TaxCalc Blog

End-of-year update on MTD

Every month brings us closer to the launch of Making Tax Digital. Even though the official launch date (or even year for that matter) is yet to be confirmed, you can rest assured that here at TaxCalc we’re actively engaged in developing solutions that will make the transition to MTD as hassle-free as possible. We’ve even reframed our go-to-market position as the Digital Tax People to emphasise our focus and commitment to making MTD work for businesses and accountancy practices.

So what are the latest developments? You might have seen that in the later part of this year, HMRC released six separate documents, each concerned with the future of the UK tax regime both in its administration and in terms of approach to tax. After this HMRC ran a consultation process involving:

• 15 face-to-face meetings with interested members of the public (primarily attended by practitioners);
• 14 online webinars with over 3,000 viewers;
• Reviewing 600 written responses to the consultation documents and 1,200 responses through an online survey.

Naturally we took part in the consultation process and fed back directly to senior HMRC officials on specific matters. We haven’t been backward in coming forward and aim to be a leading voice, not just in influencing policy but also in the way that MTD is implemented. Given the administrative burden that quarterly updates will undoubtedly bring we had to be, let’s say, the ‘critical friend’ to HMRC when addressing these areas.

The government response to the consultation

We’d originally hoped to have received feedback from Government on the consultation in the Autumn Statement. But with the volume of responses received by HMRC; and with just two weeks between the closing date and the Chancellor’s speech, there was never going to be enough time for a formal a response to be prepared.

Crucially, the Treasury Committee, chaired by Andrew Tyrie MP, determined that HMRC has not carried out a detailed impact assessment on small businesses. During a hearing on 25 October, claims by HMRC that businesses would save approximately £400m in administration were challenged. Indeed, Mike Cherry, policy director of the Federation of Small Businesses levied that the overall Making Tax Digital strategy would cost businesses £2,770 a year. As a result, HMRC has deferred producing an official response until January. We will release a statement on the response when it comes out.

Legislation

Of course, the elephant in the room is that, as things stand, the entire Making Tax Digital strategy is not yet law! Government has published its proposals for the Finance Act 2017 but, again, have deferred from publishing draft legislation until January. This gives Parliament just three months to scrutinise its content before it is voted upon. It’s worth noting that the government has a slim majority and so it remains to be seen whether the bill passes through or has to be deferred until 2018.

Software progress

Irrespective of the lack of legislation in place, HMRC received £1.3bn of funding to transform their organisation into a digital one. Development has already begun in providing infrastructure and part of this has been allocated to the development of Application Programming Interfaces, commonly referred to as APIs. In the main, these will be used to provide the quarterly update and end-of-year information to HMRC.

Subscribe API

In the last few months, HMRC has announced a new MTD infrastructure to assist in the preparation of Self Assessment returns. This is known as a Subscribe API and will be published later this month. It’s our aim to incorporate Subscribe API ninto the initial release of TaxCalc 2017.

Our understanding is that the Subscribe API will enable clients (or practitioners on a client’s  behalf) to subscribe to MTD services. These include the Self Assessment API which will enable prepopulation of employment data, marriage allowance, Class 2 national insurance and other data in the tax return.

Register API

Later in the year HMRC will publish a Register API, which will eventually succeed the 64-8 and enable the signing up of clients to both the tax regime and MTD services in one go. We expect the API to be published in April.

We’re on the case

As you appreciate there is a great deal yet to be confirmed. Yet even in spite of all this uncertainty we are as ready to respond as we can be. We’ll provide more information on these APIs as they are published. Watch this space!