Guide to Making UK Tax Digital for Businesses

Making Tax Digital – Author, Emma Smith, February 19, 2018

Making Tax Digital (MTD) was first announced by the government in 2015 as an initiative to improve the effectiveness and efficiency of the UK tax system, and reduce its complexity.

The government’s original goal was to transform the tax system by 2020 by introducing digital recordkeeping and quarterly updating for businesses, the self-employed and landlords for income tax self-assessments, value-added tax and corporation tax.

The original timeline set out by the government proposed a phased introduction of MTD between the 2018-19 and 2020-21 tax years.

However, following consultation with the industry, in July 2017 the government announced that it would delay the introduction of MTD to April 2019 at which date the scheme would only apply to VAT. It said that the initiative would be extended to taxes other than VAT by 2020 at the earliest.

So, what is required under MTD and how will the initiative affect businesses?
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Reasons for MTD

The government has said that one of the main reasons behind the MTD scheme is to help close the tax gap by helping businesses to “get their tax right”. It has estimated that over £9bn is lost annually as a result of tax errors and mistakes.

The government has also outlined some of the key benefits of the MTD scheme for businesses, including the ability to know where they stand when it comes to tax affairs; being able to access tax information online in one place; being able to work collaboratively with an agent; and being able to plan and budget effectively. These benefits will enable businesses to drive performance and successfully manage their financial affairs. According to the government, benefits of MTD for businesses include remaining competitive, boosting productivity and being able to capitalise on going digital through cost and efficiency improvements.
What will change for businesses under MTD?

MTD for VAT

From April 2019, businesses that are registered for VAT and have turnover above the VAT registration threshold of £85,000 will be required to keep digital records for VAT purposes and submit their VAT return to HMRC through MTD compatible software.

Businesses will need to keep the following information as digital records:

Business name, principle place of business and VAT registration number (to also include the VAT accounting scheme used by the business)
The VAT account showing the audit trail between primary records and the VAT return
Details about supplies made and received

Businesses will need to submit their VAT returns using compatible software, which will pull information from the digital records.

Digital records will need to be preserved for up to six years.

If businesses need to make amendments to their VAT return, the existing error correction rules will apply. This involves correcting non-deliberate errors on the next VAT return (errors must be within the four-year limit). Errors that do not fall into this category should be recorded through the submission of form VAT652.

MTD for corporation tax

MTD for corporation tax will not come into effect until 2020 at the earliest. HMRC has said that the scope of the initiative will not be widened outside of VAT until the system “has been shown to work” and to provide sufficient time to test the system fully.

Self-employed and landlords

VAT-registered businesses and landlords with income above the £85,000 VAT threshold will need to report for VAT purposes only from April 2019.
Voluntary participation

Businesses that are not required to begin keeping digital records for VAT from April 2019 will still be able to participate on a voluntary basis. HMRC has said that it expects many businesses to move to the system in April 2019 even if not required to do so.

Businesses will also be able to submit VAT data on a more frequent basis than mandated. Voluntary updates submitted outside of the VAT return cycle could be used in situations where a business wishes to notify HMRC of a change in circumstances.
Exemptions

Exemptions from MTD for VAT will apply to a number of businesses. These include businesses that are unable to use electronic communications because or religious beliefs; insolvent businesses; and businesses that are unable to submit returns electronically because of disability, age or remoteness of location.
Costs

Businesses are likely to face one-off costs and ongoing costs.

One-off costs will enable a business to transition to the MTD scheme. These include the time spent implementing new software for compliance with MTD; purchasing new or upgrading existing hardware; accountancy or agents costs to support the MTD move; and training staff in the MTD process.

Ongoing costs for businesses include moving to MTD compatible software; using bridging software to support MTD compatibility for spreadsheets; and increases on current software costs as a result of businesses bearing the burden of the MTD software improvement costs.
Software

Businesses must use software that can connect to HMRC systems via an Application Programming Interface (API) in order to comply fully with MTD. As such, the software must be able to:

Keep digital records in accordance to MTD regulations
Preserve digital records in line with MTD regulations
Create a VAT return with digital information held by the software and digitally send this information to HMRC
Provide VAT data on a voluntary basis to HMRC
Receive information from HMRC via the API platform with regard to an entity’s compliance with obligations under MTD regulations

HMRC started a limited pilot for VAT in 2017. The pilot is due to expand in spring 2018.
Penalties and interest

HMRC has previously consulted on the penalties regime for MTD. The system is likely to be a points-based model with taxpayers receiving a point every time they fail to submit on time. The model is likely to be introduced for VAT in 2020 once taxpayers in the April 2019 intake have become familiar with the system.

Open Banking Selects ForgeRock to Provide Cloud-Based Reference Bank Application

Open Banking Selects ForgeRock to Provide Cloud-Based Reference Bank ApplicationForgeRock to develop, host and manage key application for demonstration and testing of the Open Banking capabilities

LONDON – December 21, 2017 – ForgeRock®, the leading platform provider of digital identity management solutions, today announced that it has been selected by the Open Banking Implementation Entity to provide a Reference Bank Application, which will be used by leading banks and third parties to build their own applications in accordance with Open Banking standards. A major milestone in the Open Banking movement, this announcement highlights the completeness of the ForgeRock Identity Platform in solving complex requirements of global enterprises.

Open Banking is an ambitious endeavour, by and for financial services organizations, to embrace technology that will give customers greater freedom and control in how they interact with their financial services providers. It intends to enable individual consumers and small businesses to share their data securely with other banks and with third parties, allowing them to compare products on the basis of their own requirements and to manage their finances without necessarily having to use their bank.

ForgeRock becomes a key enabler in making Open Banking a reality. In being selected to develop, host and manage the Reference Bank Application, ForgeRock will deliver the cloud- based application that will drive the demonstration and testing of the Open Banking API ecosystem, much more than just a simple front-end.

Built to API specifications (see https://www.openbanking.org.uk/read-write-apis/) the ForgeRock Reference Bank Application provides the agreed standard for testing the functionality of Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs). In this way, organizations in the Open Banking ecosystem will gain the ability to build their own web and mobile applications for Payment Service Users, such as personal and business banking customers. The API specifications are now in the public domain and third- party providers are registering with Open Banking, so once their applications and endpoints are developed they can be used in a production environment. Once an ASPSP (Account Servicing Payment Service Providers), PISP or AISP is authorized, they will be able to join the Open Banking Directory; all digital identities and certificates are then provided which enable organizations to securely connect and communicate via the Open Banking Security Profile.

Mike Ellis, CEO of ForgeRock, said, “ForgeRock is pleased to partner with Open Banking to deliver the Reference Bank Application as a service. It will be the true foundation for helping to ensure success with this wide-ranging set of regulations. ForgeRock already has experience in working with CMA 9 banks, so it’s fitting that we were selected. As banks work to deliver new and differentiating services to attract and retain customers, they can continue to rely on ForgeRock.”

The latest release of the ForgeRock Identity Platform introduced a variety of new capabilities to the market that brought ForgeRock’s flagship offering into compliance with both PSD2 and Open Banking.

To purchase the ForgeRock Identity Platform, or access a free trial version, visit the ForgeRock website.

About ForgeRock

ForgeRock® is the Digital Identity Management company transforming the way organizations interact securely with customers, employees, devices, and things. Organizations adopt the ForgeRock Identity Platform™ as their digital identity system of record to monetize customer relationships, address stringent regulations for privacy and consent (GDPR, HIPAA, Open Banking, PSD2, etc.), and leverage the internet of things. ForgeRock serves hundreds of brands, including Morningstar, Vodafone, GEICO, TomTom, and Pearson, as well as governments such as Norway, New Zealand, and Belgium, among many others. Headquartered in San Francisco, California, ForgeRock has offices in Austin, London, Bristol, Grenoble, Munich, Paris, Oslo, Singapore, Sydney and Vancouver, Washington. ForgeRock is privately held.

Identity Management for Banks – update & overview

There has been unprecedented change in today’s banking ecosystem: End-users are asking for more digital services, especially those they can access using their mobile devices; Fraud is increasing and becoming more complex across online, mobile, call center, ATM and other channels; Regulations are tightening worldwide; and new financial technology competitors, or fintechs, are entering the market, leveraging the banks’ infrastructure to offer innovative services to their customers.

After having navigated in relatively quiet waters for the last 20 years, banks now must reinvent themselves and be equally innovative in how they solve multiple challenges. This, of course, represents a profound opportunity for security integrators, who can help banks to address these challenges – showing them how to use trusted identities to pursue new opportunities, become more competitive and build more sustainable business strategies for the future.

Banks will also need integrators’ help to become more creative in how they deliver current services and propose new ones – and to ensure these services are secure so that their customers will trust and adopt them. Most importantly, banks must become more customer-driven, and this is where integrators can be particularly helpful, drawing on their experience working with many types of institutions and organizations to deliver a seamless user experience.

Banks are under pressure to serve more demanding customers in an increasingly competitive environment while dealing with growing fraud threats and complying with an expanding range of regulatory requirements. Integrators can help them navigate these challenges as they work together to build trusted solutions that simplify transactions and empower consumers and organizations who provide B2B customer authentication services to better protect financial information, reduce fraud and increase peace of mind.

Today’s Banks Need Biometrics

As the world becomes more and more connected, today’s increasingly mobile bank customers need better ways to authenticate and identify themselves. These customers are already able to start their cars, order a new bottle of milk from the fridge and watch over their baby using their smartphone.

These and other new usage models are driving demand for secure and trusted connected services, and banks need to meet this demand. They need to think mobile and include all the associated geolocation, mobile biometry, “always on” and other functionality.

Many banks are already heading in this direction, using today’s digital identity transformation to help drive consistency across multiple service channels – thus improving the user experience. Banks are also facing pressure to secure their new services and solutions so customers trust them.

With the challenge to substantially improve the customer experience without sacrificing trust and security, an important way to accomplish this is by using biometrics. By better associating a user’s true identity with his or her digital identities, this approach delivers the convenience necessary for driving customer loyalty and acquisition while also supporting multiple strong authentication methods to reduce fraud across channels.

Today’s biometrics solutions can be compared to the security improvement brought by EMV for the PIN – EMV enhances the security of the card; biometrics now enhances the security of the PIN and creates a much more convenient, quick and efficient experience for the bank customer than typing in passwords.

Other mix-and-match authentication options include card and biometric, phone and biometric, and “deviceless” solutions that combine an account number and biometric.

Biometrics also can be used for bank employee authentication to enhance productivity and security. Applications include logical access for networks, shared workstations, call centers and remote applications. Additionally, biometrics can be used for transaction verification in applications including working with customer records and processing approvals. Finally, biometrics authentication is ideal for controlling physical access to ATMs, branches and safe boxes.

Trust can be further reinforced through collaboration between banks and the government on identity proofing models in which citizens receive a digital certificate that allows them to sign, timestamp and seal a document to authenticate and/or identify themselves. This is what is now occurring in European countries with the advent of the European Commission’s eIDAS Regulation. It enables the use of electronic identifications means and trust services (i.e., electronic signatures, electronic seals, time stamping, registered electronic delivery and website authentication) by citizens, businesses and public administrations, for accessing online services or managing electronic transactions across the European member states.

Mobile: Another Key Component

Increasingly, the customer must be in the middle of everything the bank is doing. This is the strength of the fintechs, and this is how banks will acquire and retain end-users.

One example of new customer-centric innovation is next-generation multi-factor authentication solutions on mobile devices. The latest solutions turn smartphones into handheld validation devices or “authenticators” for verifying online access and transaction requests, such as digital banking transactions or corporate VPN access. A mobile app is combined with public key-based cryptography and push technology to create a new experience for bank customers.

These solutions provide added security that is far more intuitive and user-friendly compared to traditional methods of authentication. Ultimately, these authentication solutions can be more broadly used to help increase cybersecurity for healthcare providers and digital business and enterprises, while improving customer and employee satisfaction.

Authentication solutions like these must support all necessary APIs, including OAUTH, OpenID Connect, SCIM and SAML in order for banks to easily adopt this new opportunity and to embrace the Open API trend. They should embed mobile application security tools like jailbreak detection, anti-cloning, Runtime Application Self Protection, etc., since providing an authentication tool on a device that is not protected would be of no-use. They should also be supported by turnkey applications that are easily customizable so that the bank can present its brand without having to build and maintain a custom app.

A Software Development Kit (SDK) should also be available to help integrate the capabilities into existing bank apps. The entire solution should provide flexible policy customization, robust security and data analytics, and create an audit trail for financial institutions that enables them to comply with regulations such as PSD2, GDPR and others.

This type of mobile platform for trusted transactions, combined with new regulations now coming into play, creates an opportunity for banks to become the central point of identification and authentication for a digitally connected world that, until now, has suffered from the complexity of so many different online identities and passwords. Every end-user could potentially have his or her online trusted identity generated and held by banks, and would be able to identify and authenticate for many types of transactions – from government and utility services to commercial offerings.

These solutions will give bank customers the confidence that they have more control over who is accessing their confidential and proprietary information, and that they are protected even when they behave unsafely.

Olivier Thirion de Briel is HID Global’s Global Solution Marketing Director for Financial Institutions and IAM Solutions.

The Climate Coalition says golf, football and cricket face an “unexpected threat”, with cricket to be the “hardest hit”.

BBC Open Championship venues such as St Andrews and Royal Troon could be under water by the end of the century if sea levels rise even slightly as a result of climate change, according to a new report.
The Climate Coalition says golf, football and cricket face an “unexpected threat”, with cricket to be thBBC reportse “hardest hit”.

The report predicts “cancelled football matches, flooded cricket grounds and golf courses crumbling into the sea”.

It adds that rising winter temperatures mean the Scottish skiing industry could collapse within 50 years.

The report says six of the UK’s seven wettest years on record have occurred since 2000, with cricket’s County Championship already losing thousands of overs every season.

“Climate change is already impacting our ability to play and watch the sports we love,” said the report, adding that extreme weather is a factor in declining participation and lost revenue.

What is climate change?
Cricket suffers in Cape Town drought

‘We could lose 5-10 metres in a couple of days’
Montrose
Last year, Montrose sacrificed the third tee by moving rocks to reinforce the first green and second tee from coastal erosion

The report says “only a small increase in sea-level rise would imperil all of the world’s links courses before the end of the century”.

The Open is the only one of golf’s majors played in the UK and is hosted on links courses, including – as well at St Andrews and Royal Troon – Royal Birkdale, Hoylake, Royal Lytham & St Annes, Muirfield, Sandwich, Turnberry, Portrush and 2018 venue Carnoustie.

It adds that “more than 450 years of golfing history” at Montrose, one of the five oldest courses in the world, is at risk of being washed away by rising seas and coastal erosion linked to climate change.

Research published by Dundee University in 2016 showed the North Sea has crept 70 metres towards Montrose within the past 30 years.

Chris Curnin, director at Montrose Golf Links, said: “As the sea rises and the coast falls away, we’re left with nowhere to go. Climate change is often seen as tomorrow’s problem – but it’s already eating away at our course.

“In a perfect storm we could lose 5-10 metres over just a couple of days and that could happen at pretty much any point.”

There was as much as 20% less playing time for courses across the greater Glasgow area in 2016-17 compared to 10 years earlier, the report suggests.

“It is a fact that increased rainfall and extreme events are causing more disruption in recreational golf,” says Richard Windows of the Sports Turf Research Institute (STRI).

A spokesman for The R&A, golf’s governing body outside the United States and Mexico, said the sport had been “actively dealing” with the issue for some time.

“Climate change, particularly the impact of sea levels, is a wider issue and ultimately it is not something that golf or any other individual sport can tackle by itself,” the spokesman added.

“We have to continue to raise awareness of the effects of climate change and encourage policymakers to consider the impact it is having on our coastline.”

However, Stephen Anthony, the club secretary at Royal Troon, told BBC World Service that, while they took the matter seriously, they are “not overly concerned”.

“We’ve been proactive over the last 30 years,” he said. “We’ve put lots of things in place to protect our course into the future.”
‘Grassroots football in decline’
Carlisle United’s Brunton Park ground
Carlisle United’s Brunton Park was flooded in the storms of winter 2015

The report states “increased rainfall and more extreme weather events associated with climate change may be a defining factor in the viability of grassroots football”.

It adds that:

Grassroots clubs lose five weeks per season to bad weather;
More than a third lose two to three months;
84% of those highlight facilities as the most pressing issue facing grassroots game;
Sport England reported a 180,000 drop over 10 years in people playing weekly;
25 Football League fixtures postponed during 2015-16 season.

In December 2015, Carlisle United’s Brunton Park was hit by Storm Desmond, forcing the League One club out of their ground for 49 days at a reported cost of nearly £200,000.

“Climate modelling has found that climate change made this storm 59% more likely,” said Kate Sambrook, from the Priestley International Centre for Climate.

In the same season, grassroots club Bromley Heath United were unable to play matches for 12 weeks because of unsuitable pitches.

Longer term, the Football Association will invest £48m in hundreds of new all-weather and specially adapted turf pitches across the country, including new dedicated facilities in 30 cities, in addition to upgrading more than 200 existing pitches nationwide.
Cricket struggles to be ‘commercially viable’
Rain stat

According to the Climate Coalition report, cricket will be “hardest hit” by climate change out of all the major pitch sports, with more rain resulting in more delays and abandonments.

Cardiff-based club Glamorgan have lost 1,300 hours of cricket since 2000 as a result of extreme weather and rainfall.

“Losing so much cricket is a county’s worst nightmare – it affects the club at every level,” said Glamorgan head of operations Dan Cherry. “It’s difficult even for first-class counties to be commercially viable with such an impact.

“T20 Blast is a great way to get new people through the gates and into cricket – but they won’t come back if this keeps happening and it’s damaged the club to the tune of £1m.”

More than a quarter (27%) of England’s home one-day international since 2000 have seen reduced overs because of rain disruptions, while the rate of rain-affected matches has more than doubled since 2011.

The England and Wales Cricket Board (ECB) spent £1m in emergency grants in 2016 and £1.6m in 2017 to support clubs and restore their facilities and have set aside £2.5m a year for small grants to help club sides keep matches on.

There is the risk that increasingly disrupted cricket will lead to people no longer getting involved in the sport. According to the report, nearly 40,000 fewer people played cricket in 2015-16 than in 2005-06, a fall of almost 20%.

“There is clear evidence that climate change has had a huge impact on the game in the form of general wet weather and extreme weather events,” said ECB national participation manager Dan Musson.
‘Resorts reliant on artificial snow’
Scotland ski slope
The Scottish ski industry adds £700m to the UK economy per year and supports more than 20,000 jobs

The Scottish skiing industry could collapse within 50 years as rising temperatures during the winter prevent regular snowfall, according to a Met Office warning referenced by the Climate Coalition.

Three of Scotland’s main resorts are spending “more than half” their operating budgets on artificial snow factories after a tough 2016-17 season, the report states.

Expert predictions suggest an increase of between 2C and 4C and a 60% reduction in Scottish snowfall by the 2080s.

The Alps are also predicted to see a 2C-4C increase and a drop in snowfall of between 70-100% at elevations below 1500m in that time.
What can sports do about it?

The report warns the impacts of climate change will worsen unless governing bodies, clubs and participants work to reduce their emissions and environmental impact.

Both Manchester City and Manchester United created nature reserves at their training grounds. Meanwhile, the report higlhighted that:

United also collect and recycle rainwater to irrigate and maintain the pitch at Old Trafford;
The R&A introduced an initiative to encourage golf events to be more environmentally friendly;
Lord’s cricket ground has led the way in introducing sustainability measures, and most major grounds have followed the example.

Analysis

BBC golf correspondent Iain Carter

These findings should cause great concern among golf’s authorities. The game was founded on the links turf of the British seaside and provides golf in its most authentic form – as well as sums in excess of £75m to local economies on an annual basis.

But the sport has recognised its precarious position at the hands of mother nature, with a number of green initiatives adopted in recent years.

This report might also impact on discussions aimed at limiting driving distances because it highlights potential dangers in the maintaining the current trend of lengthening golf courses.