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Making Tax Digital: Saving time or money?

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30th Aug 2016
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HMRC has a vision about making tax digital. Essentially it seems to lead us to a place where Big Brother knows all about everyone’s income because records are kept in a form that reports them straight to HMRC in all their flawed magnificence. I think garbage in garbage out still applies. Have the changes made in the last 30 years meant that small businesses keep ‘better’ records?

In 1981 I put an Amstrad word processor on my desk (ah, the joys of Locoscript and dot matrix printing). In the environment I was working in that was pretty sensational at the time, but I’d hardly use it today. But nothing I’ve changed it for has had a lifetime of more than about three years to scrapping or obsolescence.

In 2012 the all-party parliamentary taxation group produced a report, marvelling at the fact that the basic structure of PAYE had been introduced in 1944 and that to a considerable extent it still delivered the goods with the help of a creaky old computerisation (COP) that in its time had been the wonder of the age, Europe’s biggest computer project. There may be a lesson there.

How much hi-tech gear do you own and use that is more than (say) three years old? Or do you, like most of us, have a box full of the good, the bad and the ugly, possibly right back to PDAs and other such things. Nobody (except perhaps Apple) saw the tablet computer coming, and nobody at all saw it becoming so dominant for personal use. Smartphones are not really phones: they are computers with a phone function. Cloud computing is seen now as an answer to storage problems. Free wifi is almost everywhere. Not long ago hotels charged for it (and some probably still do, illustrating the way in which things move by fits and starts. Whatever happened to cameras?

HMRC, proposing a vast new system, cannot plan for a lifetime of three years. HMRC talks of smartphone apps being useful for record keeping, but in five years’ time will smartphone apps be consigned to history? We should know by now that large systems – public or private - cannot be changed quickly enough to keep up with the latest technology, and to aim for the very latest (and so not the most reliable) is a mistake.

HMRC has to collect tax. The aim should therefore be to make it easier for taxpayers to pay tax. That means it has to stay with things that taxpayers can do because they can reach them (the broadband problem) and what they can do technically. People want to interact with people. I found a Powerpoint display from 2013, claiming the aim of going digital was to provide a complete, better experience and making it easier to understand. It always seems to start from the right point, then somebody points out you could save money…and making life easy for taxpayers goes out the window.

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By RobertD
30th Aug 2016 15:50

The last sentence sums it all up. MTD in a nutshell will remove the ability of normal hard working people to prepare their own bookwork. It will double their costs. I read that research shows that every £1 saved by HMRC costs the taxpayer £4.
When all this hits the fan I will expect Gauke, Ellison and the perpetrators of this to be held accountable.

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By steve 12321
02nd Sep 2016 12:44

"fat pension" rather than "fat chance" of that. Here is hoping someone will wake up and realise what a calamity they are proposing? Surely it must be stopped before the damage and costly mistake is made?

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By Peter-S
02nd Sep 2016 12:36

Automation is all well and good but it shouldn't be forced on everyone as a matter of course for everything. Most organisations that automate functions to 'make it easier' for us are really making easier and cheaper for them. Some of us still like non-automated supermarket tills, real people in the bank, paper utility bills, a real person answering the phone, parking our car unassisted etc. Great if you like the modern all singing all dancing alternative but there should be choice. The same with tax.

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By steve 12321
02nd Sep 2016 12:45

Annual updates (I mean tax returns) are the way forward

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By JCTS
03rd Sep 2016 15:07

Yes I agree , technology changes very fast.manual recordkeeping is more reliable.

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