Forget the Gym...
‘I think there is a world market for maybe five computers’ Thomas Watson, Chairman of IBM 1943
Jump forward 75 years and HMRC have decided that over 2.5 million businesses need one of these new fangled machines. We’re not talking huge mainframes of a by-gone era. All you need is a small hand held device with more computing power than NASA had when they landed men on the moon.
If your turnover is below the VAT registration limit and you have registered voluntarily you can continue to use the existing portal. There will be no ‘checks’ put in place to confirm whether or not you are still eligible to use the portal because of turnover. HMRC’s response to that question was that ‘the onus is on the taxpayer to make sure they are using the correct method to file the return’. If you are trading above the registration limit and your turnover falls below £85000 you can not opt back out of MTD, the only way to get out of it is to deregister.
HMRC originally said that spreadsheets would not be acceptable but have bowed to pressure to continue their use. However, the return information must be transmitted digitally using bridging software and apart from the original entries all other figures in the spreadsheet must be calculated using functions, formulae, macros etc. No cutting and pasting or manually re-keying totals.
For those businesses not using digital systems it will be a big change. There are hundreds of ‘accounting’ packages and related apps out there so investigating suitability and cost could be incredibly time consuming – time that small business owners don’t have. And of course, once you have chosen your package you have to learn how to use it. We have many clients who will use a smartphone or tablet for all manner of things but when it comes to ‘accounting’ they really don’t want to know. The alternative is to outsource which will invariably involve more cost but would hopefully instill peace of mind for those who don’t have the time or the confidence to do it themselves.
HMRC have, only recently, been sending out letters to VAT registered businesses about these changes. Some of our clients have received them, many have not. There seems to be a general lack of awareness and a lack of clarification by HMRC on several points. For instance, there are exemptions available on religious grounds, remoteness, ability etc but no firm guidelines as to how these exemptions will be assessed. Some (mostly larger) organisations have had their start date deferred to 1 October because HMRC systems are not ready.
The House of Lords Economic Affairs Committee recently urged HMRC to defer the start date for at least one year on the grounds that smaller businesses had not had time to fully prepare and that the impact assessment carried out by HMRC had greatly underestimated the cost to businesses. But the message from HMRC is that ‘it’s happening’. So, forget the gym, the diet, the abstinence from alcohol, cigarettes etc and all the other well meaning promises made at midnight on New Year’s Eve. If you are not yet prepared then your New Year resolution has to be to get organised for MTDfV as quickly as possible.