Introducing a Pensions Advice Allowance - CIOT comments
The survey closed on 3 October and we received an impressive 1,082 replies, which is a great response rate. We have sent the results to HMRC, and we will be using them when we respond to the various MTD consultations which close on 7 November.
Our survey asked a mixture of high-level questions (such as the expected burden on clients and advisers) and specific questions (such as the threshold for exemption from MTD). The main results from the survey are summarised below:
Just over half of members are fairly clear on what the MTD proposals mean, but a large proportion of members still need to engage with MTD. Over 95% of members consider that compulsory digital record keeping and quarterly reporting will place an additional burden on their clients. Nearly 90% of members consider that compulsory digital record keeping and quarterly reporting will place an additional burden on their practice. Around 40% of members consider that compulsory digital record keeping and quarterly reporting will increase errors by their clients, with a similar number considering it will have limited impact. Only 1% of members felt it would lead to a significant reduction in errors, with around 9% thinking it will lead to a small reduction in errors. Nearly 92% of members consider that advisers should be able to keep digital records and file quarterly reports on behalf of their clients. Nearly 89% of members believe that the timeframe for implementing quarterly reporting should be extended. 33% of members report that over 75% of their clients will need to move from paper / hard copy accounting records to digital records, and over 25% of members report that 51% to 75% of their clients would need to do so. Nearly 53% of members thought that over 75% of those clients will need help with moving to digital record keeping, with over 20% believing that would apply to 51% to 75% of clients. 68% of members consider that over 75% of their clients will need help with their Making Tax Digital reporting obligations, including filing their quarterly updates with HMRC and completing their 'End of Year' activity, with 18% considering that help would be needed by 51% to 75% of clients. There was a mixed response as to whether the threshold for the cash basis should be increased from the VAT registration threshold. 29% of members suggested it should remain at £83,000, with the next popular options to increase to £100,000 (19%), doubled to £166,000 (17%) or increased to £150,000 (16%). A number of members were not in favour of the cash basis and thought it should be scrapped. There was also a mixed response as to whether members would advise clients to use the cash basis if the threshold was increased. 33% of members said yes they would, whereas 27% would not, and 33% did not know. In relation to extending the cash basis to property businesses, with no turnover threshold, 58% of businesses were in favour of such a move, whereas 22% were not, and 20% did not know. Almost 87% of members consider that the £10,000 threshold for exemption from MTD is too low and nearly 25% of those members indicated that the VAT registration threshold was the right level. The VAT registration threshold was also the most popular choice of threshold for businesses who will benefit from the 12 month deferral of MTD, with 62% of members selecting this option. 17% of members thought an even higher level was appropriate. 74% of members agreed with the exclusion of MTD for charities, CASCs, Insolvency businesses etc. When considering what financial support the government might provide towards the cost of meeting MTD obligations, 55% of members favoured a tax-free incentive payment, with a significant drop then to enhanced capital allowances / tax deductions (17%) and a voucher scheme (16%). On average, only circa 15% of members‚ clients have accessed their digital tax accounts (DTA), and only 33% of members had accessed their own DTAs; although around two-thirds of those who had accessed their DTA found it easy to access and use. Those who hadn‚ t accessed their DTA cited not needing to access it (49%) as the main reason.
Following submission of the survey results to HMRC, we received a response from Theresa Middleton, Director of the Making Tax Digital for Business Programme, and this letter is also attached below.
Over 160 members watched our live webinar, and many more have subsequently viewed the recording. I was delighted to be joined by Adrian Rudd and Tina Riches, both of whom are CIOT volunteers heavily involved with our technical work.
The webinar provided an overview of the MTD proposals, before running through the main elements of the six consultation documents, and the types of issue being consulted upon. We then had time at the end for an interesting Q&A session, covering issues such as agent access, reporting investment and other non-business income, data security, and changing accounting period ends ‚ to name but a few.
The webinar can still be watched at http://www.lexisauditorium.com/stage.aspx?c=864a7f20-4914-4f0a-9ed1-df7e55897543 and we will publish our responses to the consultation documents as soon as they are available.