MTD the latest from the pilot scheme and it’s not all plain sailing

Let’s be positive: MTD will be happening

In part four of his series of articles on the Making Tax Digital pilot scheme, Darren Powell relates his frustration at the glitches stopping him from making any further submissions

Although there have been some positive developments in my recent experiences on the making Tax Digital (MTD) for income tax pilot, I have reached a point where I am unable to make any more submissions for the time being.

A scheduled fix by HMRC back in April has helped to resolve some issues and the good news is that I can now view past obligation periods and amend them if necessary. I have tested this functionality and successfully filed an amendment to an MTD submission for the quarter ending 5 July 2017. This is a useful and welcome development, as I am sure this will be needed by us all in the future. We are unlikely to have all the correct data every time, despite our best efforts to do so.

Problematic issue

On a less positive note, and slightly frustrating to all involved, is the inability to file or view any data for two of our clients on the pilot. This is a shame, as the issues fixed above had been addressed and resolved, only for a similar but even more problematic issue to be discovered soon after. I can still view past obligation periods for my two other clients, so I don’t think the two issues are necessarily connected.

A fourth quarter or final MTD submission for the year ending 5 April 2018 has still not been made for any of our clients. I have filed a self-assessment tax return for one of my clients and therefore I have been advised that a quarter four submission is not required, which makes sense. I do have the data ready for a potential submission for the quarter ending 5 July 2018 for this client, but HMRC have asked me to hold off for now until they are sure this will not result in further problems.

I think what they are alluding to here is the fact that no submission was made for the period ending 5 April 2018 as it wasn’t required and the gap in the submitted periods may cause an error. This takes me back to my submissions for the quarter ending 5 October 2017, when the software returned an error message that the submission periods were not contiguous, and it would not allow an MTD submission if the periods did not continue exactly from where the last one finished.

I will have to wait and see what advice I receive before I can proceed with further MTD submissions for any outstanding and future periods. Fingers crossed that a solution is found soon.

I have previously complained about the lack of filing confirmations and this is still the case. I need to log back in and view the recently submitted obligation period to see if it has been received by HMRC. As the software is retrieving the information from HMRC rather than displaying information held in the software, I can draw some confidence that the submission has been successfully made. I would like to see the confirmation messages in place soon, similar to those received when we submit a self-assessment tax return.

My focus now is on how I can seamlessly transfer data from our bookkeeping software and spreadsheets in to the tax software. The initial MTD submission data was simply keyed in to the tax software but eventually this will not be allowed. Transferring data manually between software programs, products or applications is not acceptable under MTD. This is stated in VAT notice 700/22 section 3.2.1, and although this is referring to MTD for VAT it is sure to extend to MTD for income tax.

Copy and paste

My initial attempts at this have involved the copy and paste function, but this is not considered a digital link and I will therefore need to work on this to find the best way forward. The responsibility for this will need to rest with the software companies and we will be looking at software that can provide this functionality over the next few months.

In fact, the need for bridging software to deal with the fast-approaching MTD for VAT has brought our decision-making forward, so we will be keen to make our next MTD submissions entirely by digitally linking the various software.

A soft-landing approach is mentioned by HMRC, to allow firms time to put all the necessary digital links in place. We hope to be in this position before MTD for VAT becomes mandatory on 1 April 2019 and certainly well before the mandation of MTD for income tax. Perhaps we are being too optimistic. We will see.

  • Darren Powell ICPA is a Partner at Fraser & Co, based in Shepton Mallet

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