This week's opinion: 15 August 2019

That day was, of course, the due date for submission of VAT returns for the quarter to 30 June, which was the first full quarter for MTD. As far as I can see the system itself worked smoothly: I have not heard any reports of problems with people not being able to file. So HMRC is due credit for that.

But this is not the real test of MTD. In the first place, many business that have not signed up for MTD will have filed under the old portal without risk of penalties.

Second, there are undoubtedly problems with the processes for agents signing up clients for MTD for VAT and, although some of these have been resolved, the sheer level of frustration incurred by many agents will have left them, understandably, cynical about the whole process.

But most importantly, the filing element of MTD is not really the issue – the key change is the requirement for digital record-keeping. At the moment the system cannot tell whether a business has kept records digitally. The transition to digital record-keeping will be painful for a large number of businesses. For the time being, they can probably get by on a make-do-and-mend basis but, once HMRC starts to put the pressure on, we will begin to see whether MTD as it is currently structured is a workable proposition.

If you do one thing...

Many of us will have had clients who have said that it is unjust that HMRC can keep enquiries going year after year. The First-tier Tribunal decision in Abrams (TC7288) might be useful in explaining to them that, however much sympathy you have with their view, it is incredibly difficult to persuade a tribunal to call a halt on proceedings.