What’s News and What’s Old News in the World of Tax
1. MTD for ITSA (Income tax self-Assessment)
We have been talking about the implementation of HMRC’s Making Tax Digital since 2017, but post pandemic finally we have a date of 2023 for its implementation. Tax returns are mainly filed online anyway but with the onset of the need for digital bookkeeping which will be needed for the change from once a year to quarterly tax returns, many accountants feel that they will no longer be able to service their clients (that’s you folks).
Some believe that MTD is really about the hidden economy, everyone already has a PTA (personal tax account with HMRC, that lists everything that is known about them. (If you want to see yours your accountant can show you how to access it, all of our clients are ‘encouraged’ to get it as soon as they join us, the more you know the better we work). Once the books and records are harvested monthly and shown quarterly, there will not be a chance for ‘manipulating’ the figures.
There are some positive aspects to this, the good thing for us number crunchers are that it will weed out accountants with poor systems that don’t service the client. We will have the chance to collaborate more with our clients and make better decisions with you and for you.
However, there is a quiet revolution happening amongst accountants who feel that you guys won’t be able to cope with feeding us accountants your information within this new timeframe. Many also believe there may well be a mass retirement of traditional accountants unable to keep up with technology. There are a lot of new online aps that are offering easy ways to do your tax return but my experience is that people can be trained to adopt new ways of working like ‘data capture’ ( a posh way of saying photograph your invoices and store them), but they still need a real accountant either on the end of a phone line, face to face, or at worst at the end of a piece of chat software instead of a ‘Bot’. This fine line between the old and the new is what I believe will keep us hybrid accountants in the game both for MTD and the impending introduction of Conditionality…
2. Conditionality
This is the obligation of drivers to prove they are taxpayers before receiving or renewing their license. I participated in the consultation as far back as 2019, and knew it was on the cards, but in terms of its publicity, it fell through the cracks between private hire and accountancy.
I actually remember when the Private Hire Vehicles (London) Act 1998 first came into force and driver details were harvested by HMRC. Even then the sense of fear and confusion was palpable, but at that time we were predominantly a ‘cash’ business, and drivers were a plenty
Nowadays, the industry is populated by savvy operators unafraid of tech and plenty of savvy drivers that are more interested in how to reduce their tax liability in smart ways than whether to avoid doing one. However, ‘post pandemic’ the timing could not have been worse, with many drivers on the missing list or delivering anything but passengers. The loss of even 20% of untaxed drivers, would be felt more acutely.
3. More SEISS Problems
I have mentioned many times before that much of the Covid regulation was of course enacted as an emergency and so we should be gentle with Whitehall, however the list of problems and issues continues to grow and many people including myself are starting to lose our patience.
Inflated figures have been received on tax returns by those who have received self-employed income support grants. It seems the gremlins are back in the system.
There is a bug HMRC’s self-assessment application programming interface (API) that is corrupting figures entered on 2020-21 returns for SEISS grants. There have been reports in Accountingweb (The accountants media platform of:
- Million-pound SEISS claims appearing in peoples tax returns, and reports of ‘crazy’ figures being sent to accountants by HMRC.
- Grants being deducted or added because the system showed them as not paid or over paid.
An HMRC spokesperson confirmed:
“We are aware of a problem with the way that SEISS grants received in the 2020/21 tax year are being presented on the individual income API. Figures are being presented in pence rather than pounds. This is impacting individuals who use commercial software. We apologise for the inconvenience this is causing”
I believe, this is the first tranche of a lot of problems emanating from software issues and staff shortages and disruptions within HMRC So beware, speak to your accountant and check your returns.
