back to article Peers to HMRC: Digital tax reforms 3 days after Brexit? Hold your horses, how 'bout 3 years...

HMRC's digital tax reforms to VAT – due to launch just three days after Brexit – will hit small businesses hard and should be delayed, peers have said. HMRC is alone in its confidence that all one million businesses will be ready for Making Tax Digital for VAT in April 2019... In a report (PDF) published today, the members …

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  1. Dr Who

    This is indeed shaping up to be a classic omnishambles.

    For businesses not using a package that already supports MTD for VAT, building bespoke links into the HMRC API looks like it wouldn't be too hard, or alternatively for bridging software I've found this solution https://www.btcsoftware.co.uk/mtd-for-vat-software-solutions-2/ which looks pretty good.

    HMRC bombard us with info about all kinds of guff, but nothing about this, which actually matters.

    1. JetSetJim Silver badge
      FAIL

      I saw it a few weeks ago and despaired at the thought of having to spend cash on s/w to fill in the 7 boxes (mostly zero) of the VAT return. Some googling has found some Excel bridging s/w, but I've not tested them, and am not looking forward to the inevitable cluster-fuck of the first return after this.

      HMRC are currently forcing everyone to have some 3rd party solution to submit their VAT returns - pain in the arse. They should publish their own (for small businesses, at least, like their PAYE tools), as well as the API details.

      Allegedly all in the name of making things simpler for small businesses - blech

      1. Gotno iShit Wantno iShit

        How in hell is filling out 7 boxes once a quarter so complicated it needs automating?

        1. JimboSmith Silver badge

          How in hell is filling out 7 boxes once a quarter so complicated it needs automating?

          I had to laugh when told that this would be a benefit to me as it would mean that my tax returns were more accurate. I said my returns had never been inaccurate before and I couldn't see any benefit to me of having to submit three extra returns a year. I don't even have to do VAT and earn under 12k a year so this will just eat into that.

          1. JimboSmith Silver badge

            earn under 12k a year so this will just eat into that

            Just to clarify I earn that from the flat I earn more than that from my day job. Thanks to my pedantic friend for pointing that out.

            1. lglethal Silver badge
              Thumb Up

              @ JimboSmith

              if i read the article correctly, you earn under 85k on your VAT taxable items (or however you want to call it), so you dont need to change anything...

              So dont stress... ;)

          2. katrinab Silver badge

            "I don't even have to do VAT and earn under 12k a year so this will just eat into that."

            In that case you are exempt at the moment because you are below the registration threshold.

            1. Zippy´s Sausage Factory

              @katrinab Technically speaking,I should be exempt too. But I'm registered because - surprise - I'm not exempt even though I earn under the £85K limit. The reasons are obscure and byzantine, but as far as I can tell, the headline is that everyone under £85K is exempt from being registered for VAT, but the small print has enough little traps in it that most people who run their own business ought to be, almost no matter what they earn.

              1. katrinab Silver badge

                Some of the reasons why you might be required to register even though you are below the registration threshold

                You are a non-resident trader

                Certain types of foreign / EU trade

                Part of a VAT group

                In all of those cases, you won't be able to register for MTD at the moment, because it can't cope with those scenarios yet.

        2. jmch Silver badge
          Boffin

          "How in hell is filling out 7 boxes once a quarter so complicated it needs automating?"

          Depends on how complex is the calculation to arrive at the values you need to fill in, no?

          1. AMBxx Silver badge

            Automating the 7 boxes is just the start. My accountant says that transaction level will be next.

            Frustratingly, I keep hearing people saying that the ONLY solution is to go cloud for accounts. I'm one of the few small businesses genuinely filing digitally and it saves me all of 30 seconds every quarter. No, I'm not using cloud software - I'd like my data to still be there even when I stop paying.

        3. SJM

          Filling in the boxes is not the hard bit.

          From the business side of things, working out all of the ins and outs is where the effort is and many business use a lot of spreadsheets with data in all sorts of places.

          The biggest challenge is working out exactly which transactions were included in the total of your last return. For example, if a purchase invoice comes in late, you need to know if you claimed it on the last return or not.

          If you hire an accountant, they may manage this all for you yet without good systems, it can still be a manual process, therefore more expensive.

          From the government side of things, they are looking to remove the paper forms which cost them a great deal to process and can create more errors.

      2. Anonymous Coward
        Anonymous Coward

        Here are the API details,

        https://developer.service.hmrc.gov.uk/api-documentation/docs/api

        I had a look before and there is no reason why you couldn't write your own software. I did consider putting something simple together however the problem you have is the no "copy and paste" rule which would mean tailoring it to each business or getting each business to tailor there data to yours, you can export to csv/xml and import back in leaving a digital link. At least how I see it.

        1. Phil Endecott Silver badge

          > there is no reason why you couldn't write your own software

          Well you need to register and get access permissions for your application.

          This looks to be intended for commercial accounting software vendors, not for software developers who could write a 50-line shell script to do this for their own business, nor for open-source projects.

          https://developer.service.hmrc.gov.uk/api-documentation/docs/using-the-hub

        2. Anonymous Coward
          Anonymous Coward

          gnucash

          HMRC should work develop and give away a free addon for gnucash https://gnucash.org/

        3. Nial

          "I had a look before and there is no reason why you couldn't write your own software"

          Many of us aren't software engineers, that's one reason.

  2. Anonymous Coward
    Anonymous Coward

    From Window Tax to Windows Tax

    "the Government should consider again the case for providing a basic, free software option"

    I'm willing to bet that a free software option won't be available for a variety of operating systems. So am I going to have to buy a machine with windows?

    In the 18th century, people used to reduce their tax bill by bricking up windows.....

    1. Steve K Silver badge

      Re: From Window Tax to Windows Tax

      No need for an OS rant - this could be web-based (like for XBRL submisisons for small businesses to Companies House etc.).

      1. Tomato42 Silver badge

        Re: From Window Tax to Windows Tax

        And you think that they won't fuck it up by requiring use of Internet Explorer or a Java plugin that somehow works only on Windows? You are seriously underestimating gov's capacity for fuckups!

      2. Aqua Marina Silver badge

        Re: From Window Tax to Windows Tax

        "No need for an OS rant - this could be web-based"

        It already is web based, you log in online and fill in 7 boxes. This is no longer good enough for HMRC, who want per-transaction-line auditing available through the API. I.e. you say you made £20,000 of sales, HMRC want the ability to scan all the transactions to verify you actually did make £20,000 of sales. Hold on a minute, your stock purchases don't tally up with your sales for the last 6 months, and the amount of income you are making doesn't match your personal tax returns, something must be fishy here, inspection time!.

    2. katrinab Silver badge

      Re: From Window Tax to Windows Tax

      Could it be a LibreOffice macro?

      At the moment, if you need to file a MOSS return, one of the options is to put the details in a spreadsheet template and upload it to them. The templates are available in Excel and Libreoffice formats, which between them, cover most operating systems.

      What will happen to MOSS after Brexit? Right now, nobody knows. Will UK traders have to register in another EU country to report sales after 29th March? I expect most will chose Ireland so that they can communicate with the tax office in English. Are they ready to handle loads of applications?

  3. Anonymous Coward
    Anonymous Coward

    I'm working on implementing a MTD solution for the company I work for.

    I have to say most of our customers know nothing and are completely unprepared.

    Since the go live is next year, they should already be making sure they hold all of figures needed to make submissions digitally.

    I should also say that the HMRC test servers aren't great either. All of the documentation for MTD VAT is 'beta', meaning they can change it whenever they want, yet we are trying to create a piece of software that is supposed to go live next year. The test data/scenarios do not work flawlessly either. Because of the way the scenarios are implemented it's impossible to do a full walkthrough of the process using the test data. You have to stop and change the scenario half way through. Their test data/scenarios never work the way you want them to.

    I'm also quite annoyed that they have implemented MTD via the HMRC API instead of using the Government Gateway (Transaction Engine) that is used for making year end payroll submissions and CIS submissions. The old system works fine for two way communications using XML. Now we have to suddenly start learning an API that uses JSON instead, for no apparent reason.

    1. iron Silver badge

      Because JSON is the current hotness.

      If my recent experience is anything to go by, if it was local government they'd be looking for csv and not providing a schema so you have to guess what each field represents.

    2. Anonymous Coward
      Anonymous Coward

      Beta, eh ?? Think yourself lucky.

      As I incessantly bang on about, because it's shooting fish in a barrel, people paying for their use of the Dartford Crossing remain subjected to an "alpha" site, which is apparently a "new" service. Four years after it went live. In what universe is going live with an alpha project a good idea, let alone still running it like that after four years??? Though maybe they're just being more honest than the rest of the govt. "digital" estate.

      Apparently the gov.uk "brand owner" has no influence or control over this. You so couldn't make it up.

      So good luck with MTD. You'll sure need it.

  4. Sir Runcible Spoon Silver badge

    Nope

    First I've heard of this to be honest, although I am registered on the Flat Rate scheme (which I assume it doesn't affect*).

    Perhaps the figures relating to #businesses meeting the turnover threshold that are not on the flat rate scheme is a bit lower than the headline figures here (unless that's already been taken in to account).

    *I'm trying to break the habit of assuming anyone/anything makes sense anymore, but it's a struggle.

    1. JetSetJim Silver badge

      Re: Nope

      The Flat Rate Scheme still requires a VAT return to be submitted - so yes, you will be affected. All that's different is that the value you send for Box 1 is your flat rate percentage times your revenue, rather than the VAT you've charges, and the box for VAT on purchases is zero (*)

      The s/w you use will still need to send the values for the 9 boxes (some may be calculated from the others), it's just that your calculations on what to put in the boxes are different to those not on the FRS.

      (*) - something like that, anyway, I've jumped off the FRS as it was no longer worth doing for me (and I think there was some new regulation that made it a pain, but I can't remember what. Anyway, IANAAccountant

      1. Sir Runcible Spoon Silver badge

        Re: Nope

        Ah, in that case it might be the same for me then, since the s/w I use to create the values in the VAT return boxes is my brain :)

        1. lglethal Silver badge
          Trollface

          Re: Nope

          since the s/w I use to create the values in the VAT return boxes is my brain :)

          Bah, that will never catch on...

          1. Anonymous Coward
            Anonymous Coward

            Re: Nope

            And it's almost certainly not HMRC approved.

        2. JetSetJim Silver badge
          Thumb Up

          Re: Nope

          > the s/w I use to create the values in the VAT return boxes is my brain :)

          As long as your brain can issue JSON with the correct formatting, after correctly passing an OAUTH authentication transaction, correctly setting the flags in the subsequent REST queries, you're good to go, then.

        3. katrinab Silver badge
          Unhappy

          Re: Nope

          Sorry, you brain is not MTD compliant. You will need to get a new system.

    2. Herring`

      Re: Nope

      I'm assuming that my accountant has this in hand. I've been submitting VAT quarterly anyway - well, my accountant has. I'm on flat-rate too.

  5. Chloe Cresswell

    Yeah, to upgrade my version of sage to the one that can do MTD means having to move to a subscription: £850 a year to file VAT returns :(

    1. VinceH Silver badge

      Not necessarily. You can still buy Sage on a perpetual licence, and if you want to make MTD submissions directly from the software you'll just have to subscribe to the MTD module. Still an annoying cost, but nowhere near £850/annum.

      And if you do go down the route of updating Sage and using it to submit, try SJ Software as a supplier instead of Sage. They're cheaper. :)

    2. Anonymous Coward
      Anonymous Coward

      The cheapest sage subscription is £240 per year (or £480 with telephone support. I guess you must be on the 2 user version.

      https://www.sage.com/en-gb/products/sage-50c-accounting/

      Still a 48% (or 185% with telephone support) increase over last year.

  6. JimboSmith Silver badge

    I was contacted by my accountants a few years ago to tell me that MTD was coming. They said they couldn't tell me much more because there wasn't any more information from the HMRC at that time. So I ignored it as I only rent out a flat and have some investments which could theoretically come under this. Then I heard more, that there were dates for introducing this to the wider populace so I made enquiries with the HMRC. The lady on the enquiries line basically said that if I wasn't party of the exercise that was being conducted then they couldn't talk to me about MTD. I asked if they could at least tell me what records I would have to keep? No not if you're not part of the trial then we can't tell you anything. I said it sounded like I was going to be paying my accountants for four pieces of work a year as opposed to just one. HMRC lady said that I could just do it myself and that it would be easy to do online. I said great what details will I need to enter? I can't tell you that unless you're part of the trial sir. She said I would be able to submit my digital records online to which I said you mean the PDF account statement that the managing agents send me each month? I think you're trying to get information out of me that I'm not supposed to give to anyone outside the trial participants. I asked if I only received an annual statement for my flat accounts could I just submit things annually like now? That information is only available for participants in the yada yada yada same response etc.

    I asked if she could tell me what the fine would be for missing an information submission would be. I find it hard enough to get everything together once a year let alone every three months. Nope she couldn't do that either so I said it sounded like a shambles I would put money on the introduction deadlines slipping and wished her a pleasant afternoon. As it turned out the deadlines did get moved and I'm still waiting for more information. The HMRC website doesn't tell you anything about what you'll need to keep.

    1. Sir Runcible Spoon Silver badge

      "I can't tell you that.."

      ..because it has come to light that if you ask 15 HMRC staff the same question you would get 15 different answers, revealing that we have no idea what's going on. This way we get to give everyone the same answer and just look awkward, rather than incompetent.

      TFTFY :)

  7. H in The Hague Silver badge
    Pint

    How they do it in NL

    "This will mean – among other things – companies will have to update or buy in new, compatible software."

    VAT returns have been digital for yonks here in the Netherlands. If you use an accounting package you can use that. If not, or if you use a homebrewed system you just go to a web form and enter the numbers in a few boxes. Takes about 5 mins (if you're a slow typist) every quarter. Can't fathom why HMRC can't copy that approach. But UK bureaucrats always seem to find ways to make life unneccessarily complicated. (Don't get me started on jobsworth-pseudo-health & safety stuff (in contrast with real health & safety stuff which I'm all in favour of).) Time for a beer to soothy my nerves!

    1. JimboSmith Silver badge

      Re: How they do it in NL

      I don't even have to fill in a VAT return and they're saying I'll still need to do this. I could cope with putting numbers into boxes on a webpage every quarter. I'm not going to be buying an app/software to do it although that's got me thinking. If the accountants do it they'll charge me and it's not reclaimable against tax. If I buy the software then that may be tax deductable and I can do it myself. The problem with that is I am then liable if I get it wrong which is less appealing. I'll just end up paying the accountants more thanks to this. I'll wait till HMRC tell me I have to do this before doing anything.

      1. Sir Runcible Spoon Silver badge

        Re: How they do it in NL

        "The problem with that is I am then liable if I get it wrong which is less appealing"

        You're probably liable if they get it wrong as well. Just sayin'.

    2. Sir Runcible Spoon Silver badge

      Re: How they do it in NL

      HMRC do it that way in the UK too.

      I've been submitting my VAT returns (flat rate) online for over 10 years now.

    3. katrinab Silver badge

      Re: How they do it in NL

      " If not, or if you use a homebrewed system you just go to a web form and enter the numbers in a few boxes. Takes about 5 mins (if you're a slow typist) every quarter."

      That's what we do at the moment, but the government wants to "modernise" it.

  8. Anonymous Coward
    Anonymous Coward

    Wow, I’m really quite shocked that I hadn’t heard about this.

    I’ve only been VAT registered for a few months. Why didn’t everything that I signed up for back in the Summer say in big letters “This is only temporary, you’re going to have to do it all differently from next year”? I might efen have postposed registering to avoid the re-learning. (I’m voluntarily registered.)

    Currently I type about 4 numbers into a web page each quarter. I would have thought that that web page is a front end to some HMRC back-end system. Now they want me to talk directly to that back-end system, right?

    What a total pain. If it was something involving more data (e.g. PAYE for a medium-sized business) then I could see the possible benefit - but for just a handful of numbers every few months... why?

  9. OssianScotland

    As I understand it (from a brief conversation with my accountant) you are having to submit a lot more than boxes 1-9. He said all transactions involving a VAT element will need submission so presumably they can match the claimed refunds for one business against the sales for the other.

    I said it sounded like a complete clusterfork and he basically agreed. I have used an excel workbook for 15 years - never had any issues or complaints, but now I am going to have to completely revamp it into an HMRC compatible format (I am told Excel is an acceptable method as long as the layout matches what they want). I reckon one day chargeable time used per quarter (at the moment I am 10 mins a week updating the workbook, then 15 mins a quarter pulling out the numbers for the return).

    AAAARRRRGGGHHH!

    1. VinceH Silver badge

      "As I understand it (from a brief conversation with my accountant) you are having to submit a lot more than boxes 1-9. He said all transactions involving a VAT element will need submission so presumably they can match the claimed refunds for one business against the sales for the other."

      I suspect that was sort of what they were originally thinking - and when it was still at the planning stages some time back, I read stuff (on HMRC's site, I think) that suggested that during the submission process, the server could request more background data from the submission client. i.e. they could interrogate your software for the full data.

      However, even that's been scaled right back - to the extent some people have told me I was imagining it; I'm sure I wasn't. If you look at the API (I've linked to it in comments on El Reg before, and someone else has done so further upthread) it does indicate only the main VAT return boxes.

      There is supposedly a requirement that the figures be built up digitally (because that was supposed to be the point) - but AFAICS you could still keep manual records, and just key the VAT return figures into something that will then submit them, and they would be none the wiser at this stage*. It's all a big exercise in wasting lots of money.

      * Things might change in future, of course.

      1. Domino
        Unhappy

        "I suspect that was sort of what they were originally thinking - and when it was still at the planning stages some time back, I read stuff (on HMRC's site, I think) that suggested that during the submission process, the server could request more background data from the submission client. i.e. they could interrogate your software for the full data."

        Then someone mentioned GDPR and they realised having a normal set of accounts and an anonymised one for tax purposes might not be the best idea.

        I sometimes think big business has been lobbying for rules that force all small businesses to use their services. How many small businesses can comply with GDPR without handing off their IT infrastructure to a 3rd party?

        This just looks like another step down that road to me.

    2. Phil Endecott Silver badge

      > all transactions involving a VAT element will need submission

      That’s not how I understand it, based on https://developer.service.hmrc.gov.uk/api-documentation/docs/api/service/vat-api/1.0

      1. JetSetJim Silver badge

        Reading the REST API for the "submit vat return" (plenty of folk linking the docs), it is literally a JSON formatted 9 box vat return, so complete overkill for a small business which will in no way make your records more accurate as it's the same data you're submitting anyway

  10. DaveEdi

    Isn't that why I pay my accountant

    I don't see what the problem is. I already pay my VAT bill quarterly whenever my accountant (Inniaccounts) tells me too. Well, in reality, the VAT man just grabs it via DD.

    Not sure how this would change for me, but, I'm just a scumbag contractor.

    1. Sir Runcible Spoon Silver badge
      Thumb Up

      Re: Isn't that why I pay my accountant

      Do you think that contractors are ok with the 'scumbag' moniker because we know that we aren't ;)

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