Making Tax Digital: pilot (individual tax payers)

[yorkshirelad1]

There was an article in Saturday's (5 Mar 2022) FT: "Digital income tax pilot must be expanded"
Direct https://www.ft.com/content/f86adfbb-dbe6-4392-9144-5a9342780880
via Google: https://www.google.co.uk/search?q=%22Digital+income+tax+pilot+must+be+expanded%22
dealing with the pilot for MTD for individuals.

This appealed to my geek tendencies, and I'll probably have to get involved in it when it becomes obligatory, so I was minded to have a look into this.

But having looked further, the process to get into the pilot looks thoroughly uninviting. I don't think I'm eligible (even if I could fathom out the eligibility criteria) and the only way to enrol seems to by third party software providers. Having Googled some articles on the subject, I've given up the will to live. No wonder there are only 9 people involved in the pilot.

Has anyone on here got involved in the pilot as an individual taxpayer (not a business) and would they care to share their experiences?

[AF62]

I don't think I'm eligible (even if I could fathom out the eligibility criteria

Flowchart for the eligibility criteria for the trial here - https://www.rossmartin.co.uk/self-emplo ... 0voluntary.

[BobGe]

Best avoided, I feel...

[monabri]

One leg of the flowchart ends

"Congratulations! You have met the basic qualifying conditions to be able to join the MTD for Income Tax pilot."

Aren't you the lucky one, well done you!

[bluedonkey]

Accountants see MTD for income tax as a bit of a joke. It is both poorly conceived and executed. We're just waiting for the penny to finally drop with HMRC. It may take some time.

MTD for VAT has served no purpose.

[Lootman]

Accountants see MTD for income tax as a bit of a joke. It is both poorly conceived and executed. We're just waiting for the penny to finally drop with HMRC. It may take some time.

Yes, my accountant (who used to work for HMRC) firmly believes that we should submit paper returns and he advises all his clients to do so.

Apparently if he submits returns directly to HMRC then he is obliged to do so electronically. So instead he prepares paper returns for his clients who are then free to post them in themselves with a cheque.

I will be the last person in the country to submit taxes digitally or electronically. I don't even have an online account for taxes. I feel sure it is better and easier for the taxman, but that is not my problem.

[bluedonkey]

Accountants see MTD for income tax as a bit of a joke. It is both poorly conceived and executed. We're just waiting for the penny to finally drop with HMRC. It may take some time.

Yes, my accountant (who used to work for HMRC) firmly believes that we should submit paper returns and he advises all his clients to do so.

Apparently if he submits returns directly to HMRC then he is obliged to do so electronically. So instead he prepares paper returns for his clients who are then free to post them in themselves with a cheque.

I will be the last person in the country to submit taxes digitally or electronically. I don't even have an online account for taxes. I feel sure it is better and easier for the taxman, but that is not my problem.

Your accountant sounds extraordinary.

[pje16]

post and cheques
more like medieval

[Lootman]

post and cheques
more like medieval

It works, and means that I don't have to participate in the circus that is online processing and online accounts.

Moreover I have not had a query about my tax affairs in over 12 years, since back when I had BTL properties and my taxes were a lot more complicated. Now my income is just interest, dividends and capital gains, so there is no need to make things more complex than one item of post and one cheque per year. In fact I could do my return myself except that I like my accountant - he is almost as ornery as I am.

[pje16]

he is almost as ornery as I am.

I won't argue about this then

[BobGe]

Making Tax Dangerous...

[pje16]

I just helped a mate set up MTD for his business VAT
I know this thread is not about business, but as long as you know a bit about Excel (name ranges) it was very easy

[Charlottesquare]

I just helped a mate set up MTD for his business VAT
I know this thread is not about business, but as long as you know a bit about Excel (name ranges) it was very easy

Yes, vat is simple as it is only the one quarter's figures needed, link through daybooks to a vat summary and collect numbers from there to lodge with some lodging software and you are sorted, but the quarterly income tax numbers with four linked submissions and the final accounts will I suspect not be quite as straightforward a DIY project and possibly looking at off the shelf software may be simpler e.g. possibly something like VT will be more comfortable with its Excel approach.

[pje16]

I just helped a mate set up MTD for his business VAT
I know this thread is not about business, but as long as you know a bit about Excel (name ranges) it was very easy

Yes, vat is simple as it is only the one quarter's figures needed, link through daybooks to a vat summary and collect numbers from there to lodge with some lodging software and you are sorted, but the quarterly income tax numbers with four linked submissions and the final accounts will I suspect not be quite as straightforward a DIY project and possibly looking at off the shelf software may be simpler e.g. possibly something like VT will be more comfortable with its Excel approach.

My mate found a website (I can't find it now) which was brilliant
they had sample excel sheets for months and quarters and a great video that easily explained it all
You downloaded their softeare which held your hand as you went though it
I'll get the link and post it here

[pje16]

found it
https://www.comsci.co.uk/100PcVatFreeBridge.html

[Charlottesquare]

I just helped a mate set up MTD for his business VAT
I know this thread is not about business, but as long as you know a bit about Excel (name ranges) it was very easy

Yes, vat is simple as it is only the one quarter's figures needed, link through daybooks to a vat summary and collect numbers from there to lodge with some lodging software and you are sorted, but the quarterly income tax numbers with four linked submissions and the final accounts will I suspect not be quite as straightforward a DIY project and possibly looking at off the shelf software may be simpler e.g. possibly something like VT will be more comfortable with its Excel approach.

My mate found a website (I can't find it now) which was brilliant
they had sample excel sheets for months and quarters and a great video that easily explained it all
You downloaded their softeare which held your hand as you went though it
I'll get the link and post it here

Re vat I can and do write my own spreadsheets which are linked and therefore digitally compliant with all the required data per the Act, but that is simple linking the daybooks to a sheet each quarter that collates the vat return numbers, but MTD IT is different because the four quarter digital records all come together for the final submission plus there are more technical bits to appreciate (the new basis periods for one) etc. Completing four distinct returns for vat is not that difficult, four linked returns that will make up your year end accounts for IT purposes where the links from individual transactions to summaries in working papers to adjustments then to final accounts is a slightly more difficult proposition. (and I say this as someone who has been knocking out client accounts since 1985)

[pje16]

I have never done it myself
have never needed to to
but I am quite techy and have a background in finance so help out friends if they need it
We haven't done my friend's return yet (his 1st quarter in end of May -a bit odd but that's how it is ) but we installed the software, plugged in his business name and VAT number so it's all good to go and registered him for MTD
He has kept good records on Excel

[modellingman]

Earlier today I received the email version of this sponsored article about MTD for income tax on Landlord Zone. The sponsors, APARI, are one of only 3 package offerings of MTD for Income Tax listed by HMRC, though a number of others are shown as being in development. Like so much at present, APARI's offering appears to be delivered via a phone based app - which is a turn-off for me. Fiddly, tiny virtual keyboard and screen too small.

There seems to be no talk, as yet, of the provision of bridging software for MTD for income tax. A lot of the marketing of suppliers like APARI seems to be concentrated on the shock, horror aspect of five submissions per annum.

Whilst MTD for Income Tax obliges landlords and others to keep digital records of the property/business income and expense transactions and to submit quarterly and annual summaries of of these to HMRC through approved software, it is not clear (to me at least) how this further interacts with other information submitted through self-assessment (such as dividends, income from pensions/earnings, etc). Although, HMRC appears to be pushing ahead with all sorts of API's for these additional elements of self-assessment (see https://developer.service.hmrc.gov.uk/g ... ice-guide/) this does seem rather at odds with the very restricted conditions for joining the MTD pilot programme.

Re vat I can and do write my own spreadsheets which are linked and therefore digitally compliant with all the required data per the Act, but that is simple linking the daybooks to a sheet each quarter that collates the vat return numbers, but MTD IT is different because the four quarter digital records all come together for the final submission plus there are more technical bits to appreciate (the new basis periods for one) etc. Completing four distinct returns for vat is not that difficult, four linked returns that will make up your year end accounts for IT purposes where the links from individual transactions to summaries in working papers to adjustments then to final accounts is a slightly more difficult proposition. (and I say this as someone who has been knocking out client accounts since 1985)

I am not an accountant, but with my spreadsheet modelling and landlord's hats on I can't see it being that difficult - particularly as HMRC has for several years been encouraging the cash basis of accounting for small property businesses. Isn't the linkage between returns essentially rooted in assigning each transaction to one and only one accounting period and not switching transactions between the quarterly periods - particularly after these have been submitted to HMRC. The digital records for my UK property business already assign each transaction with a tax year and calendar year (the latter for the tax system in Spain, where I reside), so all I can see that is required is the addition of another field for the quarter-within-year, plus appropriate processing of the data to get the quarterly summary values required for submission.

If I am wrong and oversimplifying, I am happy to be corrected.

modellingman

[yorkshirelad1]

More in Saturday's FT on MTD

FT, Sat 26 Mar 2022: "Can we claim exemption from digital tax reporting?"
https://www.ft.com/content/a166ef11-a322-48cf-a839-5929d718309a

via Google at: https://www.google.co.uk/search?q=site%3Aft.com+exemption+digital+tax+reporting

[Charlottesquare]

Earlier today I received the email version of this sponsored article about MTD for income tax on Landlord Zone. The sponsors, APARI, are one of only 3 package offerings of MTD for Income Tax listed by HMRC, though a number of others are shown as being in development. Like so much at present, APARI's offering appears to be delivered via a phone based app - which is a turn-off for me. Fiddly, tiny virtual keyboard and screen too small.

There seems to be no talk, as yet, of the provision of bridging software for MTD for income tax. A lot of the marketing of suppliers like APARI seems to be concentrated on the shock, horror aspect of five submissions per annum.

Whilst MTD for Income Tax obliges landlords and others to keep digital records of the property/business income and expense transactions and to submit quarterly and annual summaries of of these to HMRC through approved software, it is not clear (to me at least) how this further interacts with other information submitted through self-assessment (such as dividends, income from pensions/earnings, etc). Although, HMRC appears to be pushing ahead with all sorts of API's for these additional elements of self-assessment (see https://developer.service.hmrc.gov.uk/g ... ice-guide/) this does seem rather at odds with the very restricted conditions for joining the MTD pilot programme.

Re vat I can and do write my own spreadsheets which are linked and therefore digitally compliant with all the required data per the Act, but that is simple linking the daybooks to a sheet each quarter that collates the vat return numbers, but MTD IT is different because the four quarter digital records all come together for the final submission plus there are more technical bits to appreciate (the new basis periods for one) etc. Completing four distinct returns for vat is not that difficult, four linked returns that will make up your year end accounts for IT purposes where the links from individual transactions to summaries in working papers to adjustments then to final accounts is a slightly more difficult proposition. (and I say this as someone who has been knocking out client accounts since 1985)

I am not an accountant, but with my spreadsheet modelling and landlord's hats on I can't see it being that difficult - particularly as HMRC has for several years been encouraging the cash basis of accounting for small property businesses. Isn't the linkage between returns essentially rooted in assigning each transaction to one and only one accounting period and not switching transactions between the quarterly periods - particularly after these have been submitted to HMRC. The digital records for my UK property business already assign each transaction with a tax year and calendar year (the latter for the tax system in Spain, where I reside), so all I can see that is required is the addition of another field for the quarter-within-year, plus appropriate processing of the data to get the quarterly summary values required for submission.

If I am wrong and oversimplifying, I am happy to be corrected.

modellingman

My comments were not merely re landlords' returns but more generally re returns for the self employed. (And of course eventually partnerships and I suspect eventually companies)

Whilst most are already caught re MTD Vat if vat registered it is only the vatable (standard/zero/exempt) transactions that currently need returned, but there can be a lot more to accounts for IT purposes than just vat transactions, there is all wages and PAYE, HP and loan transactions and everything else which goes into a set of accounts.

Whilst I am sure some people will be able to write spreadsheets to collect all such data quarterly , collate these annually and link the four quarters and the year end adjustments to whatever linking software becomes available ,I am not sure that many will manage this very well.

Whilst I have written numerous spreadsheets over the years from daybook which auto link into a ETB I would not really fancy using these to submit four quarters and a year end correction set of data via linking software, it feels far too much like reinventing the wheel when for MTD IT to operate there will need to be, and will be, properly written available accounting software.

Of course the accounting software is not as simple to use as all the TV adverts, rubbish in rubbish out springing to mind, given my past experience of clients I foresee that say large numbers will treat their own drawings as wages when the lodge on a DIY basis and will certainly not be that discriminating as to what costs are relievable and how capital asset additions and disposals need treated. (Accruals , prepaid and stock & WIP will be a whole other adventure)

But I do not now care, when all the nonsense got announced, and yet another change in the basis of assessment was proposed, I packed in private practice in late 2019 and suspect I will give up the day job as an in house FD before it all really bites re my employers (Partnerships and Limiteds)