Making Tax Digital (MTD) for VAT

Making Tax Digital (MTD) for VAT

All the professional blogs are telling us that we have to inform you all about Making Tax Digital (MTD). Let me start by saying that we have a smooth compliant system already in place and, at this point in time, there is nothing that you need to do other than operate as normal.

Let me now tell you a little bit of the background and the work that we and our software suppliers have put into giving you such a smooth ride…

HM Revenue & Customs (HMRC) have decided to standardise the preparation, maintenance, submission and retention of accounting records in an electronic digital format and more or less disallow manual intervention in the process after the initial accounting entries are made and the submissions completed.

From the 1 April 2019, for the majority of people, VAT records will need to be kept in this new format and paper accounting records will cease to meet legal requirements in tax legislation. This means that when you send in the original accounting records such as timesheets and expenses records, they are entered into the core accounting spreadsheets and, after relevant reconciliations are done, they are entered by us via an HMRC API (Application Programming Interfaces platform) and onto the HMRC server, prompting a confirmation of receipt to us.

This is the start of the new digital accounts plans set out by HMRC, starting with VAT in April 2019 for most companies, continuing to other taxes by 2020.

In summary, you do not have to worry about this at all – we have it sorted.

Sam Heller FCA

IR35 changes threaten 85 MP’s seats

The government’s scheme to apply Off-Payroll rules to the private sector has put 85 MPs in danger of losing their seats at the next general election, unless they choose to take sides with contractors and dispute the scheme.

A survey of 2,000 contractors suggested that 49 per cent of contractors would not support their local MP in the event of them campaigning for the extension of Off-Payroll rules.

The Office for National Statistics took the results of this survey along with the amount of self-employed voters in each region to calculate how much of an impact this would have on overall election results. The 85 MPs identified are in danger of losing their seats if the calculations are accurate, including 40 Conservative MPs and 24 Labour MPs.

Experts have suggested that the inability to secure votes from self-employed individuals would “prove catastrophic” for those that they vote against. While those that the self-employed individuals choose to vote for could gain from it immensely. MPs in “precarious positions” should ensure they are able to win over contractors’ votes in order to keep their seats.

It has also been suggested that if the findings are correct then Labour is set to be in a much stronger position as contractors vote for them instead of the Conservative MP they would have otherwise voted for, thus giving Labour more seats in parliament.

With the amount of self-employed people growing each year, it is important for politicians not to ignore their needs if they want to stay in a strong political position.

HMRC CEO criticised in wake of knighthood

Jon Thompson, the Chief Executive of HMRC has come under scrutiny after his knighthood was announced in the New Year’s Honours List. Prior to taking over at HMRC in 2016, Thompson served as the Permanent Secretary at the Ministry of Defence for three years, he has amassed a total of 30 years public service.

Thompson was the ring leader for HMRC’s IR35 reformation in the public sector in 2017, taking a similar role for the impending expansion of Off-Payroll rules to the private sector.

Upon receiving the honour, Thompson commended the “wealth of talented” civil service workers possess and the pride he feels in having dedicated the majority of his career working alongside them.

The honour was perhaps most disputed by contractors, with one anonymous worker calling IR35 a “shambles.” The same worker brought Thompson’s leadership skills in to question by comparing their job with Thompson’s, stating that they would have been fired had they led a project in the same way.

Experts in the tax industry also disagreed with Thompson receiving the honour, having been quoted as saying the award is “over the top” following reports of HMRC treating taxpayers unfairly and being aggressive.

Although Thompson was honoured for the longevity of his public service, the general consensus among contractors appears to be that the failure of retrospective tax alone should have prevented him from receiving such a prestigious title.

The government’s Good Work Plan looks favourable for contractors

Details on the government’s plans to change employment laws in the name of making work in the UK “fair and decent” for all have been released. The so-called Good Work Plan focuses on plans to protect contractors, gig economy workers and the flexible workforce in today’s economy.

Labour Politician, Matthew Taylor, authored a list of 53 suggestions in an independent review in 2017, all but two of which appear to have been adhered to by the government which states that the Prime Minister “will not only maintain workers’ rights as the UK leaves the EU but enhance them.”

The government promises to “improve clarity on employment status, reflecting modern working practices,” which they hope will ease the burden of unclear employment statuses suffered by self-employed contractors.

Employment experts are concerned, however, that employment rights are not desired by all workers and that the labour market should be kept balanced. They believe that, in general, contractors prefer working outside of IR35 and don’t think of themselves as vulnerable.

The Good Work Plan acknowledges the differences between contractors working inside the IR35 and those working outside and has promised to explore the alignment of tax status and employment rights as an option.

John Cullinane, Tax Policy Director at the Chartered Institution of Taxation does believe aligning tax status and employment rights would be easy, he has said: “It is difficult to see much progress being made on aligning and simplifying employment and tax frameworks within the constraints the government have imposed on themselves. We have three different categories of workers (employed, worker or ‘dependent contractor’ and self-employed) for employment law but just two for tax (employed and self-employed).”

Either way, it may be pleasant news for contractors that the government is looking into ways to make working fairer for them.

And finally…

Upon returning from a visit to China, a 60-year-old Taiwanese woman has been stopped at customs with 24 gerbils strapped to her legs.

The woman was stopped by Coast Guard officials after she was spotted walking in an awkward fashion through the airport on the Taiwanese Island of Kinmen.

After being pulled aside for questioning, 24 individually wrapped gerbils were found to be strapped to the woman’s legs and covered by a skirt.

Local news station 97x were reportedly told that the gerbil smuggler was bringing the animals into the country to give to friends after purchasing them in China. However, authorities suspect that the reasoning was a more sinister test of inspection procedure.

Taiwanese police charged the woman with violating the Infectious Animal Disease Prevention and Control Act.