UK tax authorities Make Tax Digital, whether businesses want it or not

In a changing world, it is good to know that some certainties remain, such as when companies log their affairs and give up to Caesar what is due to Caesar, that is, pay their tax. In the UK at least, even this constant is under fire. I’m speaking tongue in cheek of course, but the government’s Making Tax Digital (MTD) initiative is proving troubling to more than a few businesses.

On the upside, tax accounting software vendors seem very well furnished with information. There’s a quick start guide which shows JSON and XML formats for information exchange, RESTful API calls and so on. There’s also a developer hub to test remote access to APIs. Less available is information to businesses and accountants, who are largely in the dark beyond a central assumption that everyone is using vendor packages now, aren’t they?

Simply put, if you’re already using a package such as QuickBooks or Xero, you should be OK (according to the list of those whose software will enable auto-uploading to Her Majesty’s Revenue and Customs, HMRC). But many organisations are not, preferring to keep their books as, erm, books or indeed, spreadsheets. So, what if you don’t want to deliver your books digitally? Well, you have to.

As a techie, I find myself strangely nonplussed about this: while I might not have a problem with using a computer, many others whose income passes the £85K threshold (and who have run businesses quite happily without one) are now faced with three new potential costs: the software itself, the training to use it, and the conversion from one package, or spreadsheet, to a certified package.

Software vendor Liquid Accounts will “provide a single company, single user version of Liquid VAT Filer free of charge to any VAT registered business” — this works with MTD and, according to the article, with spreadsheets. Regarding the latter, the HMRC mentions ‘bridging software’ for spreadsheets here, confirmed here. A couple of solutions are now available, as per the article, including the TaxCalc spreadsheet plugin.

But it begs a question: why didn’t the Revenue simply define a file format standard for accountants to use, which all packages could write to and which anyone could upload? Perhaps there is no place for such primitive mechanisms, not in the API economy. For UK businesses meanwhile, waiting for clarity is becoming an increasingly risky option: we have nine months to go before the end of the tax year in April 2019, by which point MTD will be the default approach.

We shouldn’t be surprised that the British Chambers of Commerce are requesting that the roll-out of MTD is delayed, as this press release notes. On the point about British businesses having enough on their plates right now, I have to concur and can only hope our bureaucratic betters see sense before April next year.