 23, 2021 6:36 pm

I think this reader reply which I have lifted sums it up quite well:

MTD being expected to close the tax gap is a joke.
Evaders expected to be "caught" by their own software?
A bit like the Blackadder Skit on how to catch the German spy
Baldricks cunning plan is to ask all patients"are you a spy"

George: Well, have a look through the list of patients and see if there’s
anyone here whose name begins with `von’. Well, it’s almost bound
to be your bloke!

Edmund: I think we may find that he’s using a false name, actually, George.

George: Oh, crikey. Well, that’s hardly fair, now, is it…

Baldrick: I, too, have a cunning plan to catch the spy, sir.

Edmund: Do you, Baldrick, do you…

Baldrick: You go round the hostipal and ask everyone, “Are you a German spy?”

Edmund: Yes, I must say, Baldrick, I appreciate your involvement on the
creative side.

Baldrick: If it was me, I’d own up.

Maybe MTD was thought up after reading this plot
Either way expecting MTD to close the tax gap is losing the plot
The "Tax gap" is deliberate evasion, not error.

etf
Posts:771
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Mon Oct 04, 2021 1:02 pm

To the tune of Annie Lennox's song 'why'. You get the impression the people who invent these daft ideas have never been in business themselves.

Example 1: Tim aligns with tax year
Tim is a financial consultant who makes up his accounts to the tax year end: 5 April.

Tim’s digital start date for MTD ITSA is 6 April 2024. Tim will submit his first quarterly updates, SA tax returns and EOPS on this timetable:

MTD Qrt/ SA return: Income and expenses in period: Deadline for submission:
Y1 Q1 6 April 2024 – 5 July 2024 5 August 2024
Y1 Q2 6 July 2024 – 5 October 2024 5 November 2024
SA 2023/24 Year to 5 April 2024 31 January 2025
Y1 Q3 6 October 2024 – 5 January 2024 5 February 2025
Y1 Q4 6 January 2025 – 5 April 2025 5 May 2025
Y2 Q1 6 April 2025 – 5 July 2025 5 August 2025
Y2 Q2 6 July 2025 – 5 October 2025 5 November 2025
EOPS no.1 Year to 5 April 2025 31 January 2026

Conclusion
The MTD ITSA regulations are quite brief and further details on the practicalities of MTD ITSA are expected to be set out in an HMRC guidance note, yet to be published.

What is clear is that MTD ITSA will create a lot of work for accountants and businesses, some of which will be duplicated by the effort required to submit SA tax returns for a considerable overlap period.

Good luck explaining all that to your clients and billing them for your trouble.

etf
Posts:771
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Tue Oct 12, 2021 2:20 pm

It appears the accountancy profession are on a mission with the number of responses already posted on the thread below. NRCGT was the blueprint to raise revenue through massive late filing penalties and now the big brother is looming on the horizon. Sign the petition if you can.

https://www.accountingweb.co.uk/tax/personal-tax/mtd-itsa-why-quarterly-updates-are-needed?utm_medium=email&utm_campaign=AWUKTAX111021&utm_content=AWUKTAX111021+CID_3396fa2b3e59a4a57af5bd27c04ad6a5&utm_source=internal_cm&utm_term=Read%20more


Return to “HMRC Administration, Practices & Methods”