Following extensive discussion with members, ICAEW has submitted its response to the Making Tax Digital: Draft Value Added Tax (amendment) regulations and notice 2018 published by HMRC on 18 December 2017. The response is available as ICAEW REP 18-2018
We have repeated many of our earlier comments, including our full support for HMRC’s digital transformation initiative, but we believe that MTD should be voluntary. Our members make this known to us at every opportunity. They and we want to help HMRC make MTD a success and welcome the assurance from the Financial Secretary to the Treasury that MTD will not be made mandatory for income tax or corporation tax until the programme is working well, but this principle should naturally also apply to VAT.
We have also made the following key points in this representation:
For many businesses which are already computerised MTD will not involve any additional digitalisation. Smaller businesses not currently computerised will struggle. However some businesses - barristers for instance, have highly sophisticated computerised systems for fees and earnings as run by their chambers, but record their expenses separately. This will not satisfy the requirement for the separate systems to be linked digitally.
Richard I suspect that those businesses which are already computerised will have a tougher time of it than you think. As existing software will not have been written with these as yet unspecified requirements in mind at the very least they will need to do will be to upgrade to a later version of their software, if the supplier provides one. There will be an additional cost to that. If their supplier has not developed such software they will be faced with either a system migration to new software, or contemplating taking an output from their existing software, manually manipulating (eg in Excel), then putting the output of that into some new software which is able to transmit to HMRC. For those larger organisations that have tailored their general ledger software to their business, with direct feeds from others systems etc, there is unlikely to be an easy upgrade path. They will no doubt end up outputting from the existing system, manipulating the data then re-inputting that to new software.