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.