In part two of his series of regular articles for Accounting Practice, Darren Powell explains why the Making Tax Digital pilot scheme is making slow progress
In my last article I was able to report on my experiences of the early stages of the MTD pilot for income tax, which included the agent and client enrolment processes, the collation of the quarterly figures and the eventual MTD submission. I had, at the time, successfully enrolled four clients on to the pilot and filed three quarterly updates for the period ending 5 July 2017. The fourth submission for the period ended 5 July was unsuccessful.
I have since made further progress with the MTD submissions, although I continue to be of the opinion that MTD is a long way off from being rolled out, and even then there should be a period of relaxation for non-compliance, similar to the roll out of real time information reporting for payroll.
Progress has not been made quick enough to give our profession the confidence that this is achievable any time soon, and I feel the pilot may have lost its sense of urgency, at least in comparison to the interest and enthusiasm felt at the beginning. Let me explain.
HMRC have remained in reasonably close contact but my questions regarding the submissions and issues with the software have not been always been addressed and this is why I believe that MTD is not the priority it was.
Both HMRC and the software provider were keen to see the first MTD submission succeed. The same cannot be said for the later submissions and I feel they could both do more to smooth the process out and address my feedback.
I do not wish to sound negative, and I am enjoying being a part of such a fundamental change to our tax system, but when some of your questions are unanswered, and you sense your enthusiasm is not matched at the other end, you can’t help but feel that somewhere along the line this has lost pace.
On a positive note, I have been able to make six more quarterly MTD submissions since the last time of writing; three of these were for the period ended 5 October 2017 and three were for the period ended 5 January 2018. I had hoped to make four submissions for each period, but we still have an unresolved issue with one of our clients on the pilot, and as yet we have made no successful submissions for this client since the beginning. No reason has yet been given for this and I hope this is not indicative of the problems to come for future pilot enrolments.
Each quarterly period is known as an ‘obligation period’, and prior to a potential MTD submission the software returns a message to state what, if any, obligations have been met so far and what obligations are due to be fulfilled. This is a useful reminder of where you are in terms of submission history.
A particular gripe I have with the software is the lack of a success or failure message when the MTD submission has been made. Once the data is entered and submitted it simply disappears, and you have no idea if this has worked or not. I am currently having to contact HMRC to obtain success or failure confirmations. This is not an automated process and I assume the software will include this function in time as it is a fundamental requirement.
After each submission there is still the ability to retrieve a tax calculation from HMRC based on the cumulative MTD submissions to date. This, however, is after a period of time to allow the APIs to update and may require a log out and log back in again to check. It is also at this point that the obligation messages are updated, and this has proved another method of checking the submission success in the absence of a definitive message. It would be useful to view previously submitted data, which at present is missing and I have made this suggestion to the software provider and I am waiting for a reply on this.
It should be remembered that this is a pilot and I hope that the issues experienced so far will be ironed out and the process will become easier with data reported back to agents almost instantaneously. This would certainly inspire more confidence and allow us to look at how we need to change our practices to deal with the changing timescales and workload of MTD and switch our focus from the negatives.
- Darren Powell ICPA is a Partner at Fraser & Co, based in Shepton Mallet
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