This week's opinion: 11 July 2019

Making Tax Digital (MTD) for VAT has been with us a few months now so it is a good time to reflect on how well it is going.

Some have found the process straightforward but others have reported real problems in getting their clients signed up for MTD. HMRC and the professional bodies worked hard to get the communication right but there still seems to be a lot of confusion about the relationship between a client signing up for MTD and the agent being able to submit VAT returns through the agent services account. There also seem to be persistent issues with direct debits.

No doubt some of these teething troubles can be expected with any new system, but I think that they point to an underlying structural problem with the design of HMRC’s systems: a lack of appreciation of the role of agents. The system is designed on the basis that taxpayers will file their own returns. It seems to me – and I am happy to be proved wrong – that the role of agents was an afterthought in the design of the technology. HMRC should not build systems that compel taxpayers to use agents but, equally, they should be made as efficient as possible for taxpayers who do want to use an agent.

There is an important lesson for when (if?) MTD for income tax is introduced. It is essential that the systems are properly designed from the outset with the needs of taxpayers who want to use agents in mind, and that any communications about how to use the system are clear and unambiguous.

If you do one thing...

Read the judgment in the Walsh negligence claim case (tinyurl.com/walshhc). It is long and complex but contains some salutary lessons for all who advise on tax.