Making Tax Digital

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Seems HMRC's Director of MTD is as believable as Trump's pet claim...yikes!


https://www.accountingweb.co.uk/tax/hmrc-policy/hmrc-answers-your-questions-on-mtd-it-messaging-and-updates?cm-uuid=9c7e48c7-22ae-47eb-ae35-da823e2668af&utm_medium=email&utm_campaign=AWUKPOTW110924&utm_content=AWUKPOTW110924+CID_44e6f4297d3310a41386823883ed92a5&utm_source=internal_cm&utm_term=Read%20more

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By agknight
12th Sep 2024 10:17
I've scanned two pages of negative comments here - none in favour of HMRC, not a surprise in many ways. I don't need to comment but I cannot pass over the MTD justification as it is so weak it is pitiable.

Clearly errors will not reduce, they may be different.

Small businesses are generally simple and run by the seat of their pants and bank account. They do not need accounts to know how they are doing. Further, if accounts are needed, quarterly is a complete waste of time - actually too slow.

The way for HMRC to improve service is to engage with us and clients, not hide away. Vat visits a couple of months after registration would be a good example.

Bringing in an argument about what the government does with the money once received is spurious to the purpose of HMRC - a collector of taxes.

We can only sit back and watch the car crash. But I do wish interviewers would put strongly to the HMRC reps the points that we make. What is their answer to 100% of accountants saying as I have written. We are not divided here. The only people for HMRC are those destined to make money from MTD.

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Run for cover Sir Harra and Co. Rebecca has lit the fuse:

Just what are the benefits of MTD?
by Rebecca Cave
For years AccountingWEB members have been asking what the benefits of MTD actually are. Rebecca Cave says we have yet to receive a quantified response from HMRC.


https://www.accountingweb.co.uk/tax/hmrc-policy/just-what-are-the-benefits-of-mtd?cm-uuid=9c7e48c7-22ae-47eb-ae35-da823e2668af&utm_medium=email&utm_campaign=AWUKTAX160924&utm_content=AWUKTAX160924+CID_bc064c1c4ff552511ad212a3ef53eecf&utm_source=internal_cm&utm_term=Read%20more

If Rachel can't determine HMRC's leadership team are the cluster of all clusters 'we are all doomed'...to quote a well known Dad's Army character.

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I can remember the Ken Dodd self assessment joke that circulated around the time of self assessment introduction ('I don't know what all the fuss is about, I've been self assessing for years'). I don't recall any negative feedback around at the time self assessment was introduced.


By Twickers Call
13th Sep 2024 18:29
I hope those in charge of MTD IT would take time to read the comments made by Rebecca Cave. I do not think there is any one in HMRC had the experience of Rebecca Cave.
We are all against the MTD for Income tax project.
We never ever made any fuss for any HMRC projects before,due to the fact that earlier projects from 1996 were sensible, helpful and cost effective. It was called self assessment and every tax payer submitted their tax returns on their own and or through a tax agent.
The revenue increased due to user friendly free of charge tax programs.
This MTD for IT is a nightmare and appear to be some jargon based project to confuse us all with the intention of harming the British Economy by short-sighted Ex-Chancellor and Civil servants who gets big pension when retired. They have made their luxury holiday plans already.

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I'm less optimistic about HMRC waking up.



By kevinringer
18th Sep 2024 10:28
HMRC want MTD because HMRC thinks it will close the tax gap. There's 2 aspects to this:

1. What is the tax gap?
2. Will MTD close it?

Thoughts:

1. When SA started we were told HMRC would undertake 1-2% random enquiries annually just to check the SA system is working. HMRC also undertook other specific full and aspect enquiries. These all fed into statistics which enabled HMRC to estimate the tax gap. That was in 1990s and early 2000s. I've not had an enquiry for many years and speaking to other practitioners, they too have had either none, or very few enquiries. That tells me that any 'tax gap' figures compiled by HMRC are no longer based on real world data. I am increasingly of the opinion that the tax gap is assumptions based on assumptions which are as accurate as random figures plucked from the air.

2. MTD VAT did not close the VAT gap - see https://www.accountingweb.co.uk/tax/personal-tax/mtd-fails-to-reduce-the.... If MTD VAT failed, on what basis does HMRC think MTD ITSA will succeed?

If that isn't compelling enough, see https://www.gov.uk/government/statistics/measuring-tax-gaps/4-tax-gaps-i... figure 4.1. MTD was announced after a period of increases in the tax gap which peaked at 5.4%. But since then the tax gap has decreased and the most recent year it was 3.0% which is the lowest for 20 years. So even if MTD ITSA did close the mythical tax gap, it will be closing the smallest tax-gap for 20+ years, which means the saving will be the smallest, so the return on investment will be smaller than was envisaged when MTD was announced in 2015, and at the same time the cost of MTD has increased - see https://www.nao.org.uk/press-releases/progress-with-making-tax-digital/. The original cost of £226 million was to close a 5.4% tax gap compared to the 2023 estimate cost of £1.3 billion to close a 3.0% tax gap. That a 2023 cost/benefit of £433 million per 1% compared to 2015 cost/benefit of £42 million. In effect the cost/benefit has reduced by a factor of 10 over the last 10 years. Even HMRC has to wake up at some time and recognise their MTD vanity project is not worth it.

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Despite more or less universal negative feedback on every Accountingweb thread covering MTD4IT, HMRC still seem keen to let it stagger on. Rebecca Bennyworth is the person HMRC hope will persuade accountants that this is the right way to go (and understandably so as she is one of the most engaging tax lecturers out there), but has she called this one correctly?

Just like NRCGT HMRC appears to be ignoring the warning signs with history probably going to repeat itself. Perhaps time to put feet on the desk and wait for the proverbial to hit the fan as I'm convinced it will. Rebecca's public comments on NRCGT suggest we agree that was a sh*t show..will this introduction be different?


HMRC Making Tax Digital Event in Glasgow
On 19 September, CIOT attended HMRC's Making Tax Digital (MTD) Event in Glasgow - the first face to face event of this kind. The event provided participants the chance to meet the HMRC teams involved in the development and delivery of MTD for Income Tax. In the morning session, participants could move between the HMRC teams and discuss all different aspects of MTD. In the afternoon, Rebecca Benneyworth shared her experiences of taking part in the private beta testing of MTD. A key message at the event was that now is the time to consider how MTD for ITSA will impact your client base and your business - starting to prepare now is essential if you want to be ready for mandation in 2026.

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Whoops....Benneyworth

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It is all about timing!....he knows the chaos that is going to follow.

HMRC chief Jim Harra has announced that he will be stepping down in the spring and retiring from the tax department and the civil service.

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Hope the bleeper outer is on duty when this hits an accountingweb thread (suspect there will be more f***s than spectators witness in a round of golf with Scotland's best left handed golfer (Andrew Coulthard is on full-time duty when commentating). Amazed Rachel hasn't postponed this yet.


HMRC would like your view on what to call Making Tax Digital
HMRC’s design team are collating user research to identify a name for Making Tax Digital (MTD) for Income Tax when it is launched in April 2026. This name has to be one that is meaningful to both taxpayers and their agents. If you are an agent and would like to contribute your ideas please complete this survey: Service name survey - agents. It will take around 5 minutes, and the results will be analysed by HMRC researchers and a service name confirmed later this tax year.

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In this month's edition of Tax Adviser, Emma Rawson suggests:

'At this stage, it is advisable to only enter one or two clients (for HMRC's MTD4IT testing) at the most into testing, ideally ones who are particularly adventurous or tech savvy'. Yikes...are these requirements to be able to cope with HMRC's new filing system?

And will HMRC be able to cope with the seemingly inevitable questions from tax filers on a quarterly basis when they still have 2022/23 tax returns filed over 8 months ago parked in a dead-end cul-de-sac and struggle to answer the phone to taxpayers filing just one self assessment tax return a year?

Rachel, if you ever escape your fuel payments for the elderly problems (the new poll tax), the above issue is looming down the line and by then it will be too late if you do nothing....picturing Sir Jim perhaps lounging on a sunbed thinking that was a close shave.