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SimpleStep® Guide to MTD Readiness

Your MTD action plan.

This guide, compiled using input from a brain trust of real accountants, offers you a comprehensive action plan to get you from now through to April 2024.

It breaks down the 10 key activities you'll need to make, plus a timeline of when to make certain decisions and provides milestones to track your progress through the plan.

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For a walkthrough of the key points in the guide, additional tips from contributor, Eriona Bajrakurtaj and insight into how we developed this landmark masterwork you can watch the recording of our webinar below.

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Your first step toward your own MTD Masterplan.

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As you can see this was a lively session with lots of questions from the audience.  So many in fact that we had to take many of them away and have answered them below.

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Questions and answers

Will you be preparing a "standard letter" as a guide which can be adapted and sent to clients, explaining briefly the requirements?
We are working with a group of customers to come up with some appropriate wording for this.
Will TaxCalc be providing software for individuals to record their transactions which can then be used as a basis for quarterly MTD ITSA submissions? So that this reduces the number of apps that are involved in the end-to-end process?
We are currently evaluating additional functionality we can develop to support our customers with MTD for ITSA and will keep you updated on these as we approach the go live date.
Please confirm that we enter gross expenses in the quarterly report, and not have to make private use adjustments or separate mortgage interest from capital when not known until the year end.
HMRC have suggested to us that it is a transactional 'update' and not any kind of tax return. Therefore, year end adjustments need not be applied to the quarterly submissions. However, tax projections will be made available to your client based on the submitted figures so you may choose to make reasonable adjustments if that is of concern.
There are points penalties for late filing, but what about the accuracy of data filed in the first four filings?
The penalty regime only covers late filing and late payment. However, HMRC are likely to take a dim view of intentionally erroneous data and this may lead to an enquiry process for your client where the sum of the four quarterly submission is wildly different to the End Of Period Statement.
Are the any age exemptions for clients over the age of say 65 who are still landlords or self employed but with no computer expertise?
There is no set age threshold. Claims for exclusion on the basis of age, religion, disability or remoteness of location are decided on a case by case basis by HMRC. If a client is digitally excluded from MTD for VAT they will also be digitally excluded from MTD for ITSA.
Why do we have to correct a quarterly report when that is surely what the end of period statement is for?
The MTD regulations state "The relevant person must provide the correct or complete information to HMRC when the relevant person next provides a quarterly update; or the end of period statement, whichever the relevant person is first required to provide."
Can we access previous webinars on this topics?
Previous webinars can be accessed from taxcalc.com/events or our YouTube channel.
How does this affect subcontractors on CIS? Will they still need to submit?
Subcontractors within the Construction Industry Scheme will need to comply with the MTD for ITSA requirements in addition to the CIS requirements.
With the four income submissions it is my understanding that the responsibility is the clients. Where do you stand in insisting the clients do them and you just do (and charge for) the final 5th clean-up return?
Some of our customers will have a strict policy of doing all the submissions themselves, others will allow clients to make the quarterly submissions and do a tidy up at year end, perhaps like they do today for VAT.
Will TaxCalc have a different package for submitting MTD ITSA and how much will this cost?
Our bridging solution, Business Filer, will be a new chargeable product. We have not yet decided on the pricing for this product but will update everybody as soon as this has been determined.
Will this affect charities?
Charities are currently excluded from the requirements for MTD for ITSA.
HMRC say that they will be providing free software. Is this true?
HMRC have always maintained that they will not be providing any software themselves but the Government made a commitment that there would be free software available from 3rd party vendors for 'simpler' tax returns. This software will not be designed for use by agents.
Can your bridging software be used by a client to do their quarterly submissions?
Yes. Both VAT Filer for VAT returns and Business Filer for ITSA returns can be used either by the accountant or independently by the client.
Will TaxCalc send out a printed copy of the MTD Guide to TaxCalc customers?
Printed copies of the guide will be available from our offices, or at any of the events we are attended this year starting with Accountex on May 11th and 12th and the ICAEW MTD Conference on May 18th.
Can you submit a "Nil" quarterly return?
Only if there are no transactions that took place during the quarter.
HMRC keep delaying and delaying - is it feasible to spend all the time preparing and researching only to be told that it's being delayed again?
It is extremely frustrating and we share your pain. At this stage we would consider it too risky to ignore completely on the anticipation of further delays.
If you currently submit quarterly VAT returns, can you use this information for the MTD ITSA submissions?
The submission itself is distinct and separate but you can use the same data to make the submission, which may streamline the process providing it is complete.
I heard all year ends need to change to 31/3 (5/4). Is that correct?
All year ends do not need to change but if you maintain a non-tax year end then you will need to apportion them every year as they will be taxed on a 'tax year' basis, rather than today's 'current year' basis.

There will also be an option to make a calendar year election which means you will report to the end of March, June, September and December rather than carry over the 5 days each quarter to align with 5th April. 
What is the penalty regime for late submissions?
An explanation of the new MTD penalty regime can be found on our website here: https://www.taxcalc.com/blog/points-based-penalty-regime
Are TaxCalc going to have an MTD for ITSA alert that the client falls within MTD? It would be useful for the current filing year so that those conversations can happen with the clients?
A combination of Reporting, Data Mining and Custom Fields can currently be used to run reports of clients that will fall within MTD for ITSA. We are currently evaluating additional data mining items that could assist in this process.
Will the spreadsheet templates provided by TaxCalc for quarterly reporting be used to prepare the EOPS through your software?
The data submitted quarterly is quite independent from the End Of Period Statement. We anticipate that the process for preparing the end of year accounts and including the adjusted figures on the final tax return will remain largely unchanged from what you do today. It is primarily the submission process to HMRC that will use a different mechanism behind the scenes.
Quickbooks are starting to offer CT600 filing within its product, how is TaxCalc intending to deal with this if more bookkeeping software solutions add tax filing to their products?
We constantly monitor activity in the market to ensure that our products continue to offer the best value for money for our customers. We recognise that some bookkeeping providers are extending their functionality to cover other compliance areas so we will continue to invest in enhancing our products to ensure they remain best in class.
Can TaxCalc add in Partnership turnover and Gross rentals into Data Mining to get a list for MTD ITSA?
We are currently evaluating all the additional data mining fields required to identify relevant clients and will update the product to include these in due course.
How do we use TaxCalc to submit MTD ITSA returns to HMRC?
Quarterly ITSA submissions can be sent using Business Filer, our bridging solution, in a very similar fashion to MTD for VAT returns. End of year returns such as the End Of Period Submission (EOPS) and Finalisation can be submitted using Tax Return Production just as you would for today's Self Assessment tax return.
Does the database allow for new and existing clients to create within TaxCalc something similar to GoProposal or Ignition so that pricing can be kept inline without having to buy that software?
Within TaxCalc we have standard letter creation, time recording and the ability to set client fees for services. We would be happy to discuss exactly what functionality you are looking to emulate.
I assume that this will also apply to trusts who have property?
Trusts are currently excluded from MTD for ITSA.
Will HMRC send requests to taxpayers every quarter in the same way it send requests to file a tax return?
This has yet to be confirmed by HMRC but we are not anticipating HMRC sending out reminders for the quarterly submissions themselves, rather they will rely on 3rd party software suppliers to provide that functionality. We will have that facility within TaxCalc.
I am a sole proprietor so all MTD is down to me, is there an easy way to bring all this together?
Trusts are currently excluded from MTD for ITSA.
Will there be an import from Sage and other software for MTD requirements?
If your client uses another product for bookkeeping but you wish to make the quarterly submission via TaxCalc then this will be possible using our MTD bridging solution, Business Filer, just as you can for VAT returns today with VAT Filer.

To complete the end of year accounts we have 2-way integration with Xero, QuickBooks and FreeAgent. Sage users can use the CSV import method.

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