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Readers’ correspondence.
Gifts out of income
I read the replies to the Readers’ forum query ‘Relief for making gifts out of income to next generation’ (Taxation, 16 September 2021, page 27) with interest.
I generally advise clients to download form IHT403 (Gifts and other transfers of value) and complete page 8 of that form each year when they complete their tax return. This has the benefit of containing details of gifts being prepared relatively contemporaneously and strong evidence of the regular pattern of the gifts made and evidence that the size of the gifts falls within the surplus income available. This can be supported by invoices created at the time if necessary. The form must be retained in a safe place for when the time comes when it can be submitted to HMRC.
If the regular gifts commenced several years previously then the client should be assisted to complete the form from the year when the regular gifts started. Unfortunately this can be a time consuming exercise, but it is usually worth the effort.
Paul Masters.
Changes ahead
The section on making tax digital in Jo Gossage’s article ‘Changes ahead’ (Taxation, 9 September 2021, page 8) included the line ‘there will be a complete shift from annual reporting to quarterly reporting’.
I fear that is overstating the case. The details of how the year-end processes for MTD will work are still unclear, particularly in the way that non-business sections of the tax return will be tied up with the quarterly reports. There will certainly be more for agents do to each quarter but I fear that our end-of-year work will not be reduced by anything approaching a similar amount of time.
Andrew Graham, Kirbymoorside.
Making tax digital
I am a member of the ICAEW Tax Faculty tax practitioners committee and have over the past few years written a small number of letters to Taxation magazine regarding the HMRC ‘steam rolling’ approach to making tax digital, which the editor chosen to publish.
Naturally nearly all the stakeholders involved in the consultations, while accepting that the change was to be encouraged recognised the problems involved particularly for the elderly and counselled that the changes should be voluntary and not compulsory. This is my view from the ‘coal face’.
I am surprised and amazed that for the first time in my professional career I am acting for several aged clients in their late 80s and 90s probably due to advances in medical science.
My experience is that the majority of these elderly clients are not computer literate and have great difficulty in dealing with the ‘paperless environment’.
I am aware that the editorial policy of Taxation has been favourable to the move to making tax digital, however I was heartened by Andrew Hubbard’s editorial ‘Everyone needs time to prepare for MTD’ (Taxation, 19 August 2021, page 5) where he advised caution about the timing of the implementation of the changes.
I was reminded of this by a letter in the Daily Mail (8 October 2021) concerning some older people’s struggles dealing with the Covid-19 online requirements when going on holiday abroad. At the time I thought that this letter needs to be brought to the attention of both Rishi Sunak and Jim Harra.
Robin Summers FCA, Summers & Co.
Regarding Andrew Hubbard’s article ‘Pause for thought’ on the delay to making tax digital (Taxation, 7 October 2021, page 8), having been in practice for over 30 years, I have two big reservations with some of his comments.
First, HMRC’s software is notoriously not user friendly. It is ridiculously clunky and difficult to navigate. Have you tried filing a ‘capital gains tax: report and pay’ for a client? If that is the future, we are doomed!
Second, I am surprised that Andrew suggests that clients file details of their own freelance income and expenditure. I have seen the mess that is created sometimes when clients try to prepare and submit their own VAT returns. Some clients simply do not know the correct figure to report. I also remain unimpressed with many of the apps out there for recording expenses. They claim to offer a wonderful, simple solution, however they are currently very unreliable in my experience.
Richard Nelson FCCA, Breckman & Company.
