Yet Another Cycling Forum
General Category => The Knowledge => OT Knowledge => Topic started by: SoreTween on 23 November, 2018, 11:53:46 am
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Making Tax
Digital needlessly complicated >:(
There are now 5 months until the nice, easy Web portal for submitting VAT returns gets switched off in favour of something vastly more complex. The Lords have just issued a report on this giving HMRC a total roasting but I don't want to get into the politics. Are you ready? I'm not.
All to save the complexity and human error in filling out 7 numbers in an online form.
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The whole thing's a total joke, but then the VAT division of HMRC has some serious form (as I'm sure any VAT registered business owner will tell you ::-)).
Our accountant told us they (HMRC) want to collect more data. I guess they might stop at wanting the breakdown of every single transaction made, or will they? Tesco and the like must produce a few, for example.
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Cheapest solution for me found so far is this:
https://www.neilsonjamestech.co.uk/vat-summary.php
At £36 a year it will 'only' cost me nine quid each time I do a return. Even that little grates for a 90 second job. It also means I need to keep a Windows PC beyond January 2020, something I have been working steadily to avoid. Searching for a libreoffice on Linux equivalent has so far drawn a blank.
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I looked at that co's website a little while ago. Looks like they've moved forward a bit, which is good.
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I'm all fingers crossed that I don't have a year when I cross the VAT threshold. I'm registered, but that was because most of my clients are large corporations and there was a risk in the beginning that I'd hit the threshold.
It beggars belief that they are doing this. There should be a threshold of, say £500k or £1m, instead of slapping another financial burden on small businesses. I would have to go to the subscription version of my accounts package, at £170 per year.
As has been said above, we have to do returns anyway (else we get bashed about) and we do them electronically now. It's rubbish.
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Making Tax Digital needlessly complicated >:(
There are now 5 months until the nice, easy Web portal for submitting VAT returns gets switched off in favour of something vastly more complex. The Lords have just issued a report on this giving HMRC a total roasting but I don't want to get into the politics. Are you ready? I'm not.
All to save the complexity and human error in filling out 7 numbers in an online form.
Is there a description anywhere of what this "something vastly more complex" actually is?
Agree that the threshold should be more like a million rather than the what 80k that it currently is?
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Basically instead of inputting the 7 or so figures into an on-line form you will have to have an accounts package that can directly upload the same data to HMRC.
So bye bye doing your accounts on a package that won't do that.
There's some gubbins about HMRC getting a better handle on how much revenue they are going to get. I don't understand that, unless they go to monthly VAT reporting...
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ah right I see... but will it have to be third party, or will HMRC supply their own like they do for RTI?
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One of the reasons behind the move, AIUI, is to eliminate potential errors arising from re-entering figures from, say, a spreadsheet into the VAT submission portal. If the data is linked, an error can't occur. I get this part but it doesn't prevent errors upstream so IMO the point is somewhat moot.
I don't know why HMRC can't just allow a CSV import from a spreadsheet. The data won't be any less accurate than it is currently for Excel/LibreOffice etc users and nor does it prevent direct MTD uploads from dedicated accounts software.
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ah right I see... but will it have to be third party, or will HMRC supply their own like they do for RTI?
Nope, open your wallet for something commercial. The cheap option I linked above looks like being a short term solution. The intention is to force us to use software that can respond to requests for more detail from the robbinyou.
I'm surprised the beancounting industry isn't making war. Sure there mistakes made, I've done a couple. You simply make the correction in the next quarter. If I don't spot my error I expect my accountant to at year end, they are the defence against mistakes going uncorrected. The implication in this is HMRC don't trust accountants.
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The implication in this is HMRC don't trust accountants.
After the problems at Carillion, etc would you trust accountants?
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ah right I see... but will it have to be third party, or will HMRC supply their own like they do for RTI?
Nope, open your wallet for something commercial. The cheap option I linked above looks like being a short term solution. The intention is to force us to use software that can respond to requests for more detail from the robbinyou.
I'm surprised the beancounting industry isn't making war. Sure there mistakes made, I've done a couple. You simply make the correction in the next quarter. If I don't spot my error I expect my accountant to at year end, they are the defence against mistakes going uncorrected. The implication in this is HMRC don't trust accountants.
Any reason I couldn't write my own? Surely HMRC must publish the specification for the API at least?
My issue is not with paying for something, but with paying a fly by night, that's no better if not worse than I am at writing software, and that's no better if not worse than me at understanding the interface specification. If HMRC only supply the spec to select chosen companies, fine, they must have been vetted/carefully selected so I'll just choose one of them. If there's no recommended supplier (s) and you have to just get the software off anybody, I'd rather get the API spec and do it myself.
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Any reason I couldn't write my own? Surely HMRC must publish the specification for the API at least?
My issue is not with paying for something, but with paying a fly by night, that's no better if not worse than I am at writing software, and that's no better if not worse than me at understanding the interface specification. If HMRC only supply the spec to select chosen companies, fine, they must have been vetted/carefully selected so I'll just choose one of them. If there's no recommended supplier (s) and you have to just get the software off anybody, I'd rather get the API spec and do it myself.
The API is publicised and HMRC provide a sandbox:
https://developer.service.hmrc.gov.uk/api-documentation/docs/using-the-hub
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I'd not heard about this.
sounds like a pain. I do mine in excel and would rather keep it that way.
I once worked on an acquisition of an accounting software company and saw what margins they made and how poor customer service was across the market. Being more or less compelled to be a customer of one of them is annoying.
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I think the only way you don’t have to do it is if your turnover is below the VAT threshold.
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Any reason I couldn't write my own? Surely HMRC must publish the specification for the API at least?
My issue is not with paying for something, but with paying a fly by night, that's no better if not worse than I am at writing software, and that's no better if not worse than me at understanding the interface specification. If HMRC only supply the spec to select chosen companies, fine, they must have been vetted/carefully selected so I'll just choose one of them. If there's no recommended supplier (s) and you have to just get the software off anybody, I'd rather get the API spec and do it myself.
The API is publicised and HMRC provide a sandbox:
https://developer.service.hmrc.gov.uk/api-documentation/docs/using-the-hub
Interesting, cheers. Will have a look.
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I think the only way you don’t have to do it is if your turnover is below the VAT threshold.
I think if you are registered for VAT you need to do it. I help out with a company that is below the threshold for compulsory VAT registration but is registered so that VAT on expenses can be reclaimed. That company can avoid the MTDfV pain but only be de-registering and so losing the ability to reclaim.
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A quote:
On 13 July 2017, the Financial Secretary to the Treasury and Paymaster General announced that Making Tax Digital for VAT will come into effect from April 2019. From that date, businesses with a turnover above the VAT threshold (currently £85,000) will have to:
keep their records digitally (for VAT purposes only), and
provide their VAT return information to HM Revenue and Customs (HMRC) through Making Tax Digital (MTD) functional compatible software
Now, if they remove the current way of reporting, that’s a problem.
There is also a note that it might become compulsory to all VAT registered businesses the year after.
Apparently income tax and corporation tax will be going the same way.
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Not quite as bad as I feared.
It looks like there are free systems available which will bridge between excel and the mtd system.
https://www.accountingweb.co.uk/tech/accounting-software/mtd-avalara-bridges-the-spreadsheet-gap (https://www.accountingweb.co.uk/tech/accounting-software/mtd-avalara-bridges-the-spreadsheet-gap)
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Reading this lot ^^^^ makes me glad we closed our company two years ago. On the 21st of every month I still wake up with a little surge of adrenalin and "it's VAT day!" slinking across the back of my mental stage.
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Not quite as bad as I feared.
It looks like there are free systems available which will bridge between excel and the mtd system.
https://www.accountingweb.co.uk/tech/accounting-software/mtd-avalara-bridges-the-spreadsheet-gap (https://www.accountingweb.co.uk/tech/accounting-software/mtd-avalara-bridges-the-spreadsheet-gap)
Useful, thanks. I'll get the boss to look at it.
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July is the earliest we will have to worry about this, the 1st April date is for start of VAT periods not submissions.
My Jan-Mar submission which will be done late April will NOT be electronic.
My Apr-Jun submission in July will be electronic.
Lucky old me being aligned to the calendar quarters, I'll be in the first batch of submissions so I better set aside the whole of July to deal with the systems going TITSUP.
The last to join the party in September is those who have Mar-May (old style) & Jun-Aug (MTDfV) VAT periods.
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AIUI a lot of sole traders do no work for the last couple of months of each financial year, living off savings, just to stay below the threshold and avoid a world of pain. In a mostly-labour business like Fixing Stuff, you really don't want to be VAT-registered as you have virtually no input costs to help offset it and will simply be 20% more expensive than the next guy who manages to stay unregistered.
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Just filled out my VAT return in the old way. The pages have a warning on them now:
If you have signed up for the Making Tax Digital pilot you should not use this service to file your return. You must file using MTD compatible and enabled software. If you file using this portal your return will not be received.
From 1 April 2019 all VAT registered businesses making taxable supplies above the threshold (£85,000) have to submit their returns using Making Tax Digital compatible software. For more information including how to join the pilot click here.
This suggest that this system will carry on for those below the £85k limit.
Also what I think is a new box to tick that declares that you have calculated the figures properly ::-) You can't progress until you've ticked it.
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Do you think that means that even if you're vat registered you can still do returns like you do now if you don't earn 85k, but only once you get to 85k do you have to start using mtd? Or just that if you don't make 85k you don't have to be registered? ( I know it's not entirely clear/ open to interpretation!)
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It's quite clearly the former.
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I've avoided Making Tax Difficult and I have mixed feelings about that. I've just submitted my final VAT return for the company that has been my working life for the last 15 years, it is no longer registered for VAT. As of January 2nd I'm an employee of somebody else's company :'( I asked, when the position was first offered, if I could take it on a contract basis (i.e. through my company instead of direct hire) and did not press the point when the answer was no. Now I'm in the job I've found there are contract employees in similar positions so I could have. But the combination of
- The virtual abolition of tax free dividend income
- Making Tax Difficult
- IR351
mean that I'm really not bothered that I didn't.
I'm in the lucky position with my 2nd company that it has never reached the mandatory VAT threshold so I can go on filling out 7 boxes once a quarter.
1 I don't think I'm liable under IR35, the online tool honestly filled out says not. But since the HMRC don't seem to have clue one2 how to apply their own rules I simply fear them. If they came after me I would not have the resources, financial nor time, to put up a substantial fight. I genuinely think the HMRC will increasing go after the small people rather than celebs. Sure the individual payouts will be smaller but crucifying the small guys (irrespective of whether they should be liable) will be far easier money.
2 For example:
Ian Wells (https://www.theregister.co.uk/2018/05/17/it_contractor_wins_ir35_appeal_against_26k_in_backtaxes/)
Susan Winchester (https://www.theregister.co.uk/2018/09/24/hmrc_ir35_case_settlement_thousands_cest/)
Lorraine Kelly (https://www.theregister.co.uk/2019/03/21/lorraine_kelly_ir35_ruling_hrmc/)
Kaye Adams (https://www.theregister.co.uk/2019/04/16/ir35_win_uk_taxman/)
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I've been able to avoid it for another quarter. I should have started it in April but an error at their end meant I have a six month period from Jan to June so won't start until July. I hope that things are clearer then.
Good luck to everyone now in it.
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Bumped into our accountant in Waitrose the other day (god, how middle class that sounds). His firm had done VAT submissions from Excel using a piece of free bridging s/w. When I have the details I'll post them here.
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HMRC fuckers.
Got another letter today as I'm not registered for Making Tax Digital Difficult. I must do one of two things, the letter implores, either register or declare that I don't need to (I don't).
The URL to register:
www.gov.uk
The URL to declare I don't need to register:
www.tax.service.gov.uk/submissions/new-form/declare-your-business-is-not-required-register-making-tax-digital-vatFollowed by pages and pages of filling out shit they already know to such an extent I had to double check I wasn't in the middle of being phished.
Oh and the lovely nugget at the bottom of the letter: Businesses will be required to sign up for Making Tax Difficult regardless of turnover from April 2022.
Shits
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I've managed to dodge this by being a bit workshy and hence below the threshold for MTD. Nonetheless, having discussed it with my accountant they've said they'll happily continue to take my spreadsheet records and stick them into suitable software and upload for me for a small quarterly fee to save me buying the software myself, and all the attendant upgrades etc. Mind you, my records are pretty simple.
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Thanks for the heads up. I did worry that the bastards would do this. Oh well, that will change the quarterly VAT process a bit. And increase costs...
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I've managed to dodge this by being a bit workshy and hence below the threshold for MTD. Nonetheless, having discussed it with my accountant they've said they'll happily continue to take my spreadsheet records and stick them into suitable software and upload for me for a small quarterly fee to save me buying the software myself, and all the attendant upgrades etc. Mind you, my records are pretty simple.
Is the small quarterly fee more than the price of the software.
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I have been doing this for the last three returns and it is a bit more hassle but not too bad.
I use Avalara MTD Filer, which is a free software designed to take my excel outputs and put them into the format that HMRC requires. It's basically an extra stage. It does take more time, but it is less than an hour, every three months, so it is bearable.
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I have got it down to 1 minute and 16 seconds.
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I have got it down to 1 minute and 16 seconds.
Is that using MTD Filer, or software?
I guess that is probably realistic for MTD Filer. I just did it last week and it took almost an hour as I had to set it up on a new computer. But most of the time is reminding myself how it works, rather than actually doing it. If I include that time, ten minutes is a reasonable worst case of what it should take.
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I have got it down to 1 minute and 16 seconds.
Is that using MTD Filer, or software?
I guess that is probably realistic for MTD Filer. I just did it last week and it took almost an hour as I had to set it up on a new computer. But most of the time is reminding myself how it works, rather than actually doing it. If I include that time, ten minutes is a reasonable worst case of what it should take.
1 min 16 was the duration of the tutorial video. In actual fact it is but a few seconds to do in reality. I start the mtd software, press the excel option and then drag and drop the excel spreadsheet on to the drop zone and press ok. Paid for, not free mtd software though.
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I have got it down to 1 minute and 16 seconds.
Is that using MTD Filer, or software?
I guess that is probably realistic for MTD Filer. I just did it last week and it took almost an hour as I had to set it up on a new computer. But most of the time is reminding myself how it works, rather than actually doing it. If I include that time, ten minutes is a reasonable worst case of what it should take.
Hmm, it doesn't work on Apples. I guess I'll has to set up Office 365 on my Virtual Win 10 machine. I already use a MacOS virtual machine for my accounting package (because gouging) so that's only be three places I need to go to each quarter...
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I have got it down to 1 minute and 16 seconds.
Is that using MTD Filer, or software?
I guess that is probably realistic for MTD Filer. I just did it last week and it took almost an hour as I had to set it up on a new computer. But most of the time is reminding myself how it works, rather than actually doing it. If I include that time, ten minutes is a reasonable worst case of what it should take.
Hmm, it doesn't work on Apples. I guess I'll has to set up Office 365 on my Virtual Win 10 machine. I already use a MacOS virtual machine for my accounting package (because gouging) so that's only be three places I need to go to each quarter...
My one is also available as web version so works with macs. Send me a message and I will sort you out.
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Avalara MTD filer has stopped working but I have discovered Portico, which is far easier to use and does the job, apparently with HMRC's approval.
Highly recommended if you want to carry on with your excel sheets!
https://app.portico.openanswers.co.uk/#/signin (https://app.portico.openanswers.co.uk/#/signin)
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AIUI a lot of sole traders do no work for the last couple of months of each financial year, living off savings, just to stay below the threshold and avoid a world of pain. In a mostly-labour business like Fixing Stuff, you really don't want to be VAT-registered as you have virtually no input costs to help offset it and will simply be 20% more expensive than the next guy who manages to stay unregistered.
That’s exactly what I did. It’s going back a few years now, but if I’d gone VAT registered I would have needed to work quite a lot more just to pay the extra accountant’s fees.
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The annual HMRC Administrative Burdens Advisory Board (https://www.gov.uk/government/groups/administrative-burden-advisory-board) survey is up. It's biassed towards you telling them how wonderful Making Tax Difficult is but you can tell them the actual situation too. Benefits: "None". Extra admin = "finding the funds for the additional costs" etc.