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

[Mark]

Hi Neil,

Unlike VAT, the Corporation Tax service is an earlier API, and isn't
currently covered by MTD standards  There is no verification process for
developers to be able to use corp tax. Developers just ask for a 4-digit
vendor ID and that's it.

At the moment, small businesses could use the existing balance sheet and
P&L to fill in the details in HMRC's free online service, but MTD could
well change all of this.

Mark.

On Wed, 28 Jul 2021 at 12:48, Neil Campbell <neilcamp65 at gmail.com> wrote:

> Hi Mark
>
> Thank you for all that background information which I found to be very
> informative. I hear, and agree with, you about the complexity of UK
> Taxation system and the practicality of this, but do wonder how the
> software developers mentioned on HMRC website got MTD status. I expect all
> they did was to get submission of the unadulterated records without year
> end adjustments etc linked to HMRC via their API. I was not aware of the
> HMRC motives, so that was interesting. From what you have said, it may be
> correct to say that the existing P&L Report would be OK for this automatic
> return. It would just need to be integrated with the HMRC system using
> their API. But I am not a programmer, so I couldn’t do this.
>
> I have put in an enhancement request for this change and will see what
> happens next. Thank you for your enlightenment.
>
> Regards.
>
> *Neilneilcamp65 at gmail.com <neilcamp65 at gmail.com>*
>
>
>
> On 28 Jul 2021, at 12:24, Mark <alien.technology at gmail.com> wrote:
>
> 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.
>
>
>