HMRC has ‘failed to support’ small businesses in transition to Making Tax Digital for VAT

Peers on the House of Lords Economic Affairs Select Committee have urged HMRC to delay the introduction of Making Tax Digital for VAT by at least one year.

Despite already making some concessions, HMRC has failed to support small businesses in their transition to Making Tax Digital for VAT and would delay the introduction of the new system by at least one year.

That’s the recommendation being made by Peers on the House of Lords Economics Affairs Select Committee, which in a damning report claims that HMRC has also not made any attempt to calculate the impact of introducing Making Tax Digital for VAT on the smallest businesses.


HMRC to enhance self assessment pre-population

From 6 April 2019, HMRC’s phase two pre-population release will include:

  • Data available earlier in the tax year and maybe for the current year (currently unavailable until September after PAYE reconciliation has completed)
  • Pensions data by provider, not aggregated
  • Improved data quality (for example, pensions are sometimes reported as employments)
  • More data, such as state pensions and bank interest

HMRC penalties

HMRC have , without a doubt, over the last few years been less and less concerned about making sure taxpayers have done the right thing at the right time because if the taxpayer didn’t bother there were ample opportunities for HMRC to charge penalties.
In my opinion most of the penalties bear little relation to the “offence”. Fining someone £1300 for not submitting a tax return on time seems excessive when the tax liability could well be far less than the penalty itself.
I’m seeing more and more of these penalties. Not from existing clients I should add!
In most cases it’s a new client who has “learned their lesson” and wants to make sure it never happens again.
Call me me old fashioned but I can’t stand unfairness and even though the client may think they deserve the penalty I think it’s worth appealing. In the last few months I have submitted about half a dozen appeals. HMRC can take up to eight weeks to deal with them but up to now I am pleased to say that none have been rejected (see attached PDF).
The moral of this story has to be don’t accept HMRC penalties, it’s always worth an appeal but make sure you choose the right person to submit it.
— Read on

Three myths and three truths about MTD record-keeping.

Advisers and clients are beginning to show an interest in the specific detail about what records they will need to keep in a digital format when MTD starts in April. This is especially important if they join HMRC’s pilot programme, adopting good habits from day one so to speak.

Purchase invoices need to be split into different VAT rates. No this is wrong.

If I buy a VAT book (zero-rated) for £100 and a print cartridge for £50 plus VAT on the same invoice (standard rated), I only need to digitally record the total net figure of £150 and the input tax of £10 that I am claiming. I don’t need to make separate entries for £100 and £50.


EU disagrees over plans for digital tech tax following Hammond’s Budget promise

EU negotiations for a digital tech tax are not going quite as smoothly as Philip Hammond’s decision to apply one to the UK

Following Fiscal Phil’s announcement in the Budget that a new digital services tax on big technology companies like Facebook and Google would soon apply, the EU member states are struggling to make a global agreement of the same nature.

The EU are said to be fearful of a potential US retaliation, which is what is stopping them from reaching a consensus.  To pass the plan, approval is needed from all 28 EU member states, and currently there have been many objections.  Proposals are for a three percent tax on the revenues of large technology companies, which mostly have origins in the US.  The implementation of a worldwide tech tax is therefore not likely to be implemented for some time.

Chancellor Philip Hammond last week announced the UK would launch its own digital services tax on the UK revenues of these companies.

Britain followed other countries such as Spain and Italy in launching its own version of this tax. Hammond made the announcement last week in his 2018 Budget speech, where he promised the tax would only to apply to profitable companies with sales of more than £500m globally.

He said: “We will ensure we get it right so UK remains best place to start and scale a tech business.”

The EU disagreement comes just a day after Hammond publicly defended his new digital tech tax.

He pointed out that while the tax will be a topic to debate between the UK and the US, the US itself has a tax reform act which is arguably discriminatory towards any non-US companies.

He said “everyone recognises it’s a problem” that the EU is failing to come to an agreement.

France and Austria both wanted a global bill to be agreed by the end of 2018, but came to a compromise which would pressurise the OECD to deliver a plan.

France today announced it would only hold of on implementing its own digital services tax in place of a global one until the end of 2018.

The nation claims that bringing in the tax would be the perfect way to win votes in the next European Parliament elections.

France’s Bruno Le Maire said the EU draft bill was “due to be adopted in December 2018… but we are open to postponing the entry into force to allow time for the OECD to make a more comprehensive proposal”.