How has MTD for VAT been for you?
Two and a half years ago, and in conjunction with the Tax Faculty, we convened the MTD Software Advisory Group to help ICAEW get a better understanding of the software aspects of MTD. The group, which has met every one or two months since, is made up of software developers (all the major players plus a mix of others), accounting practitioners (again, representing firms of all sizes) and HMRC. About a year ago we opened the group to other accountancy bodies including ACCA, ICAS, AAT and CIOT.
The group has been consistently well-attended and productive, with many issues discussed and changes made as a result; HMRC has been very helpful in this respect. The group has operated under a ‘Chatham House Plus’ rule – essentially keeping all discussions private, except as needed to effect system changes; it was especially important in the early phases to create a safe space to speak, so participants could update the group with any issue, knowing it would go no further. This manner of working has led to more honest discussions and productive outcomes.
For the past several months, a standard part of the agenda has been to get a sense of progress from the different stakeholder groups. In the October meeting, where the first mandatory filing deadline had passed for the majority of businesses in scope for MTD for VAT, we heard that over one million businesses had submitted a VAT return under MTD using compliant software, with over 30,000 agents having created a new Agent Service Account to help service their clients. Moreover, for the first time in all our meetings, all the participants largely gave the implementation a clean bill of health.
With some issues
But the clean bill of health did come with some caveats. It was noted that whilst things were generally much smoother, when things went wrong (which they did, but with decreasing frequency), they invariably went very wrong, which could cause significant extra work for the client, agent and software developer. The Agent Services Account was singled out as an area of particular difficulty, and lessons have been learned for the next phase of MTD for Income Tax.
There is also a question of the scope and purpose of MTD. Kevin Salter has blogged elsewhere on Tech News with some interesting findings from a short survey, as well as personal thoughts from piloting the system for several months. Amongst others, there are comments about the potential for inaccuracy of VAT recorded automatically, as well as the underlying business case for MTD, including an assessment of the costs and benefits of the project.
Roadmap for success
At the last meeting, alongside a sense of achieving constructive outcomes from the meetings, there was a feeling of needing to learn the lessons from the implementation of MTD for VAT and apply those to the significantly larger ‘opportunity’ of MTD for Income Tax. There was also a suggestion to push for a wider roadmap for the digitalisation of the tax system as a whole, rather than the constituent pieces such as VAT or Income Tax.
No doubt you will have your own stories to tell. How was MTD for you?