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Where Taxpayers and Advisers Meet

Making Tax Digital

etf
Posts:1330
Joined:Mon Nov 02, 2009 5:25 pm
Re: Making Tax Digital

Postby etf » Mon Jun 12, 2023 10:07 am

Making Tax Digital £1bn over budget, says NAO report
by Tom Herbert
HMRC’s digital tax transformation programme is expected to clock in at five times its original forecast, according to a new report from the National Audit Office, which also called on the tax authority to prepare a separate business case for MTD ITSA.

etf
Posts:1330
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Mon Jun 12, 2023 10:13 am

Still no promised call back from HMRC. Is any part of the organisation functioning?

etf
Posts:1330
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Wed Jun 14, 2023 9:33 am

By kevinringer
12th Jun 2023 11:15
HMRC are not under-resourced, they are just wasting their resources on vanity projects. £1 billion would have permitted the helplines to be fully staffed and calls answered within 1 minute and correspondence actioned within a week, and there would have been considerable resources left over to fix their IT problems. It is no coincidence that HMRC service levels began to deteriorate when HMRC started wasting money on MTD.

etf
Posts:1330
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Thu Jun 15, 2023 12:47 pm

A link to a MTD podcast.

Why anyone would allow HMRC to introduce a project like this is beyond me when they can't even process a 64-8 four months after they received it (and can't provide a call back when they receive a complaint about it).

There is an alternative called self assessment which from my perspective did work quite well until HMRC diverted resources to MTD. Get your house in order Jim beforec you take another step.


https://www.accountingweb.co.uk/content/no-accounting-for-tech-ep17-making-tax-digital-is-out-of-control?utm_medium=email&utm_campaign=AWUKITP150623&utm_content=AWUKITP150623+CID_09da1cb3b43b39d32207b8ccd33b4d10&utm_source=internal_cm&utm_term=Listen%20here

etf
Posts:1330
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Tue Jun 20, 2023 1:45 pm

Making Tax Digital (MTD) is “out of control”, with HMRC vastly underestimating development and implementation costs and overestimating benefits to the exchequer of its flagship scheme, says the Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT) following a damning report by the National Audit Office (NAO).

The two bodies contributed to the report1 and have repeated their calls to review the business case for MTD, after the report suggested the scheme is now expected to cost around five times its original 2016 budget and excluded upfront costs of £1.5 billion to VAT and Self-Assessment customers from its business cases.

Alison Kerrey, Chair of the joint CIOT and ATT Digitalisation and Agent Services Committee, said:

“HMRC and the government’s execution of this major change to the tax system feels like it is out of control, with spiralling costs, unrealistic timescales, and questionable benefits. While we support digitalisation, the report backs up our concerns that HMRC's estimates have vastly underestimated costs to taxpayers and overestimated benefits to the exchequer - it is time to pause and take stock.

To announce a project as substantial as MTD, with significant impacts for businesses, agents, software companies and HMRC themselves, without being able to point to a proper business case beforehand, simply beggars belief.

“And then, just three months ago, to omit such massive sums from the cost : benefit analysis, is equally remarkable. You wonder how HMRC would react, and the behaviour they would infer, if a taxpayer had made a similar omission from their returns.

The report indicates that MTD was announced before any business case had been prepared for it, with later cases in May 2022 and March 2023 seeking additional funding omitting the significant up-front costs for taxpayers.

It also noted that, during 2022-23, moving VAT records onto its new system initially led to VAT liabilities being overstated by around £5 billion. HMRC will only move one year’s taxpayer data for Self-Assessment.

Alison Kerrey continued:

“We have repeatedly questioned whether the business case for MTD stacks up and fully agree with the NAO that a fresh, complete business case needs preparing. Even the latest estimate of a 2:1 return on investment still seems marginal, based on experiences to date with spiralling costs, speculative revenue benefits, and the need to operate two systems for the foreseeable future.

“The haste with which MTD is being pushed forward, without sufficient preparation or testing, and with questionable business justification, has itself caused errors totalling more than MTD is expected to generate by 2033-34. It has also led to significant practical concerns amongst practitioners, such as how multiple agents can operate within the system. As well as a cost:benefit analysis, a full review of the fundamental principles behind MTD, is now needed.

“Transferring VAT records onto HMRC’s new systems created, in one year, errors totalling more than MTD is expected to generate by 2033-34. Errors are precisely what MTD is seeking to minimise, not introduce, and this further underlines the need for thorough testing before any additional MTD requirements are introduced.”

Notes for editors

Integraoutsourcing
Posts:11
Joined:Wed Apr 12, 2023 12:55 pm

Re: Making Tax Digital

Postby Integraoutsourcing » Mon Jun 26, 2023 1:24 pm

Making Tax Digital (MTD) is an initiative introduced by HMRC to modernize the UK tax system and make it more efficient. However, MTD requirements may not apply to all taxpayers. Currently, MTD for Income Tax only applies to unincorporated businesses (including landlords) with annual business or property income above £10,000.

If your total income, including rental income and pension, is around £20,000, it's likely that you fall within the self-assessment regime, which means you may not be required to sign up for MTD. However, it's important to stay updated on any changes to the MTD requirements, as legislation can be subject to updates.

Regarding your concern about being computer illiterate and unreliable internet access, you may want to explore alternatives or seek assistance. HMRC provides a variety of methods for submitting tax returns, including online options, phone services, and paper returns. If you're currently submitting a paper self-assessment tax return and it remains an acceptable method, you may continue to do so unless HMRC notifies you otherwise.

To ensure you have accurate and up-to-date information, I strongly recommend contacting HMRC directly or consulting with a tax professional who can provide personalized advice based on your specific circumstances.

Website: https://www.globalintegra.co.uk/
Contact us: +44 (0)20 7993 2949

Integraoutsourcing
Posts:11
Joined:Wed Apr 12, 2023 12:55 pm

Re: Making Tax Digital

Postby Integraoutsourcing » Mon Jun 26, 2023 1:25 pm

Making Tax Digital (MTD) is an initiative introduced by HMRC to modernize the UK tax system and make it more efficient. However, MTD requirements may not apply to all taxpayers. Currently, MTD for Income Tax only applies to unincorporated businesses (including landlords) with annual business or property income above £10,000.

If your total income, including rental income and pension, is around £20,000, it's likely that you fall within the self-assessment regime, which means you may not be required to sign up for MTD. However, it's important to stay updated on any changes to the MTD requirements, as legislation can be subject to updates.

Regarding your concern about being computer illiterate and unreliable internet access, you may want to explore alternatives or seek assistance. HMRC provides a variety of methods for submitting tax returns, including online options, phone services, and paper returns. If you're currently submitting a paper self-assessment tax return and it remains an acceptable method, you may continue to do so unless HMRC notifies you otherwise.

To ensure you have accurate and up-to-date information, I strongly recommend contacting HMRC directly or consulting with a tax professional who can provide personalized advice based on your specific circumstances.

bd6759
Posts:4325
Joined:Sat Feb 01, 2014 3:26 pm

Re: Making Tax Digital

Postby bd6759 » Mon Jun 26, 2023 1:35 pm

I wouldn’t recommend consulting a firm that seems to be more out of touch than HMRC.

etf
Posts:1330
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Thu Jul 20, 2023 10:39 am

How many people could HMRC have employed to process post/answer telephones for the spend highlighted below? In the words of Ian Dury and the Blockheads 'What a Waste'

Scrap MTD and achieve its goals through self assessment
Finally, we come to the billion-pound decision – will the government really push the big red button on MTD?

The NAO’s figures state that up to March 2023, £642m had been spent on MTD ITSA, with a further £295m spent on the now-completed MTD for VAT project.

It would be a bold move indeed for any government to be seen to torch more than half a billion pounds, but would it be foolhardy?

A forthright submission to the PAC from accounting firm Crundell & Co stated that HMRC’s plan to keep taxpayers below a certain threshold on the current self assessment system – essentially running two tax systems in parallel – was ‘crazy’.

“How will [having] two tax systems in place make the process easier?” stated the submission, adding that instead, it will add “unnecessary complication and admin”.

“The current self assessment system works well, it does not need to be replaced. If the ultimate aim for HMRC is quarterly tax payments, these could easily be brought in under the current self assessment system, our clients would actually welcome that move!”

ICAEW’s submission pointed to the high levels of online self assessment filing that have been achieved without mandation or forced change – approximately 96% of 12 million returns and rising. Instead, businesses had adopted digital record keeping in their own time and reported this as a benefit.

This points to a system that, while it has its issues, isn’t in need of full-scale replacement. Moreover, ICAEW points out that digital transformation needs to happen in parallel with the overall simplification of tax policy, an aim made harder with the abolition of the Office of Tax Simplification.

While sections of the tax and accountancy community would heartily toast a move to scrap the MTD project, the humiliation for HMRC’s senior leadership team would be total.

While it's impossible to see this current government writing off its digital transformation project, it’s not beyond the realms of possibility that an incoming government might use its first budget in 2025 to do so.

AccountingWEB has repeatedly asked our potential government-in-waiting what it makes of MTD, but perhaps understandably they’ve decided that ignoring this particular bear trap and hoping it goes away is the best policy.

etf
Posts:1330
Joined:Mon Nov 02, 2009 5:25 pm

Re: Making Tax Digital

Postby etf » Fri Oct 06, 2023 10:12 am

Will MTD4IT go the same way as HS2 Manchester?

The decision below could give Mr Harra his excuse to postpone it:

All eyes were on Chancellor of the Exchequer Jeremy Hunt (above) at the Conservative Party conference this week, with plans to cut the civil service budget leaving many, including the already woefully under-resourced HMRC, reeling.

The Chancellor unveiled a plan to boost the Treasury coffers by up to £1bn by capping the civil service headcount at current levels with immediate effect. Bizarrely, the government is claiming that what effectively amounts to cuts to the civil service will in fact improve its efficiency. HM Treasury reports: “Through tackling unnecessary bureaucracy and improved use of technology, it is expected that the civil service will become more productive and act as a lean, agile and cost-effective organisation, in line with the people’s priorities.”

This statement, dripping with optimism and perhaps a touch of fantasy, conjures up an image that could not be much further from the realities of most of our readers’ recent experience of dealing with our ailing civil service department, HMRC.

Lean and mean
“Lean”, yes – it has not gone unnoticed that HMRC is suffering a serious resourcing crisis, with helpline wait times regularly exceeding 45 minutes, as shown by a survey carried out by the Chartered Institute of Taxation (CIOT) this summer, and callers frequently cut off before their call is answered.

“Agile” is defined by the Oxford English Dictionary as “able to move quickly and easily”. A far cry from the day-to-day reality faced by agents and taxpayers, or as HMRC calls them “customers”, in dealing with the tax authority. In fact 95% of respondents to the CIOT survey felt that the impact of HMRC’s poor service levels has had a “moderate” or “significant” negative impact on their ability to do business. Trying to get an answer from HMRC feels less “agile” and more akin to wading through treacle.

As for “cost effective”, look no further than the tax authority’s Making Tax Digital project, already costing more than £1bn over its initial estimate of £226m.

The Institute of Chartered Accountants of Scotland (ICAS) has raised concerns about the Chancellor’s plans, saying: “In the absence of improved digital services, any reduction in HMRC staffing levels would result in a further reduction to the service our members and the public are receiving.”

The professional body cited the recent removal of the 10-minute service call answering target on the Agent Dedicated Line as an example of cutbacks at HMRC that are already adversely affecting operations.


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