12 Days of IRIS Christmas: "On the 5th day of Christmas, a client said to me...
...what on earth is MTD?"
If your clients aren't asking this already, they soon will be...
Possibly not to the tune of ‘The Twelve Days of Christmas’ (that'd be nice though, wouldn't it?), but from businesses expecting you to sate their curiosity as ‘Making Tax Digital’ becomes entrenched in the public lexicon.
In a previous blog in this series, we heard the harrowing tale of one accountant’s failure to read up on new FRS and how it almost led to that most dreadful of fates: a place on Santa’s ‘Naughty list’.
With Making Tax Digital – or MTD – the need to know your stuff is even more pressing, and while its implementation may be 18 months away, preparation is absolutely key.
If you’re feeling inadequately informed, don’t worry: you’re not alone, and we've created an online resource to help get you up to speed - the Making Tax Digital Hub.
Do You HMRC What I See?
When HMRC announced their six Making Tax Digital consultation papers in August 2016, they encouraged feedback from accountants and other agents.
At IRIS, we immediately began formulating a comprehensive survey containing the most pertinent information and questions, and sent it out to our customers in early autumn.
The response was overwhelming. We received almost 1,000 replies – much more than anticipated – and we were surprised to learn just how in the dark a vast majority of accountants currently are on the subject.
After sending the feedback to HMRC, we went straight to work converting the results into a digestible format to return to our respondents, as promised.
Survey In A Manger
Such is the importance of the new legislation, we’re now making the results of the survey available to everyone.
For an in-depth analysis we recommend downloading the full report here.
Or, if you’d prefer a visual representation, you can check out our infographic featuring the key points.
We’ve also handpicked a number of the major takeaways below:
- 98% of respondents felt HMRC had not adequately informed them or their clients of changes required for MTD
- A majority feel it will be very difficult to transition clients to a digital way of working
- 86% felt that the changes are not achievable in the time frame given by HMRC
- 50% of respondents’ clients use Microsoft Excel or no software for their bookkeeping
- A large majority believe the MTD exemption threshold should be £83,000
- A large majority believe that 2 years would be a more appropriate length of time to allow HMRC customers to become familiar with new obligations before the new penalty regime comes into effect
- 70% believe that fixed penalties should reflect business size
- A large majority believe 14 days to be an inappropriate length of time to allow customers to pay in full or make arrangements to pay before penalty interest is charged
- A large majority agrees with the alignment of interest rules across income tax, VAT and corporation tax
As the results make clear, HMRC appear to have overestimated the readiness of accounting practices, and the businesses they represent, for a ‘digital-first’ tax and record-keeping system.
It’s our hope that, after careful consideration of the feedback received, they will make the necessary amendments to ensure a fair transition for all.
HMRC will be issuing their response to the feedback in January 2017, and their findings will appear on our Making Tax Digital Hub soon after, followed by our full evaluation.
If you'd like to read more in our ‘The 12 Days of IRIS Christmas’ series, click on the links below: