As HMRC's quarterly deadline for online VAT filing looms, biz dogged by 'technical difficulties' Businesses and accountants are struggling to sign up to HMRC's new online VAT filing system, raising concerns that the systems will be unable to cope with the quarterly deadline next month. Online VAT filing is part of the UK taxmen's delayed Making Tax Digital programme. From April, all businesses with an income above £85,000 …
I see where you are coming from and in an ideal world you wouldn't plan these major changes in the same period.
On the other hand, MTD will actually help a lot with tackling the oncoming Brexit challenges. The Bank of England has just started using VAT filings as a leading indicator (i.e. telling you where the issues are going to be instead of where they have been) for UK economic performance so it gets alerted much earlier to specific areas that are in trouble.
I can also image that MTD will help a lot with untangling the intra-EU trade that is now going to be changed to UK-EU trade. At the moment nobody in the UK trades WITH the EU, it's all trade WITHIN the EU. After Brexit the trading relationships that I have with customers and suppliers elsewhere in Europe will probably change dramatically (we'll probably see the end of Reverse-Charge VAT for instance). Flicking a switch on an HMRC algorithm on Brexit day will be much easier than having to change all your forms and educating all businesses about a change in process.
> On the other hand, MTD will actually help a lot with tackling the oncoming Brexit challenges. The Bank of England has just started using VAT filings as a leading indicator (i.e. telling you where the issues are going to be instead of where they have been) for UK economic performance so it gets alerted much earlier to specific areas that are in trouble.
Confused as to how submitting them via an API (which submits the 9 figures encrapsulated in JSON) vs submitting the same 9 figures via a web form makes the blindest bit of a difference.
For sure perhaps it's time to bin off the paper forms, but the web submission system seems entirely fit for purpose, and MTD is just a clusterfuck
@JetSetJim: agreed, but once the system is up and running reliably then it's only a couple of small steps to real-time reporting whereby the VAT data are reported immediately the invoice is submitted. Many businesses run on cash reporting, so their VAT returns can be months behind the the work being done, especially if they are on rip-off 120 day terms. Giving real-time invoicing data to HMRC could reduce the delay to less than a month since most of us try to invoice customers at least monthly.
It would be a pain for small outfits who would almost certainly have to invest in more software with absolutely no benefit to themselves, but HMRC would love it.
I'm not saying that this is a good idea, just speculating..
>Many businesses run on cash reporting, so their VAT returns can be months behind the the work being done, especially if they are on rip-off 120 day terms. Giving real-time invoicing data to HMRC could reduce the delay to less than a month since most of us try to invoice customers at least monthly.
? VAT is due on the invoice date, not on when the invoice is actually paid. To avoid this you can send out a "Not VAT invoice" and then issue a "VAT Invoice" on receipt of monies, which denies late paying VAT registered companies the opportunity to reclaim the VAT before they have paid your invoice.
Don't see how HMRC having real-time invoicing data will have any impact on prompt payment.
MTD makes no difference whatsoever for the availability of this data.
All MTD does is force you to submit the 6 boxes of your VAT return via a REST API instead of via the web form. That's literally it - no other difference. The only difference is that I now have to pay for MTD compatible submission software. In my case, I use a bridging spreadsheet plugin that costs me £7.50 every time I submit a return.
So the process hasn't changed, the visibility of anything else to HMRC or anyone else using their data hasn't changed, the only thing that has changed is that now there is effectively an overhead of at least £30/year per VAT paying business being paid to providers of 3rd party software for submitting the VAT.
This was purely a crony money grab for big companies selling accounting software. There is no other possible explanation given that it does absolutely nothing but change the API for submitting the same 6 numbers as before.
Coincidentally, none of the big accounting vendors offer perpetual licences any more - all those nasty monthly fees.
For the time being, I'm using some weird spreadsheet to upload my VAT to MTD. Hopefully, I'll be able to retire by the time we're forced to use cloud accounting software.
I'm not sure it was even tested!
I registered after my March VAT return. Turns out that if you register before your VAT payment has been take, the money just isn't taken - HMRC can't see that the VAT is due as it's marked as paid in the old system.
I've made a manual payment, but I'm now expecting that amoun to be deducted from the first payment under the new scheme.
It seems like they've thrown this together in a ramshackle, hurried manner.
Perhaps we should register a new business named "General Stores); DROP TABLE tblCustomers;---", and send in a timely VAT return? We'd be doing them a favour, really...
(We'd need a few such businesses, obviously. Got to cover all the options. All suggestions welcomed.)
I am not sure that was a correct assessment of the new system, to be honest. The previous system for filing VAT digitally from accounting software worked a bit like that. I once had to help my accounting package troubleshoot an issue I had and it seemed to be a fairly simple system, probably no more than sending a CSV.
In the new system my accounting package, among other things, can see that HMRC has opened a submission for a specific period for me, ready for me to file. That suggests that it is now a much more fully functional API with two-way communication.
It may be that the system has become more complex, but that doesn't actually make it more "functional", indeed the article suggests the exact opposite. I'm not sure what value is added by your knowing "HMRC has opened a submission for a specific period for me" - the calendar should tell you that automatically. The whole point of "making tax digital" was supposed to be to make things easier.
The issue is essentially that a simple process that was working appears to have been broken by unnecessary complexity as the current system was not seen as "digital" enough.
Hopefully they will have implemented CSV better than MS, who don't seem to (in the past, at least) understand the 'rules', namely that anything in quotes is one text field EVEN WHEN IT CONTAINS A COMMA... that's why you put quotes round it dummy!!
(it turned out to be easier to stop people entering commas rather than explain to India, who were re-writing a working Access DB for web, that the MS CSV import routine was broken and could they get the system to parse the CSV before importing)
But that is still like trying to get blood out of a stone.
I was going to try again to speak to a human but with all this VAT malarkey, I'll put it off for another month.
They are quick to take your money but so slow in giving it back when through no fault of your own or anything you can control you have overpaid...
Anyone who has money in a pension and has already taken the tax free amount will automaticall get taxed at a very high rate when you take some more of your money out. It is then up to you to fight to get it back once that tax year has ended.
Birth, Death and bloody TAXES!
Yes I got a silly 40% rate on over the tax free sum taken from my pension but I just filled in the appropriate online form and got the extra tax back about 6 weeks later.
Only problem was that the remittance advice with the check suggested I should have given them my bank details to they could pay me electronically, but there was nowhere in the reclaim procedure to do that.
Also, when I did my final VAT return which generated a refund, they sent me a cheque, even though they've been taking my VAT payments by DD for over a decade.
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I guess it depends on the tax then. Last year after my submitted my self assessment online it was indicated in the final assessment prior to submission that I was owed £3500. As part of the submission I was asked to enter my sort code and account details if I wanted en electronic refund, or to check a box if I wanted a cheque sent. As such, I went for the electronic and it was in my personal account 7 days later.
The stupid thing is, they stopped us from filing on paper years ago. So we were submitting returns on their web portal thingy for years. And then we were allowed to submit the return through our cloudy accounts software. And I thought I was submitting my VAT digitally.
Until the beginning of this year - when we were informed we'd have to do it digitally. But they made me do that more than 5 years ago. So is this digitally-digitally? Magically-Digitally? Or what? It's all very odd. And they never bothered to actually write to us to tell us - or if they wanted to save paper use my email address - that they've had for more than 5 years and they regularly send me payment reminders on. The only reason I knew anything about it is that our cloudy software flagged up a warning.
All I know is I have to go through some painful admin process in order to do what they already forced me to do years before - but this time it's different for ...reasons...
I have to agree. I don't fully understand what the change is about. I have been filing VAT returns from my cloud based accounting package for seven years now. The only thing I believe is that it's now more advanced with a proper API instead of just sending a CSV file over http. For instance, I believe that it's now a two-way street. My accounting package can read statuses from HMRC whereas it previously could only report if my fling had been accepted.
I provide IT support for a couple of friends of mine that run their own small business. They found themselves in the situation of being forced to upgrade their Sage accounts package just to be able to handle this UK HMRC BS!
Fortunately I was able to track down a free alternative:
https://www.avalara.com/vatlive/en/vat-news/avalara-mtd-filer-free-tool-for-hmrcs-mtd.html
The bottom line is that the UK VAT system is being treated like the US tax return system. Companies are pretty much being forced into throwing money at filling in a few boxes in a government database every quarter.
I wonder who in HMRC got the big kickback from the accounting software companies to push this great big steaming pile of BS through?
can be copy-pasted in from any spreadsheet
Copy/paste will not allowed after 1 April 2020: section 4.2.1.1 So: beware this cannot be used for long.
Looks like this is the optimum solution for MTD returns.
The only query is that there are absolutely no strings attached, so how do the creators make money on this.
My guess is that they sell it lock stock and barrel back to the HMRC who should have implemented it this way in the first place.
Presumably the HMRC will tnen kill it so that their high-up officials can continuie to enjoy large lunches with the other commercial software providers for the middlemen market they have created.
And nobody thought of ironing out the problems with the pilot before going live ?
Or was it just a question of absolutely having to obey the schedule ?
Fun fact : a pilot is where you test a solution against real-life data in order to find the inevitable bugs, correct them and ensure that the go-live will go well.
If you do a pilot and you don't correct the issues before go-live, you're doing it wrong.
When this was first proposed. I had always done my own business accounts (no 3rd party software), it was the straw that made me shut down my business. (Closed in January 2019). Glad I did so. Unfortunately it meant about 6 million pounds less to UK exports.
QuickFile https://www.quickfile.co.uk/home/pricing is free for up to 1000 transaction entries per year.
That includes any bank account transactions you choose to import into the system, but simple use by contractors should use far less than 1000.
It's a full online system for business accounting and invoicing.
Not a single online interaction with HMRC I've had running a business for 2 years has resulted in me getting through one of their obtuse workflows without some error happening along the way, including this MTD switchover shambles. In my case, I got an email telling me my direct debit had been migrated to a new bank account two weeks before I submitted my quarterly return. Submitted it, everything appeared to work properly, and then one week had a feeling something would have gone wrong, and inevitably found that nothing had changed in my VAT bank account. Cue a call to them, and it was "oh, you weren't migrated in time for the direct debit to go through, you'll have to make a manual transaction".
Then why send me an email saying I had been 3 weeks before!?
But I can't fault their people on the other end of the phone when I inevitably have to call them. They have an almost melancholic view that whatever I've done online won't have worked because of the latest fuck-up of the day and seem to be capable of sorting it out manually.
My ex worked for the tax department (not UK). Pretty much every attempt to automate the workforce more, be it the phone workers or walk ins, turns out to be counter productive.
They've managed to keep it relatively quiet, but they didn't pay out returns for about 18 months* because they had fired a bunch of back office staff and replaced them with OCR scanners for forms.
Turns out people make minor errors and typos in tax forms. Humans fix this and send a confirmation. OCR just accepts it. Results in a whole year of returns being processed incorrectly.
Then they did it again the next year. With less errors, but still too many. Hence the 18 month delay.
Dozens of stories like that.
Oh, and their IT estate is bonkers. They need maybe 5-6 applications. They have ~15. Every couple of years a new app is created, that has 60-90% of the functionality of 2-4 of the other apps. It's also either slower in the majority of use cases, or is flakey as hell.
"They have an almost melancholic view that whatever I've done online won't have worked because of the latest fuck-up of the day"
Their systems fuck up, their users fuck up, the people who write and interpret the rules fuck up. the ones who stick around (and actually talk to the public) tend to be either super optimistic or cynical. Sometimes both :)
* they paid you 4% pa on it. Wasn't wild about what felt like being compelled to purchase government bonds.
In order to enrol in MTD, a company needs to select MTD software which has been approved by HMRC.
If you have an in-house integrated sales and accounting system, then either you use bridging software (pointless, destroys the point of itnegration) or you build your own MTD module, which has to be approved by HMRC. (Their web site says they will respond within 10 days.)
So we built our own module, tested it via the HMRC sandbox and submitted for approval.
Way more than 10 days elapsed. We heard nothing.
We submitted a support ticket. Got a response that they would look into it. Thereafter, nothing.
Not a positive user experience of something done for the benefit of HMRC, not for the benefit of the user.
Whilst I feel some of your pain (those who have their own bespoke systems), if you use sage, you just install the latest version, get your MTD details and that's about it. Literally about a 5 minute job, have to be honest I was expecting much worse. Why wouldn't you keep your accounting software up to date? Worked great last QTR, hopefully the same this QTR. Costs me £20+ VAT per month for a sage subscription and at year end I simply send a file to my accountant.
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