Making Tax Digital

[etf]

Getting Away With It (All Messed Up)
Song by James

Such an apt title..perhaps they should use it in the MTD4IT publicity campaign. I'd rather he just 'Sit Down'.

By Ian McTernan CTA
02nd Dec 2024 11:41
'He added that once MTD IT is in place, he believes it will improve productivity, make things easier for small businesses, and cut the time spent on tax administration.'

So having to do 5 reports instead of one will cut the time spent on tax admin?

Has this guy ever actually run a small business?

No mention of the massive additional costs of software, accountancy, etc required...this all sounds like the Govt's idea of promoting growth by taxing more and more...

I just hope they tell the truth in their publicity campaign in the months leading up to April 2026: more costs, more admin, more chance of errors with people using accounting software which tries to decide what an expense is and endless struggles trying to get everything filed quarterly whilst trying to also run a small business with small margins.

By North East Accountant
02nd Dec 2024 10:43
Sole trader with a rental property.

Can James please tell me the benefits for the taxpayer of submissions going from 1 per annum to 9?

[etf]

By Nichola Ross Martin
02nd Dec 2024 16:53
Good interview Tom! Well, I think that it's fantastic that we finally have a minister in charge of HMRC. I am also delighted that we have a minister who understands how tax works.

On MTD: look that is a learning curve for everyone (me too). Working out how your practice will join up all it's different software to submit anything will a real challenge but worth the effort when its done. On E invoicing: well why not? It's in use across the globe after all. Murray is quite right, we have to move on.


Replying to Nichola Ross Martin:

By AdamJones82
02nd Dec 2024 18:22
"I am also delighted that we have a minister who understands how tax works."

We do?!


Replying to Nichola Ross Martin:

By ireallyshouldknowthisbut
02nd Dec 2024 18:53
I am stuggling to see any benefit for one of my clients today.

Self employed with a £40 t/o (4 * £10k sales invoices) and a rental property paid annually in advance.

I think he had 20 transactions all year.

So instead of one simple return, prepared in under an hour, we have to do 8 rounds of tosh, and one proper return. Presumably given there are no accounting adjustments permitted in the quarterly rot, HMRC computer will tell him after the the April rent he has a massive tax bill.

There will be more transactions for his 2 licences for accounting software, no doubt paid monthly than there will be actual accounting transactions.

Its a total farce at the sharp end.

[etf]

“My three priorities for HMRC are closing the tax gap, improving customer services, and modernising HMRC. I want to be involved in that and be very frank with people at HMRC and on the Board. But I want all of them to be open with me earlier, rather than later. So if there are problems, as a minister, I can be involved in making sure we address them head-on and help resolve them as quickly as possible.”

The above quote from James Murray suggests to me, that he doesn't fully trust those he is dealing with at HMRC. He has good reason to be worried: viz

-He has Sir Jim stating the Taxpayers Charter is at the heart of what HMRC do (fairness blah, blah, blah) and yet in one quarter they deny all NRCGT late filing penalty appeals and in another they let everyone off (within a few percentage points);

-You have the 2nd in command stating HMRC are world class when reviews confirm they are rubbish;

-You have stats that suggest roughly three quarters of post is dealt with in 15 working days and yet you have a task force to deal with post over 12 months old.

HMRC can't cope with their workload as it currently stands...what is going to happen when all these new quarterly filers require help? I spoke with HMRC yesterday (45 min call) chasing post held since May...they had previously taken 12 months to process the submitted 64-8.

If James really is a detail man, he needs to speak with those at the coal face to get a better overall picture.

[etf]

I'm pleased Benneyworth and Ross Martin have come out to seemingly support MTD4IT as it is very difficult to debate if no-one disagrees with what you say. It also produces great responses.

If Murray has the gumption to talk to people like the accountingweb composers who are not the software companies and HMRC, he might wake up to some of the valid points they make. If he can answer them, well done him, but his waffle surrounding 5 or 9 returns instead of 1 was uninspiring:

Exhibit A-Waffle

“This will be a change in how people interact with the tax system,” said Murray. “It’s about modernising the way people interact with the tax system and how their relationship with their accountants operates in practice. It’s going to be a period of change, but I think it will be one that people will look back on and realise the benefits once it’s in place.”

By johnjenkins
04th Dec 2024 08:21
Nichola, you are obviously highly intelligent and well up on tech. The problem is most self - employed earning under £90k, especially nearer the £20k mark aren't admin minded but they are very good at what they do. Most are not tech minded although they can use their phone. What HMRC are doing is to mandate these people into having to be tech minded or they will be penalised. That is not where we should be going with MTD.


By kevinringer
04th Dec 2024 08:57
“It's still a stretch deadline,” said Murray. “HMRC can't do it on their own and we need to make sure software developers are on board and we've got the whole industry coming together to hit that deadline.”

In terms of numbers "whole industry coming together" is mainly taxpayers (several million) followed by accountants (several tens of thousands), and these are definitely not on board. In terms of numbers there is only HMRC and software providers (a few hundred). Our challenge is getting the message across to James Murray that it's not sufficient just to have HMRC and the software industry on board.

Replying to Nichola Ross Martin:

By johnjenkins
04th Dec 2024 08:23
Nichola, you seem to forget E-invoicing will become a scammers playground. So more technology to be put into place and pay for.

[etf]

I've read we can expect a MTD advertising campaign shortly.

HMRC can use this suggestion for free and save paying an advertising company (to the tune of Kenny's 1975 hit 'The bump'):

Lyrics
One
two
three
MTD!
One
two
three
MTD!
Come on everybody! Do the MTD!

There's a new tax return that is coming around
You complete it nine times a year, instead of once

It will fill your holidays and your weekends too
Filings are so frequent you'll struggle to have a poo

HMRC won't bother looking at the first eight
A straight talking Aussie would say it's 'bloody idiotic mate'

MP James Murray the man now in charge of HMRC vehemently disagrees
Until he completes quarterly returns for his IT consulting fees

Repeat opening chorus.

[etf]

By Mr J Andrews
16th Jan 2025 11:40
M.P.s who are privileged to have sailed through private education followed by an Oxbridge degree are to be commended for their devotion to serving the general public.
James Murray , M.P. for Ealing North was appointed Exchequer Secretary on a reported salary of up to £200K. His aim - to ensure robust dealings and commitment with HMRC in meeting the MTD timeframe.
How do you explain that to the small businesses in Ealing ? These small businesses struggling to make ends meet and equally - or more so - dedicated to offering services to their fellow Ealing residents. Do they want to be tied to more administrative time wasting for no benefit whatsoever ? Equally the Ealing sole traders, plumbers , carpenters , childminders , foster parents etc - the list of trades / professions is endless, not to mention the O.A.P.s who have put their life savings into a property rental as their retirement pension.
Come MTD day , when the proverbial #### hits the fan , I envisage the pythonesque situation of Murray and his husband opening sack loads of Royal Mail from his Ealing constituents moaning and complaining about the horrendous detraction of wasted time from their business activities and punitive costs for additional professional services in complying with filing obligations , with further complaints by those Ealing residents faced with the knock on additional costs imposed by those very businesses suffering the impact of MTD. How does Murray explain the wonderful benefits his much beloved Ealing constituents are getting from this imposition. There's probably one or two sadomasochists in the Borough who might feel relieved.
Meanwhile , as the Ealing compliant are punished , take a walk down Murray's street - or anywhere in Ealing and see how the rampant un-tackled Black Economy flourishes.

By FactChecker
16th Jan 2025 12:55
Good strategy ... take the battle to the doorstep - and make it personal for Murray (the only threats that politicians acknowledge and listen to are the ones that risk their own livelihood)!

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Rob Swan
By Rob Swan
16th Jan 2025 14:42
Well....
Maybe the last plumber in Ealing will have given up under the burden of MTD just before Murray has need of an urgent unblocking.
That'll hit home

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By AdamJones82
16th Jan 2025 12:02
Why am I reminded of the Gulf War when Chemical Ali kept being trotted out saying everything was fine.....?

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By DoubleEntryTwice
16th Jan 2025 16:42
I think you mean Comical Ali.
Chemical Ali was a different person.

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Rob Swan
By Rob Swan
16th Jan 2025 12:48
Great article Richard.
Murray's Muppetry (apologies to Jim Henson) highlighted brilliantly.

"... he’s [James Murray] going to see private sector organisations to get ideas and feed them back to HMRC."

Proof right there that HMRC don't have a clue! If they did, that would already be well established. Just saying

"Elsewhere on the MTD front, Murray emphasised how the roll out of MTD for income tax in April 2026 is a “really important foundational part of moving over to a much more digitalised system of HMRC”.

No! NO!!!! NOOOooooo......

First [Step 1]: You sort your (HMRC) systems out and get your digital systems working correctly.

Then [Step 2]: You develop MTD and interface with your 'working' back end HMRC systems.

If Murray would like a simple analogy:
First you learn to ride a bicycle; then you practice - a lot.
Then you attempt Lands End to John o' Groats.
If you claim that doing Lands End to John o' Groats is a “really important foundational part" of learning to ride a bicycle. Well.... Good luck with that!

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By FactChecker
16th Jan 2025 13:06
Has anyone else noticed that his avowed "three main priorities: closing the tax gap, modernising and reforming, and improving customer service" don't operate in a vacuum ... they require a cohesive plan that places a priority on each element + quantifies each part + shows how one is connected to another.

That would be called a Strategy - and is not the same thing as disconnected soundbites that are without semblance of quantitative or qualitative measurement.

"Full steam ahead on MTD" + "Customer service" + "Closing the tax gap" isn't the order I'd choose ... do we have any bids for an improved order of priorities?

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By Open all hours
16th Jan 2025 13:13
But don’t disconnected sound bites become true if you use them all at least three times without laughing, crying or hiding behind the lectern?

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By paulwakefield1
16th Jan 2025 17:02
Seems that improving customer service is getting the phones answered quicker but not necessarily being given the right answer. I'm sure the satisfaction ratings would be lower if Joe Public knew that the advice they received was wrong.

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By Karen whitehead
16th Jan 2025 10:16
" explaining that it would improve record-keeping, allow businesses to better manage when they pay tax and help close the tax gap."

No one seems to have asked him how. I have clients who kept lovely records before that were easy to follow and now they are digital they are a complete mess with items being duplicated, items missed, VAT misclaimed, things posted all over the place including on the balance sheet when they should be on the P&L our fees have doubled for them and it doesn't matter how many lessons we give them on the software - they are not book keepers! this will only get worse when they have to submit quarterly. HMRC will just receive a load of rubbish every quarter. No accountant in the land has enough manpower to be completing the last year end and submitting accurate quarterly submissions.

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By fmuk
16th Jan 2025 12:28
I completely agree with you Karen. Over the last few years, we have been converting clients to various Digital systems (QuickBooks, Xero, FreeAgent etc) and I have previously commented how I thought this was a good thing for businesses (certainly the ones with bad records).

However, the picture is becoming more and more apparent the mess clients are getting into with digital systems. Some clients who used to produce the perfect set of records using a combination of manual or spreadsheets are producing an absolute load of rubbish, despite ongoing training. Fees are increasing accordingly, and clients are questioning why, after we had advised digital is best. It’s not for the businesses without a good knowledge of bookkeeping.

As you have said, accountants will have no intervention in correcting quarterly submissions rendering them all useless.

Sage free offering will be useless as is QuickBooks cheapest product called Sole Trader, it has no trial balance or audit trail, you cannot produce a set of accounts from it.

[etf]

This reminds me of a cartoon of a widow standing by her late husband's grave. She was recounting all of the digital hoops her husband had to jump through to get a GP appointment....it came with the caption 'too late'. It is not too late for Mr Murray to wake up and stop MTD4IT.


By Jimess
17th Jan 2025 11:00
I agree wholeheartedly there. Only yesterday I received a phone call from a bewildered 74 year old who had received a simple assessment for the first time and the only payment method mentioned on the assessment was to "go to your HMRC app or personal tax account to pay online". The person did not have a computer, a smartphone, a tablet PC or anything digital. He did not have a cheque book as his bank had stopped issuing them automatically so he used his bank card or cash from the ATM at the grocery store. His bank was an hours bus ride there and another hours bus ride back which he could not do due to recent surgery. He asked around for help and someone suggested he rang me. After about 20 minutes searching I eventually found a telephone number for the "HMRC Miscellaneous Payments section". It was the only thing I could suggest as we had exhausted all other options, and I can only hope that he got the help he needed. I do hope Mr Murray reads this and gets a bit of an insight into the difficulties this drive to digital is making in peoples lives. It might be easier for HMRC, but it certainly isn't easy for the taxpayers who are left behind in the race to all things digital.