Archive for the ‘MTD (Making Tax Digital)’ Category


Open consultations

January 12, 2017

Oh look, there are still seven open consultations on relating to the policy area “tax and revenue”.  Of course, it’s a slightly different list of seven from the last time I looked…

(Employment Allowance: restricting the allowance from employers of ‘illegal workers’ closed on 3 January

Withdrawal of extra statutory concessions – technical note and call for evidence opened on 10th January and runs till 7th March)

However as yet there is no sign of the promised responses to the seven consultations on the “making tax digital” proposals. And weren’t we supposed to be able to try out the free software in “autumn 2016′?  Er, hello?


Inner Peace?

January 11, 2017

I don’t want to do my tax return.

I don’t want to do my tax return, because it’s boring, and difficult.

I don’t want to do my tax return, because it’s boring, and difficult, and it’s important you don’t get it wrong.

I don’t want to do my tax return, because it’s boring, and difficult, and important you don’t get it wrong, and it won’t make a blind bit of difference because I don’t owe them any money (or vice versa) anyway.

I don’t want to do my tax return because it’s boring and difficult and important you don’t get it wrong, and it won’t make any difference, and they know it all anyway.

I get a pension covered by PAYE, and I make less than the MTD threshold doing odds and ends of writing, and I get less than the dividend allowance on my non-ISA shares (actually, have I even got any non-ISA shares?) and less than the Personal Savings Allowance on my bank interest (actually, did the bank even pay me any interest?) and, honest go god, if they’d just take it and go away I’d happily pay the £100 fine not to have to fill in a tax return by the end of the month.

(I understand why they don’t do that, of course, because it would be a great tax loophole for people who really need to be doing a tax return)

But, honestly, every single thing that will be on my tax return is information already known to HMRC aside from my derisory three line accounts.  Which is why I’m so interested in MTD.  If it was a case of, “here’s your tax return, all you have to do is check over the figures, add your three line accounts and press send”, then it would be a boon for people like me.

Is that how we think it will work?  Or am I, instead of once a year, going to find myself in a couple of years time sitting four or five times a year thinking “I don’t want to do my taxes…”


Straws in the wind

January 9, 2017

You may remember that in 2012 I published the rules for production of a tax impact assessment here, after I obtained them via a Freedom of Information Act (FoI) request.  I remain surprised that they are not on the publication schedule like the instructions for Regulatory Impact Assessments since they are the equivalent.  Well, 2012 is a while ago, so on 7th November I made a FoI request for an updated copy and received an automated response with a reference number.

A month went by, so I sent a little reminder that the twenty working days deadline had been breached, and received an email back which said

Unfortunately I am currently unable to confirm your request for information being received by the Freedom of Information Team.  I have noted the reference number you have provided would have been generated by one of the department’s online enquiry forms but am unable to trace your request…

The email went on to ask me for a phone number and I had a conversation with them where they said that my request – and, judging from the reference number, a number of others – had been lost in the system.  I emailed it again directly, and I’m still waiting for a response.

Except… well, last week I received this:

Please do not reply to this email.

Thank you for contacting HMRC. You have submitted an on line enquiry using an incorrect system to a mailbox which is no longer monitored. Due to this, I am unable to reply due to Data Security issues. Could you please direct your enquiry to the correct department by following the attached hyper-link or by reviewing your Personal Tax Account, details for which are below:

Is this a phishing email?  (Because who follows hyperlinks from emails, seriously?) Or is it a response to my original FoI request (which was made on the page I got from putting “FoI” and “HMRC” into Google – I find “incorrect system” a bit annoying tbh).  Am I ever actually going to get a response to my FoI request – which I made twice, once to the automated system and once in a clear email to the person who had phoned me, and I imagine the information commissioner will find at least one of those to be a valid request.  Look HMRC, what the hell is going on?

OK, but obviously the FoI form is a separate part of the HMRC computer system: a failure there won’t have any impact on the system they build for MTD, right?  I mean, right???




Edit: this morning I received this response from the HMRC phishing email address:

Thank you for contacting HM Revenue & Customs.

The e-mail / phone call you received was from HM Revenue & Customs and is nothing to be concerned about.

If you think this communication is incorrect, you may wish to contact the relevant HMRC business area. HMRC contact details are published within the link below:

If your query relates to HMRC online services, you can contact our Online Services Helpdesk by telephone – 0300 200 3600 (opening times 08.00-20.00 Monday to Friday, 08.00-16.00 Saturday), or by following the link below


HMRC Online Security Team

I’m really none the wiser.



December 7, 2016

The Parliamentary Question is an arcane art: for the person asking, the art is to phrase the question as widely as possible so as to “fish” for at least some of the facts you might want to know.  For the person answering, it is to give the minimum amount of information compatible with not actually lying in the person’s face.

Why?  Why not just ask what you want to know and then answer the bloody question?

Here’s an illuminating exchange from the 5th December Small Business debate in the Lords, from Hansard, via the indispensable “they work for you” site:

Lord Vinson (Conservative)
To ask Her Majesty’s Government, in the light of the fact that most small businesses assess their profits annually in arrears, whether it is the intention of HM Revenue and Customs to make small businesses report their income and expenditure quarterly; and what assessment they have made of the feasibility of this requirement. (HL Deb, 5 December 2016, cW)

In other words, MTD, can it be done?

Lord Young of Cookham Lord in Waiting (HM Household) (Whip)
HM Revenue and Customs published a consultation document setting out the Government’s proposals on 15 August 2015 entitled “Making Tax Digital: Bringing business tax into the digital age”. The consultation included an initial assessment of the impacts on businesses. The consultation closed on 7 November. The government is currently considering the responses to the Making Tax Digital consultations and will publish its response and draft legislation in January, together with an updated Tax Impact Assessment.

In other words, we’ve done an initial impact assessment and we’ll refine it in January.

Let’s turn to that impact assessment, shall we?

Look at para 8.6 on page 60, for example:

…We recognise that many businesses will incur costs, including time costs in making the transition to a digital way of transacting with HMRC.  However we do not yet have a granular understanding of what those costs will be to provide an estimate at this time.

An impact assessment is about costs, not about feasibility.  The tax impact assessment process is about three costs: the cost or gain to the exchequer (i.e. the increase or reduction in tax due as a result of a change to the system), the cost or savings to the taxpayer (the administrative burden, in terms of the standard cost model – a very precise measurement of the average cost to the averagely competent business, but not a particularly robust or realistic assessment of the actual costs to an actual business) and, thirdly, the costs or savings to HMRC.  The question Lord Vinson asked was, I think, whether businesses would be ABLE to operate MTD.  The question Lord Young answered appears to have been an entirely different one.


Worst of all possible worlds

December 6, 2016

You will no doubt remember the six (seven, if you include the summary) consultations on the ambitious “Making Tax Digital” proposals, which closed on 7 November.  At the Autumn Statement there was nothing in the actual speech, but, buried deep in the documentation, there was a statement that the government would be issuing a consultation response in January.

This sounded hopeful, because – if MTD is to be mandatory from 2017 or 18 – then the legislation needs to go into the 2017 Finance Bill and the draft clauses for that were published today, 5th December.

But look what it says here, in OLD (The Overview of Legislation in Draft) at the end of paragraph 6.1:

To ensure that the views of respondents to the consultations are fully considered, the government will publish its response to all 6 consultations, together with draft Finance Bill 2017 legislation in January 2017.  [my emphasis]

So not only is there an absurdly short timescale for the government to consider the multiple responses it is “pleased” to have received on MTD, but it plans to bring forward the legislation, or at least some legislation, anyway, except it will be out a month later than all the rest, shortening the time available for that to be scrutinised.

Poor show all round, I say.


Consultation trivia

November 8, 2016

So yesterday I managed to polish up the rest of my MTD responses (they were already in draft, but I’ve had the ‘flu so I didn’t get to them in an orderly sequence in the week before the deadline as I’d originally planned) and get them out the door.

I sent six emails, one for each of the six consultation documents, to the five different email addresses listed in them (the business records and voluntary pay as you go proposals share the same response address)

As the evening progressed I had three automated response (from the “process transformation”, “cash basis” and “tax simplification consultation” email addresses)

Think about that for a moment.  Ever set up an “out of office” reply on your email?  If half the HMRC email addresses don’t know how to, or can’t be bothered to, set up a “thank you for your contribution: watch the site for the consultation response in the next few weeks” response, well, we have great confidence they can manage to transform utterly the digital offering from HMRC.  Don’t we?


MTD 7/7 Transforming the tax system through the better use of information

November 7, 2016

I found it hard to engage with this particular consultation, because as far as I can see it’s about the stuff that HMRC ought to be doing to make taxpayers’ lives easier – gather and make use of third party information more efficiently and effectively.  This includes handling information securely, and will, presumably, soak up a great deal of the funding that they have been promised for MTD, because they’ll need to redesign and/or replace existing and legacy systems which are no longer cutting edge or even fit for purpose.

Why consult?  Get on with it, is my view, so I don’t feel I have anything useful to add.

(Except that I’d really like to see some figures on this:

We know that not everyone is ready or able to use digital services. People have a range of needs and we will continue to provide extra support for those who need help. HMRC’s Needs Extra Support Service (NES) provides extra help to customers with additional needs by providing both telephony and face to face specialist contact. NES supports customers through digital tax account registration and queries and for face to face customers, access to digital accounts will be facilitated, via tablets for example. This, along with other existing mechanisms (such as tele-filing and home visits), which support digitally excluded customers in providing their tax information to HMRC, will continue

How many visits are made by how many staff, and how does that compare with the numbers who used to use  enquiry centres when they existed?)

The consultation document is here, the email address for responses is and the consultation, like all the other MTD consultations, closes at quarter to midnight tonight, Monday 7th November 2016.  Good luck!



MTD 6/7: Tax Administration

November 7, 2016

The consultation on “Making Tax Digital: Tax Administration” seems to me to be a huge missed opportunity.  It reminds me of when I was working comms for the introduction of the CIS (Construction Industry Scheme) in 2003 or 4 or so, and a colleague from the “door kicking” end of HMRC came to see me.  They objected to CIS, and particularly to the verification process for subcontractors, where subcontractors would provide their name and two numbers and have their status “verified” as eligible either for gross payment or payment under deduction.  Where are we going to get the evidence to prosecute fraudulent claims to gross status, my door-kicking colleague argued, since they would no longer be able to seize the cards that were previously issued to subcontractors and prosecute the holders of forged and stolen ones?

Those of you with long memories of CIS will recall that one of the points of the 2005 scheme was to “design out” the opportunities for fraud in the old scheme – in other words, putting my door-kicking friend out of work was a feature, not a bug!

So with the Tax Administration consultation, I see the dead hand of someone wedded to HMRC’s powers as they stand at present, unable to see that a radical new scheme is a chance to “design out” the quirks and infelicities of  the current rules of administration.

Yes, yes, obviously powers and safeguards have to go hand in hand, so if you fiddle with one you have to fiddle with the other.   And obviously there’s a sunk cost for accountants in learning how the existing rules work so the easiest way forward is to look at the existing rules for putting in a tax return and, essentially, file off the words “tax return” and replace them with “annual summary”.

But most small traders don’t have a clue how the current rules work (that’s why they have accountants, d’oh!) so if you are going to build a system where you’re trying to design accountants out of the process you might as well design them out of the administrative rules, too.

That isn’t what we’re doing, you say, HMRC?  Well make your mind up.  Do you want a system where it’s the poor bloody taxpayer who has to do their own bookkeeping on an app every day and press the “send the results to HMRC” button every quarter?  Or are you going to leave agents embedded in the system?  Because those who deal with clients currently entitled to put in three line accounts are likely to give you three line quarterly summaries and then produce a set of accounts when the requirement to “finalise” the entries kicks in.

What do you want, HMRC, and why do you want it?  It’s a poor show that we’re this far into the process and I for one have very little idea.



(And, on the impact assessment point again, look at question 6.1, below the cut, which essentially says “please do an impact assessment for us” and at 6.2, which might as well read “and please do an equality impact assessment too while you’re at it”.  For shame, HMRC!)

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MTD 5/7: “voluntary” pay as you go

November 7, 2016

“Voluntary” pay as you go.  How voluntary is voluntary?  I’m already suspicious, given that MTD was originally supposed to be MTE: Making Tax Easier, not “Digital”.  No mandation without representation!  It’s also about rights: the government doesn’t have any right to the money until the day that the liability is crystalised, so this whole “voluntary but we’ll restrict your power to get it back” thing in the consultation worries me.  In fact it reminds me of when my mum was £1000+ in credit with the electricity and I tried to get them to repay her. The damn fool woman on the helpline told me it was their job to prevent their customers getting into debt.  No it isn’t: it’s your job to sell electricity, just as it’s HMRC’s job to collect the right amount of tax when it’s due.

The consultation seems to me to be very light on the consideration of interest when surely that’s the way to get “voluntary” pay as you go moving.  Pay 2% interest on tax paid early and I think the government might find payments were a great deal more timely than they are at present.

Make it easy for people to pay their taxes (a lot of the problems reported by the profession are pure HMRC problems – misallocation of payments, ignoring instructions, making unwanted repayments that generate unfair payment demands) and a lot of the remedy is in HMRC’s own hands.  If they put their own house in order, if the MTD record gave a clear statement of all liabilities and their due dates, if the government paid 2% on money paid before it was due and charged 3% on money paid afterwards, well, wouldn’t this issue disappear altogether?

I’m short of time so I have given the specific questions below the cut but I will actually be responding with an email.  You can too: the email address for this one is and the consultation closes – they all do – at a quarter to midnight tonight!!!



(Final note: I know I’m starting to look like the proverbial man with a hammer, to whom everything looks like a nail, but I have to comment on the impact assessment.  According to the impact assessment, moving to voluntary pay as you go won’t have any impact!  Actually I think this is the one likely to have the most profound impact of all, at least as far as the individual taxpayer is concerned, and I think if it worked well it would have an enormous (albeit temporary) positive impact on the government’s cash flow, sufficient to counterbalance the impacts they’re worried about in terms of overlap relief and other timing changes.)

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MTD 4/7: Simplified cash basis for unincorporated property businesses

November 7, 2016

This consultation is simply about allowing buy to let landlords (all right, all right, and other “unincorporated property businesses”) to use the cash basis.  Chapter 2 of the condoc is for landlords, chapter 3 for rep bodies.  There’s also an anonymous survey which is interesting, long, and in my view quite bizarre (have a look:  it’s a google doc.  I seriously question whether HMRC should already know the answers to these questions, and if they don’t, whether a google docs survey embedded in a consultation document which, frankly, is never going to be read by people who aren’t already tax policy wonks is the way to find the answers.  Try research!  If you really need to know, try paying someone to do the work and find out.)

Of course, if you put small landlords onto the cash basis, you immediately come up with the problem of what to do about tenants’ deposits…

Interestingly they don’t mention that in the “civilians” chapter but in the “professionals” one.  To be honest, by the time you’ve dealt with special rules for deposits, you might as well have done GAAP in the first place, surely?  And if you’re a buy to let landlord and you don’t use an accountant, well, perhaps you should start thinking about getting one…?


Again, I’ve put the questions under a cut in case you want to see them, but I haven’t answered them individually.  But if you want to reply (and hurry up: the deadline is quarter to midnight on Monday 7th November!) the email address is  – you don’t have to answer every question, you can just email with your comments and concerns.

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