[GNC] Making Tax Digital (MTD) for Tax Self-Assessment

[Mark]

Hi Neil,

>From what I understand, HMRC's stated aim for Making Tax Digital is to
reduce errors which cost the government tax money. The general approach
consists of (my interpretation):
- Making APIs which make it easier for the right information to be
submitted.
- Requiring that software developers that implement the APIs do so by
creating submissions straight out of the raw accounts.  Thus, there is no
way for the end user to manipulate the submission data; the data will be
accurate (if the accounts are right) and it's harder to defraud the system.

I got to see inside the MTD process as I've implemented the MTD VAT
interface for my businesses, taking the account data out of GnuCash. In
order to get this approved for production use, I had an interview with an
HMRC engineer, shared my screen and showed the solution at work. It was
relatively painless, but the interviewer wanted to check that the general
approach was right, that there was a legal submission containing required
text, and that there was no way for the end user to change the submitted
data (other than by editing the accounts).  I shared the code on GitHub,
Google for gnucash-uk-vat if anyone is interested.

I would expect that MTD for Corporation Tax submission is going to be along
the same lines i.e. a requirement that the corporation tax return is
automatically derived from accounting records.  I wonder how that will work
in reality: VAT accounting is relatively straightforward - the same
accounting approach works in lots of different countries. Corporation Tax
is a whole different kettle of fish - there are arcane rules specific to
the UK: Depreciation, two ways for getting R&D relief, and the way
profit/loss is shifted between tax years to name a few.

Mark.

> From April 2023, new laws in UK will require all businesses with a gross
income of in excess of £10,000 to keep digital records for Tax returns. I
think that there are already laws in place for record-keeping and
submitting VAT digitally direct to HMRC. I am sure that there must be
thousands of GNUCash users who will be affected.
>
> This may seem a long way away, but can one of the developers please
confirm that GNUCash either complies already (I can’t find anything in the
Menu’s that relates to VAT or the collection thereof) or the matter is in
hand and GNUCash will comply before April 2023.