(MTD) – Making Tax Difficult
Posted on: 11 May, 21
Oury and Clark discuss the dangerous implications of real-time tax reporting.
Worse than that, Oury, I’ve seen the future.
How? Were you reading the Daily Mail?
No.
Looking at the Mirror of Galadriel, maybe?
No. At HMRC’s plans for real time data access.
Oh. I’m supposed to be the accountant. You’re the lawyer.
I’m the only one who can see the dangers of what’s happening here. I’m like Gandalf.
Not exactly. Gandalf doesn’t wear a suit by Zara.
It all started with Real Time Information reporting for Payroll back in 2012.
Those were the days. A bitcoin was just a tenner. Cardi B hadn’t even made a record yet.
Now all payroll information is reported as you go - before anyone is even paid. They want the same real time reporting for other taxes. With everything moving real time into the cloud, the government wants to charge tax and VAT in real time.
I like my gaming in real time. I like my dates in real time. But not my taxes.
Exactly.
In France and Italy when you raise an invoice don’t you have to run it by the government to get it validated?
Yes.
When it comes to admin, the French and the Italians really are the world leaders. They love admin. That’s why they all have affairs with their secretaries.
Not sure my partner would buy the “admin” excuse.
Nor mine.
There’s nothing wrong with efficient tax collection. It’s one of Adam Smith’s four principles of taxation.
Adam Smith. Wasn’t he centre forward for Arsenal?
In a way. The Arsenal of economists. It might suit some to have their taxes taken as they go - but it leaves no margin for error. It’s is going to be a clusterflip.
Is that a kind of hipster hamburger? I think I ate one served on a vintage dustbin lid in Haggerston.
Once upon a time you would give your information to your accountant - who is trained and experienced. He inputs the data and you pay the tax. The revenue has a look, it may ask some questions and if so, they speak to the accountant.
Those were the days. Baby Shark hadn’t even been released yet.
But with now entering data directly into HMRC in real time, many, especially small businesses, won’t know what they’re doing.
Oh cripes some businesses will post wages, when they mean dividends and loans when they mean an advance.
Mine don’t even know the difference between a row and a column in excel . People are going to get done for fraud, when all they were was ignorant or careless. And loads of fraudsters will just pretend they were ignorant. People are going to get into big trouble.
But Ignorance is no excuse in the eyes of the law. And you know what HMRC is like - you’re guilty until proven innocent.
However, you can’t plead guilty but completely confused.
"Confused?" don’t you mean with a different educational experience.
Big business will be fine ‘cos it will have their dedicated HMRC person organizing things for them, but small business.
Imagine being the dedicated HMRC person in an organisation - when do you get into that career after you've been told you don't have the charisma to pull off being an undertaker?
There’s no reciprocity.
Impressive word. Somebody's been on dictionary.com this morning!
I know - what did the lady say to her husband, an accountant, when she couldn't sleep?
Don’t know what did the lady say to her husband the accountant when she couldn’t sleep.
Darling tell me all about what you did today at work.
Haha.
Small businesses won’t have the resources to deal with all of this. They’ll end up having the wrong amount taken and they won’t have the wherewithal to contest it or get the money back.
You can’t even get through to HMRC on the phone, or get them to answer a letter, let alone have a discussion with them. It’s like tweeting celebrities. They just ignore you unless you tell them how great they are.
In fairness you were tweeting Claire Balding a bit too much it was getting creepy.
How did you know that?
It's like the bank or the phone company, the only time they'll answer the phone is if you say you owe them money then magically someone answers.
Yes.
It’s a dangerous place where they are going. They are removing checks and balances.
Yes. Checks and balances, the principle of the three branches of government departments have the power to limit or check the others, which creates a balance between the three branches of the state.
How did you know that?
I got real time data information from Wikipedia. As I said some things are good in IRL.
The three branches of the state - clowns fools and buffoons.
No. Legislative executive and judicial.
Professionals are there to protect the individual but they can’t without checks and balances.
I know what this is about. They’re moving towards deduction at source. A bit like PAYE. They collect more money that way. Slippery buggers.
Maybe. One way to pay off covid is trying to bring forward payment of taxes. But I think this was going to happen anyway. There’s a blurring of the lines going on. Remember when the distinction between tax evasion and tax avoidance was clear? Now that’s blurred too.
What’s the difference between tax evasion and tax avoidance?
Tax avoidance is what left-wing activists criticize Amazon and Starbucks for. Tax evasion is what they do with money they get paid in bitcoin.
Even the line between what is a bank and what is a fintech company is getting blurred. Payroll and banking is merging. But the more it goes real time, the more it is automatically collecting and taking the data - the scarier it is. Zero, or Quickbooks or whatever software you're using will record business income and expenses and supply quarterly updates to HMRC via your digital tax account.
Your bank account just goes straight into HMRC and you get a bill?
You won’t get a bill. It will just get deducted. Particularly when we get these Central Bank Digital Wallets. Don’t get me started on them.
I’ve no plans to. I have to meet my mother next week and I don't want to be late.
But if the person inputting the data doesn’t know what they’re doing, as is inevitable, it will get messy. Where is the representation, the consideration - the right to share the information you want to - not the information you don’t?
You should go on one of those conspiracy channels. It's fascinating - just add a dead celebrity and a few aliens and you'll have a hit!
This story needs highlighting and it needs opposing.
It used to be right tax at the right time for the right person, now it’s get as much as we can. And by the time the government have administered this and all the ensuing errors and corrections it's going to cost them an arm and a leg in bureaucracy.
We need to fight back against this, Clark. We need a Fellowship of the Ring. To fight for small businesses.
Business hobbits.
The important thing is that people pay the right amount of taxes. But this new system means that those least equipped either in terms of training or resources will be the ones on whom the most burden falls. Small business owners should be helped not burdened with this kind of thing.
They’ll spend their whole working lives filling in spreadsheets rather than doing their actual job or running their business. What do they expect of small business owners ? After a hard day's work milking cows there's nothing better a farmer wants to do than an hour or two on QuickBooks. It’s that bloody making tax difficult…
Digital.
Wasn’t that a George Osborne thing?
Yes. Whatever happened to him?
I think he’s working for Russian oligarchs now. I saw him in Harrods the other day holding shopping bags for a very stern looking man and an extremely attractive eastern European woman.
Why don't they play monopoly in Russia?
I don’t know Clark. Why don’t they play monopoly in Russia?
Because they play oligopoly instead - it's almost the same except you always land on "go" and you always get out of jail for free.
Typical Chancellor. But yes the plan was to modernise the UK tax system. They wanted businesses and individuals to be supplying tax information electronically to their own online digital tax accounts, thus making HMRC one of the most efficient tax authorities in the world. Every taxpayer’s details in one place, with businesses and individuals interacting with HMRC, who can view their tax affairs in real-time and see a rolling estimation of their tax liability as information is added. It’s quite Orwellian really.
Didn’t he used to play for West Brom?
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We are but two fictitious characters throwing out ideas and comment to stimulate debate and collect information. As professional service firms, we are open minded people and think independent thought and debate is essential to help understand, as well as navigate, complex problems. By joves – doing business across Europe (and the world) is set to become a whole lot more complex in light of recent seismic political events. As businesses - we provide information and hopefully some wisdom - and we see this blog and its caricatures merely as a much more fun, perhaps slightly controversial way, of stimulating debate and collecting ideas. We’re searching for some true pearls of wisdom, and as we find them, we’ll share them with you.
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What’s the matter, Clark? You look like you’ve seen a ghost.