Recently announced changes to the rollout of MTD explained

In an accountingweb podcast the recently announced changes to the rollout of MTD were put into context and is well worth a listen.

Some of the key updates include:

Business as usual

  • HMRC is 100% focused on the delivery of all aspects of MTD, not just VAT.
  • Deferral of the mandatory filing of quarterly updates does not mean slippage in HMRC’s delivery of the underpinning functionality.
  • The whole project rollout is continuing as planned.
  • HMRC will be working closely with software companies and agents to encourage taxpayers’ early adoption of MTD.

Benefits of the deferral

  • Deferral gives HMRC, software companies, agents and taxpayers the advantage of an extended test-and-learn phase.
  • Those taking part in the podcast are of the view that a 2020/2021 mandation date (at the earliest) gives all parties an appropriate period to reach a stage of readiness.
  • If the original mandation date(s) had stood HMRC would have faced a major challenge to ensure successful delivery of MTD for the self-employed.

VAT Mandation

  • Those mandated to file MTD VAT returns (the VAT registered with turnover above £85,000 (2017/18)) will be required to do so using MTD-compliant software from April 2018.
  • HMRC is about to enter into formal meetings with software companies to discuss the VAT aspects of MTD.
  • HMRC will start releasing the VAT APIs for technical testing later this year.
  • Public beta testing starts in spring 2018, approximately one year before mandation.

Agent services 

  • After a slow start, the department is beginning to give agents access to digital services on behalf of their clients.
  • In the long term agent access to HMRC systems will be via APIs.
  • Due to the long lead-time required by many practice software solution providers, HMRC will be allowing agents to register for agent services via a portal accessed on the gov.uk site.
  • It is universally agreed that HMRC’s Agent Services strategy is fundamental to ensuring the long term success of MTD.

My view

  • There is no reduction in HMRC’s drive and commitment to deliver all aspects of MTD.
  • HMRC is to continue with the public beta testing of all aspects of MTD-filing.
  • With VAT filing mandation a little over 18 months away and a public beta phase starting in Spring 2018 (just over six months away) it is vital that attention is devoted to ensuring that the products used will be able to file MTD compliant VAT returns sooner rather than later.
  • The fact that there is to be a full year of public beta testing in advance of the mandation to file VAT returns is a sensible nod back toward the Lord Carter of Coles principles (no.23) published in his review of HMRC Online Services Report 2006:

“We recommend that as part of their work to deliver robust, high-capacity services HMRC should build in more rigorous testing. Each of the services should be capacity tested at least a year before our recommendations are implemented, and if any tests are not successful the measures relating to that service should be deferred.

Brian Palmer is the tax policy adviser for AAT.

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