Small Brit firms beg for 'light touch' as only half are ready for digital tax reforms due next month

A half of VAT-registered small biz don't have the software needed to comply with the British government's digital tax reforms - due for launch next month - with each facing bills of almost £600 to bring it in. HMRC is phasing in its Making Tax Digital (MTD) programme, which will require companies to keep digital records and …

[A Bee]

Making Tax Farcical

Just suppose that you run a small business.

Suppose you have in-house business systems that (inter alia) record VAT digitally.

Suppose you use those business sysems to generate the data to fill the seven fields that are needed by HMRC reporting once per quarter.

Then along comes Makinging Tax Digital, with a requirement to supply that data via the HMRC API.

Suppose that the API has no documented examples in the language used by your business systems.

You have three options:

1. Replace your business systems.

2. Spend development time on developing, testing and debugging a customised interface with the HMRC API.

3. Export from your business systems to commercial "bridging software" which interfaces to the HMRC API.

All in order to populate 7 fields once per quarter.

Which business problem does HMRC suppose that this solves?

[Dan 55]

Re: Making Tax Farcical

Perhaps someone could write a simple open source program which accepts manual input for seven boxes, asks if you're really sure, uploads it, and logs the upload.

[Anonymous Coward]

Re: Making Tax Farcical

> Perhaps someone could write a simple open source program

I've put in a request, via a general email inquiry, for a copy of the API spec. We'll see.

[Dan 55]

Re: Making Tax Farcical

https://developer.service.hmrc.gov.uk/api-documentation/docs/api?filter=vat

Unfortunately that's just an overview, you need to ask for the complete documentation, at least for "Check a UK VAT Number" .

Each developer needs an API token to "prevent fraud" so that doesn't sit well with the open source model as you're supposed to keep the token secret.

[Anonymous Coward]

Re: Making Tax Farcical

Each developer needs an API token to "prevent fraud" so that doesn't sit well with the open source model as you're supposed to keep the token secret.

That depends. If someone at HMRC has the brains to make a test token available it could be done, which then gets us to possible solutions that would be compliant with Kerkhoffs' principle which is IMHO mandatory if we are to trust yet another ill thought out idea that is foisted upon us by Powerpoint. The problem with that idea is that it assumes sanity in HMRC, and the way this idea has been handled suggests that is an absent ingredient.

Is it really so hard to get competent people handling government IT? We've gone through so many slideshow wielding consultants I lost track of the people that come up with good ideas and actually deliver. Oh wait, that's right, most of these fled the country when a collective sets of idiots voted for Brexit - some because they were British and saw what was happening, others because they were foreign and we told them in no uncertain terms what would happen to foreigners post Brexit. Well done.</rant>. Now, where was I?

Ah yes, Open Source. There is, however, a second problem. Ever since one [deleted] Tony Blair opened the door and pretty much dragged [deleted] Microsoft into the (until then open standards) mechanics of government IT there has been a hidden war on anything open (defined as independently verifiable and able to interface with non-Microsoft systems), because of, well, profit for all involved. So I wouldn't hold my breath.

Dammit, just burned my rant quota for this week.

[BebopWeBop]

Re: Making Tax Farcical

Ypou are obviously a very controlled person - you have a rant quota?

[Anonymous Coward]

Re: Making Tax Farcical

You haven't been on the Internet long enough if you do NOT have one :)

[Anonymous Coward]

Re: Making Tax Farcical

"Perhaps someone could write a simple open source program which accepts manual input for seven boxes, asks if you're really sure, uploads it, and logs the upload."

HMRC's guidance for MTD APIs specifically forbids this method, the 'source' data has to be referenced by the software.

Anonymous because.

[Dan 55]

Re: Making Tax Farcical

If whatever accounting software could export to XML or even CSV and you write bridging software then in theory that would comply, wouldn't it?

[JetSetJim]

Re: Making Tax Farcical

The CSV bridging s/w is already out there - all it does is do OAUTH to set up the session with HMRC, then submit JSON with the 7 values.

I've got no idea why HMRC couldn't have written their own simple tool - this strikes me as eminently feasible given the current simplicity of the interface and given that HMRC currently maintain the "simple PAYE tools" tool which does a much more complicated job of managing employee payroll for small companies.

The whole premise of "making it simpler for small businesses" is failing at the first hurdle - thankfully I'm under the threshold so don't need to worry just yet

[EnviableOne]

Re: Making Tax Farcical

because their dev team were all contractors and told they were subject to IR35 so left ...

[Anonymous Coward]

Re: Making Tax Farcical

That's partly true, half of the team were blanket-assessed as inside IR35, and left.

The other reason we didn't publish a proof-of-concept / simple integration app or solution wasn't that we didn't want to, but we were expressly -forbidden- by the higher-ups, for fear of pissing off accountants in general.

That's not to say we didn't create a cheeky little tool for our own benefit.

[DataDearCarl]

Re: Making Tax Farcical

We even posed the suggestion to HMRC as we're committed to providing completely free, and in their original legislation they advised they would ensure £0 cost software is available to comply. Seems without some generous companies building for the goodwill of the market it would be circa 700k businesses handing over money for software they may not need, with millions more the come in the next few years. Huge benefits to business owners for going digital, don't let compliance be the only 1 - https://www.datadear.com/making-tax-digital-for-vat/

[Anonymous Coward]

In their original legislation ... they would ensure £0 cost software is available to comply.

Please provide a link to the legislation and the Free software they are obliged to provide for submitting returns.

Or has the Law changed since then ?

[Dan 55]

Re: In their original legislation ... they would ensure £0 cost software is available to comply.

I looked quickly through the legislation referenced here and didn't find any mention about free software, but there were lots of references to commercial software.

[Roland6]

Re: In their original legislation ... they would ensure £0 cost software is available to comply.

>Please provide a link to ... the Free software ...

Not been able to find any on gitHub, seems all are offering variations on the "free trial" and all require registration with the developer...

[Roland6]

Re: Making Tax Farcical

>HMRC's guidance for MTD APIs specifically forbids this method, the 'source' data has to be referenced by the software.

Can't see this from my reading of the public documents and seeing how some of the MTB compliant bridging products work against pre-existing Excel spreadsheets.

It seems that all MTD requires is a wholly digital path between the source (eg. a spreadsheet with manually inputted data) and their systems; it does not require the creation of an audit trail and/or transaction log.

From what I can see, all that is necessary is a client to manage the OAUTH credentials and their use in MTD interactions, from the public materials it is not clear whether this client is tied to a single system or whether it can simply reside on a usb stick.

[Anonymous Coward]

Re: Making Tax Farcical

And on the subject of farcical, HRMC's website includes the statement: "You must tell HMRC in writing if you want to join or leave Making Tax Digital."

So it's okay to force companies to use electronic submission, but they have to use pen and paper to join or leave the system? Perhaps a "facsimile" would be permissible? Hypocrites.

[H in The Hague]

Re: Making Tax Farcical

"Just suppose that you run a small business."

I do, currrently in NL. But we were thinking of moving to West Sussex (both Mrs H and I have ties there) in 5 to 10 years and run the business there for a while before retiring. But that's becoming less and less attractive.

The Conservatives are supposed to be the party of business. I should be a natural Conservative voter (owner of a small business, comfortably off, investments, etc.) but now I would be as likely to vote for the Socialist Workers' Party as for the (as stated by the then Foreign Secretary) 'F.... Business' party.

Politicians (and the civil servants working for them/us) seem to forget that it's businesses which create the wealth and taxation that pay for the NHS, civil service salaries, etc. etc. Running a business always involves a lot of uncertainty - we're used to that. But the UK government deliberately throwing this much unnecessary bureaucracy and uncertainty at businesses, esp. small ones, is just incredible. (Time for my pills, or a nice cuppa.)

[Gordan]

"Last week's myth-busting document, though, claimed HMRC had written to every business by the end of February"

Two months notice for something that may require uprooting the entire established process and associated software doesn't seem like a reasonable amount of time.

[Version 1.0]

"Two months notice" ... please could we have two months notice for the other government cock up? Starting to look like we'll be lucky to get two weeks...

[Crypto Monad]

End of February to 1st April is *one* month's notice.

[AMBxx]

Not quite. It's your VAT quarter after 1st April. I have until mid-June to be compliant.

I can't register until after the deadline as registering stops you using the old method.

Real reason is that HMRC are trying to force everyone to use cloud accounts software so they can have unlimited access to your records.

[DataDearCarl]

Most businesses obligations will start on 7th August. 1/4-30/6 period. Only early adopters, monthly returns, and those who have been mislead by HMRC communication have to file under new obligations sooner. Also a 6 month deferral for some cases, predominantly groups and complex VAT schemes, first relevant period will be 1st October for these!

[Chris G]

A slight discrepancy

Between the numbers of HMRC and those of the FSB, I know whose I would trust most!

[Anonymous Coward]

I thought there wouldn't be any taxes after Brexit, that the EU were going to pay them instead?

[Korev]

Ah the Enterprise Bus

[alain williams]

Error control in Making Tax Difficult ???

I took a look at the HMRC Mythbusters PDF.

The 5th section is titled ''MTD won’t reduce errors'' ... and the 6th section is exactly the same. This doesn't really give me much confidence that the rest of this is anything other than bollocks.

What sort of Muppet do they employ ?

[martinusher]

Re: Error control in Making Tax Difficult ???

>What sort of Muppet do they employ ?

I'd guess "a quite well paid one".

Seriously, though, the hallmark of an ex-colonial nation wasn't the absence of government but but an excess of non-functioning government. Countries would take over the old colonial administration systems but instead of adapting it for the needs of the newly independent it became a sinecure for the well connected. The result was a stifling of legitimate business, an outbreak of 'informal' business arrangements (black economy and corruption) because people still had to get stuff done and a general stifling of the economy that left a lot of people poor and an administrative middle class that's primary purpose was to defend the wealth and privilege of the very well off.

Sounds familiar?

[Doctor Syntax]

Re: Error control in Making Tax Difficult ???

There's another failure of logic.

"HMRC have underestimated the admin burden and costs to businesses for MTD"

It's the essence of any estimation that the estimator believes it to be the best estimate possible. If it weren't they'd correct it. It represents the entire relevant knowledge of the estimator. If that knowledge is wrong the estimator has no means of knowing that. So if they have underestimated they will have no means of knowing that. Therefore the estimator is the last person on Earth competent to decide whether or not they have underestimated. The Dunning-Kruger effect may well prevent them discovering any error.

[Paul 87]

I work for a software company that had to deploy MTD into our product.

It's been an absolute ballache, start to finish. HMRC are *still* changing the specification and requirements, including remembering to implement some actual security beyond a token.

What's more, this is just the start, there's every likelyhood that we'll see requests for more and more data each year, likely to the point of taking complete invoices and VAT numbers to spot fraud.

[Anonymous Coward]

Enjoyed the testing using the sandbox service that only offers canned responses and doesn't replicate the production service?

A catalogue of woes right here https://github.com/hmrc/vat-api/issues

Although I do think it laughable that there have been multiple requests by developers for specific examples of integration using their particular snowflake language of choice. They are http requests; you shouldn't need HMRC to tell you how to do them in language x, y and z

[Dan 55]

Judging by the user ID of someone replying on behalf of HMRC, they're 24-25 years old, which bodes well.

[Philip Hands]

Sombody in there understands something about Free Software...

given that the API is under the Apache license:

https://github.com/hmrc/vat-api

so there are clearly some people with some sort of clue involved, but apparently the higher-ups don't understand that requiring a secret developer key is a show-stopper when it comes to a Free Software client implementation.

I also find it pretty odd that they appear to have written an API without a reference client to go with it -- how are they testing this stuff? (or is there a secret in-house client for testing? If so, shouldn't taxpayers get access to that too, having paid for it?)

This seems to amount to something akin to illegal state aide of the proprietary vendors to me. The cheapest that one seems to be able to get bridge software for is about 75 quid, and the cloudy offerings are charging a tenner a month or more. If one multiplies that by the number of VAT registered folk that need to comply one is talking about a vast cash injection for the accountancy industry for what amounts to almost no gain and often quite a lot of pain for the people that are actually doing something productive.

[Shady]

Re: Sombody in there understands something about Free Software...

Well, accountants will need to recoup some income once all the contractors are forced inside IR35 and into using umbrellas from April 2020...

[JetSetJim]

Re: Sombody in there understands something about Free Software...

There a free one here - not tried it, not recommending it, no idea if it turns into a lock-in to a paid solution in the longer term, YMMV, etc.., but it took a 2 minute google. I believe others are out there, too

[Roland6]

Re: Sombody in there understands something about Free Software...

>There a free one here - not tried it, not recommending it

Couple of others that have gained favourable comment:

https://www.quickfile.co.uk/ - Potentially free, depending on total number of ledger entries per accounting year.

https://vitaltax.uk/ - This one is first year free only, however it does look interesting:

VitalTax makes it easy to submit your VAT return without having to leave Excel. Simply select the desired cells in your spreadsheet and the application can import their values into the relevant box on your VAT return.

...

What’s more, you don’t need to have a particular data format or spreadsheet template to use VitalTax, as it can be used with any user-defined Excel spreadsheet.

...

currently support VAT spreadsheet templates from DIY Accounting, QuickBooks, Sage 50, Sage Instant and VT.

Only limitation is it requires Excel 2013 or more recent.

[Anonymous Coward]

mebby 1000 truly qualified people in the UK that can take this project from start to finish, forget about having to bits and pieces it together from a standard tech supply chain where everyone is probably booked 6 months in advance trying to get any sort of plan in place to deal with Brexit (plan, did I just say plan? Sorry I meant government mandated decision to be made after the current government collapses from failure either to succeed or when Scotland and Ireland (Northern) vote to leave the UK) and about 500,000 businesses to deal with where the employees are Me, Myself and I, and/or are really good at filling prescriptions or stocking shelves but are already locked into an exclusive tech support contract with a company that may not know squat about this stuff, but are very protective of their turf. Can someone please explain to me how England ended up where they are right now (and I need basic splainin cause I am still trying to figure out how my country (USA) ended up where it is.

[Nial]

"or when Scotland and Ireland (Northern) vote to leave the UK"

Neither of those is going to happen.

"Can someone please explain to me how England ended up where they are right now"

The UK isn't 'England'.

[ibmalone]

"or when Scotland and Ireland (Northern) vote to leave the UK"

Neither of those is going to happen.

Did the DUP tell you that? There'll be a border poll in the next two decades, we might have had one without Brexit, but it'll be an influence on the outcome. The more of a hash is made of the latter the more likely the former is to go south.

[EnviableOne]

Nicola Sturgeon has fully stated that if there is no customs union, scotland will push for an independance referendum and re-join the EU.

Both Scotland and Northern Ireland voted remain by more margin than the overall leave vote

Scotand 62% remain

NI 55.8% remain

[Dan 55]

Any look at why Brexit happened looks at why England drove the whole thing. Try a few articles or interviews by/with Fintan O'Toole for a primer.

[Anonymous Coward]

One problem is you have to keep checking if you are eligible, until recently if you had sold to Europe or sell to Europe you couldn't apply. I got another letter recently reminding me to register I nearly binned it as I knew my company wasn't eligible, but I checked and lo and behold the page had been updated (although nothing to say it had so there was no certainty). Anyway applied three weeks ago, supposed to hear back in 5-7 days, had nothing. It hardly inspires confidence when you are signing up for a BETA.

[Doctor Syntax]

"It hardly inspires confidence when you are signing up for a BETA."

All HMG websites are beta. I think someone there is under the impression it means ready for production use.

[Anonymous Coward]

gives me the impression they think they are cool like google (was).

[Mike Pellatt]

All HMG websites are beta.

No they're not.

Some are alpha. See the Dartford Crossing Payment page.

52 months since it went live. And counting.

[BebopWeBop]

Well yes to both. HMRC has worked pretty hard (my observations, other may vary) to tell people about it. They seem to have been a little less helpful on Brexit - in part I assume because they are as much in the dark as the rest of us (with the most clueless resting their fat arses in Westminster).

My company (small-medium did the former some while ago and within process it makes little difference to us. The latter, well we have moved most of the R&D to a European (mainland) capital - the incentives on rent and taxes helped) and 50% of delivery there as well - because 70% of our business is based there and it might make a difference (?). Being employee owned and with half of our employees either being EU citizens (ex UK) or married to them, the moves were very popular. Some disruption, but agin being employee owned people do make an appreciable extra effort where there is gain. The gain here was (a) reassuring people, following both threats to hold EU citizens hostage early on in the process and (b) the partner of one of our employees getting a formal 'Fuck off out of Britain or we are coming for you' notification. A mistake as it happens, but one that took a lot of resolution and gave a lot of angst. My dual British/Irish nationality may well come in handy in ways I never thought.

[DontFeedTheTrolls]

Can I invoice HMRC for my time to search and research the various options they are making me use?

There's nothing in their "list" that lets me identify the free options so I guess I'm going to need to go through all 220 options and write out the costs, set up test environments and feed test data through the solutions. And I guess that work will be inside IR35 too, so HMRC can pay the appropriate NI and Income Tax.

[Iain]

I found a freebie!

https://www.quickfile.co.uk/ free for small accounts (this is just one of the first ones I found looking for 'free MTD software', it was good, so I didn't look further!)

Works well for me as a contractor on Flat Rate VAT, took about an hour to sign up, import the data from my spreadsheet, hook up to MTD, and submit my first return, which all went smoothly

I did look at the developer docs/api, but quickly realised it was non-trivial

As mentioned above, I've got no idea what the HMRC are trying to achieve by replacing a simple form with all this faffing about!

[Zippy´s Sausage Factory]

This makes moving my business to Ireland look even more attractive than just Brexit!

Thanks, HMRC!

/sarcasm

[Butterfingers]

Bringing in MTD in the same month as Brexit is a bold move. VAT is one of the main sources of revenue for the government. Making this tax difficult to collect (because HMRC want to shut the simple VAT filing gateway) could result in an immediate revenue crisis for the government. I blame the software companies for fleecing customers, HMRC for pretending everything is fine, and the government for believing "the market" would magically provide the software at an affordable cost.

[SVV]

Making Transactions Diabolical

I've just read the API, as I may need to use it in the future, and it is a dogs dinner of a faff. You have to log in with a Government Gateway account to get an authorisation token (which is then valid for 4 hours). Then you have to call a REST API to submit your info with the token as one of the fields (not a big API but there are numerous methods). So presumably the average interaction will be something like : log in to Gov Gateway and get OAuth token. Copy and paste into correctly formatted Excel spreadsheet with financial reporting data. Run bespoke 3rd party program to extract Excel spreadsheet data and call REST API. The API returns HTTP status codes to indcate success or various vague error categories, so these need to be checked too (probably manually).

Now, the big question here is why the hell didn't they create a web page where ypu could simply log in with your GG Id, enter the small amount of data required in a form and submit it, with helpful success and error rporting afterwards? It wiuld cost almst nothing to do, and would save vast amounts of time and money for all the thousands of businesses that have to do reporting this way, almost none of whom will have any idea of what a REST API is or how to use it.

[JetSetJim]

Re: Making Transactions Diabolical

>Now, the big question here is why the hell didn't they create a web page where ypu could simply log in with your GG Id, enter the small amount of data required in a form and submit it, with helpful success and error rporting afterwards?

Err - that's what they currently have (at least for me). I log into my company account, select the "VAT service", click on "submit VAT return", enter the 7 numbers (several of which are always 0.00), click submit, job done.

(Hope that wasn't a "woosh, joke trajectory gone super-caput" on my part!)