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:
I am incredulous that the proposals, which in effect just mandate a digital link between excel records and no doubt expensive third party software to file would do anything at all to reduce error. It is not as if the keying of a few figures is beyond the competency of accountants, not that any errors wont be picked up at the year end as part of a standard VAT rec. I would like to understand how exactly HMRC think the numbers arrive in accounting systems in the first place. The fact is, most of it is keyed. The proposals fail to meet the original objectives, and seems to be carried forward purely on momentum from the failed quarterly reporting project and have no merit for either tax payers or government.