Making Tax Digital - Is this healthy?

Making Tax Digital - Is this healthy?

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A recent report by Ofcom reveals that 58% of Britains consider themselves to be hooked to their handsets.

It seems possible that it is such people who are trying to force their addiction on to the rest of us through the Making Tax Digital project, and it could be said that the Government will be fuelling that addiction by requiring mandatory use of such handsets and other devices. Indeed, it could be argued that the Government are planning to blatently push people further into addiction with their plans.

Some might see this an an extreme view but just think about it. If you are currently not 'addicted' to your electronic devices and would rather not go down that route or even abstain altogether then it will not be possible to comply with the Making Tax Digital mandatory requirements.

Making Tax Digital needs to be introduced at a steady slow pace and there should be an opt out alternative for those that are wanting to ditch their electronic devices and get back to a better, less stressful life.

Do I have a point here or do I just have an old-fashioned view?

 

 

Replies (50)

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RLI
By lionofludesch
10th Aug 2016 13:46

It's not so long ago that it was considered that mobile phones microwaved your brain.

How much extra will we put into the NHS to cope with this?

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Replying to lionofludesch:
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By josephc
17th Aug 2016 16:23

It was also once reported that sitting too close/watching too much television will make your eyes go square.

Cost the NHS thousands.

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By Ruth Lesley
10th Aug 2016 13:58

Have you considered this:
http://www.plymouthbrethrenchristianchurch.org/

Bonkers that they have a website!

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Replying to Ruth Lesley:
RLI
By lionofludesch
10th Aug 2016 17:33

Plymouth's too far away.

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Replying to lionofludesch:
Tornado
By Tornado
10th Aug 2016 17:56

I am not sure what the point of the link was but the linked website has a contact address in Australia.

The wonders of modern technology ..... I must twit that to everyone.

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By Duggimon
10th Aug 2016 16:04

1: Just because some people can get addicted to a thing does not make the thing bad.

2: The majority of respondents in the quoted survey don't know what addicted means.

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Replying to Duggimon:
Tornado
By Tornado
11th Aug 2016 00:32

1) Just because some people can get addicted to a thing does not make that thing good either.

2) If the majority of respondents in the quoted survey didn't know what addicted means then the situation is worse than I thought. The first thing an addict has to do is to understand and accept their addiction before any help can be effective.

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By supremetwo
12th Aug 2016 12:25

Inadequate signal to use a smart phone from home in my 'rural' area (between Maidenhead and High Wycombe).

I will not be getting one.

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By Gone Sailing
12th Aug 2016 13:06

It is frequently evident when clients reply to my emails from their smartphone:

Not read properly / unclear and hurried response / not answered adequately / later forgets that it was ever done / multiple messages to clear the various points.

It's almost entirely to do with WHERE they are when they reply. MTD beware.

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Replying to Gone Sailing:
RLI
By lionofludesch
12th Aug 2016 13:19

HMRC won't care.

It's always the taxpayer's fault.

Encouraging errors encourages penalties.

Kerching!!

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Replying to Gone Sailing:
Tornado
By Tornado
12th Aug 2016 13:57

I love this one.

"It's almost entirely to do with WHERE they are when they reply. MTD beware"

The imagination runs wild ....

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Morph
By kevinringer
12th Aug 2016 13:58

No in this locality - rubbish mobile signal - we've got none in the office - there's a rumour of a patchy EE 4G somewhere nearby but no Vodafone, O2, Three. I've just spoke to a client who can't get broadband so I checked out mobile coverage but Three and O2 have no coverage at all and EE and Vodafone only got 2G!!!! He will have retired before MTD happens.

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Morph
By kevinringer
12th Aug 2016 14:00

I agree re introduction. If HMRC's goal is for tax to be paid earlier then I've no problem with that. I feel MTD should be optional with some carrot offered to encourage takeup eg no interest on backdated taxes. Also MTD should start with the biggest businesses first.

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Replying to kevinringer:
By Tim Vane
18th Aug 2016 12:36

kevinringer wrote:

Also MTD should start with the biggest businesses first.

Surely the largest businesses already calculate liability and pay tax quarterly.

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By DMBAcc
13th Aug 2016 13:19

You are absolutely right. Just go down any major high street or go on the underground. People no longer converse. They collide with others and even posts and other stationary obsticles. I still ask the question what happens to those who have no idea how to work modern technology? There has been no definitive advertising to inform millions who are still blissfully unaware as to what will soon be required. I have not had discussions with my clients because I don't know how to advise them, because I have been given no useful information by HMRC and yet this all kicks off in 20 months!!!!!

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Replying to DMBAcc:
RLI
By lionofludesch
13th Aug 2016 13:29

I'm tipping it won't kick-off in 20 months.

You can get 20/1 against on Skybet and the bookies always know.

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By SteveHa
15th Aug 2016 10:31

MTD consultations have hit the streets, though.

https://www.gov.uk/government/publications?departments%5B%5D=hm-revenue-...

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Replying to SteveHa:
RLI
By lionofludesch
17th Aug 2016 09:38

This discussion document appears to have been written by E Bilko.

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Replying to lionofludesch:
Tornado
By Tornado
17th Aug 2016 09:52

What odds would you give on that then?

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Replying to Tornado:
RLI
By lionofludesch
17th Aug 2016 11:48

Odds on.

Definitely.

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Replying to lionofludesch:
Tornado
By Tornado
17th Aug 2016 11:56

See you in the Motor Pool at 11.00 pm then.

Knock three times and whisper "MTD" through the keyhole.

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Replying to Tornado:
RLI
By lionofludesch
17th Aug 2016 12:11

Bilko will DEFINITELY be laying bets on this.

Or anything else, for that matter.

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Morph
By kevinringer
16th Aug 2016 14:49

HMRC press release http://www.mynewsdesk.com/uk/hm-revenue-customs-hmrc/pressreleases/digit... "Mike Cherry, FSB National Chairman, said:

Removing small firms and the self-employed with modest turnovers altogether from the proposals will now mean that in addition to the 1.6 million small businesses and landlords that were already excluded, as a result of these changes announced, a further 1.3 million small firms and landlords will no longer be in scope. This means that half of the UK’s 5.4 million small businesses will not be affected by quarterly tax reporting." Have I missed something - I thought all businesses with £10,000+ turnover had to do quarterly accounting.

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Replying to kevinringer:
RLI
By lionofludesch
16th Aug 2016 17:05

Yeah, you've missed reading the New Improved version.

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Replying to kevinringer:
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By DMBAcc
18th Aug 2016 11:01

I have been told by Thomson Reuters (who are one of the companies advising HMRC) that the threshold of £10,000 won't change. But if they can agree a higher temporay threshold for one year then that means there will only be a one year delay for small firms. I would have liked to see the profit figure taken not turnover. Two companies might have the same turnover but entirely different expenditure therefore different profits. Purchases for software etc. will affect profits more significantly than turnover (% stating the obvious I know). It is also odd that the tax threshold is linked to profit NOT turnover and yet HMRC are insisting that turnover will be the determining factor. Am I the only one who can see a whole load tax returns being submitted which will generate no income for HMRC but will cost the punters more just to tell HMRC they have no tax to pay. Is this perverse or I am yet another person missing something here?

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Replying to DMBAcc:
RLI
By lionofludesch
18th Aug 2016 11:59

DMBAcc wrote:

I have been told by Thomson Reuters (who are one of the companies advising HMRC) that the threshold of £10,000 won't change. But if they can agree a higher temporay threshold for one year then that means there will only be a one year delay for small firms. I would have liked to see the profit figure taken not turnover. Two companies might have the same turnover but entirely different expenditure therefore different profits. Purchases for software etc. will affect profits more significantly than turnover (% stating the obvious I know). It is also odd that the tax threshold is linked to profit NOT turnover and yet HMRC are insisting that turnover will be the determining factor. Am I the only one who can see a whole load tax returns being submitted which will generate no income for HMRC but will cost the punters more just to tell HMRC they have no tax to pay. Is this perverse or I am yet another person missing something here?

I can't see any point in enforcing this for traders whose turnover is as low as £10000. It's below the personal allowance!!

The question one should perhaps put to HMRC is "if HMRC were standing the cost of all this - software, professional fees, trader's own time, whatever - would you be doing this ?"

If the answer's "no", the project should be abandoned.

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Replying to DMBAcc:
Tornado
By Tornado
21st Aug 2016 11:10

"I have been told by Thomson Reuters (who are one of the companies advising HMRC) that the threshold of £10,000 won't change."

I would say that anything can happen and that there is every possibility that the £10,000 threshold will change. The information that you have been given is possibly what Thomson Reuters believe, but they do not make the final decisions, effectively we will be doing that.

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Eagle
By Financial Eagle
17th Aug 2016 16:06

I've been without internet for the last 3 days thanks to Virgin Media's total incompetence. Don't have or want a mobile 'phone of any description, so exactly how do HMRC suggest people comply given the stone age state of the internet in some areas.

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Morph
By kevinringer
18th Aug 2016 13:12

MTD is going to be massively burdensome on all of us and our clients, but complaining here isn't going to get us far. Each and every one of us needs to respond to the consultations and make sure our professional body knows our thoughts on this. HMRC need to be deluged with responses because they will measure feedback on quantity. We need to use AccountingWeb to bring members attention to points not widely known.

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Replying to kevinringer:
Tornado
By Tornado
18th Aug 2016 14:14

kevinringer wrote:

MTD is going to be massively burdensome on all of us and our clients, but complaining here isn't going to get us far. Each and every one of us needs to respond to the consultations and make sure our professional body knows our thoughts on this. HMRC need to be deluged with responses because they will measure feedback on quantity. We need to use AccountingWeb to bring members attention to points not widely known.

It is true that we should respond to the consultation documents, but I really do not think this will make much difference. To me it is little like asking a condemned man if he wants to be shot or hung. The outcome has already been decided, it just the way that it is done that is up for discussion.

Now if the basic principles were changed, (e.g. stick with the current self-assessment system with enhancements) then I would be fully engaged, but I am not going to spend any of my precious time trying to influence a situation that is going to create a huge amount of unpaid work for me whichever way the consultations go.

If the Government want to interact with the public without my help, then so shall it be and good luck to them.

Do we know what the HMRC Staff think about this?

And on the subject of health, I am still experiencing problems with my tax software for 2016 which is still calculating the wrong figures and my patience is wearing thin.

If there is just one aspect of MTD that will prove to be its downfall, it will be the inability of software to do its job property. I think communications and software quality are nowhere near to being of the required standard and if nothing else, the Government need to be concentrating on the key mechanisms that will be driving their fantastic (as in fantasy) dream.

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Replying to Tornado:
Eagle
By Financial Eagle
18th Aug 2016 14:56

Tornado wrote:
To me it is little like asking a condemned man if he wants to be shot or hung. The outcome has already been decided, it just the way that it is done that is up for discussion.

.

In that case shouldn't we be stating that our preferred method of dying is "from old age".

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Replying to Financial Eagle:
Tornado
By Tornado
18th Aug 2016 15:13

Financial Eagle wrote:

Tornado wrote: To me it is little like asking a condemned man if he wants to be shot or hung. The outcome has already been decided, it just the way that it is done that is up for discussion.

.

In that case shouldn't we be stating that our preferred method of dying is "from old age".

That would be a good answer to my point if that option was given, but you will note that only two options were given. The MTD Consultation Documents are much the same and do not throw the doors open for any suggestions at all, just comments on selected points from the base proposals.

Suggestions such as "scrap the proposals altogether and start again" are unlikely to be given even a cursory glance.

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Replying to Tornado:
Morph
By kevinringer
18th Aug 2016 15:55

Tornado wrote:

Suggestions such as "scrap the proposals altogether and start again" are unlikely to be given even a cursory glance.

Agreed which is why we need to respond and explain why the proposals would be so difficult and expensive for so many small businesses to implement. I know from my own discussions with my professional body HMRC are convinced most taxpayers maintain digital records (how else could they file their VAT return digitally?) so it won't be much effort to switch to MTD. HMRC think taxpayers using paper records are very much in the minority. I have made an estimation of the amount of time it will take to maintain digital accounting records for a sample of my clients and sent the costings to my professional body. I will do the same to HMRC. If each one of us in the profession presents a reasoned argument to HMRC they must listen.

I am not against digital accounting records and facilitate this for many of my clients. But you have to consider the needs and ability of the client: digital accounting records won't suit all of them and they haven't got the funds to employ a bookkeeper.

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Replying to kevinringer:
Tornado
By Tornado
18th Aug 2016 16:27

" I know from my own discussions with my professional body HMRC are convinced most taxpayers maintain digital records (how else could they file their VAT return digitally?) so it won't be much effort to switch to MTD."

This is the bit that I find particularly hard to understand. This is utter nonsense and I cannot see how HMRC arrive at their conclusion.

I quote from the Pandle website -

"Only 20% of small businesses in the UK actually use bookkeeping software, with the remainder using spreadsheets or manually kept records."

I am totally bemused by the HMRC throw away comment that most businesses will be able to make a submission to them just by pressing a button in the software they are already using.

Breathtaking arrogance is not nearly good enough to describe my anger at this ignorant assertion. (Better watch the health on this one)

I am not endorsing this supplier, (although their product look interesting), but having quoted from their website I really should provide a link -

http://www.pandle.co.uk/

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Replying to Tornado:
RLI
By lionofludesch
18th Aug 2016 16:26

Tornado wrote:

" I know from my own discussions with my professional body HMRC are convinced most taxpayers maintain digital records (how else could they file their VAT return digitally?) so it won't be much effort to switch to MTD."

This is the bit that I find particularly hard to understand. This is utter nonsense and I cannot see how HMRC arrive at their conclusion.

I read with some disbelief that HMRC say that businesses already prefer to do business online. Most businesses, apparently, file VAT Returns and PAYE online.

I wonder why that might be ? Bullied into online submissions ?

Setting the bullying aside, filing a VAT return or an RTI as accompanied by collection of tax. Quarterly Reporting, on the other hand, serves no purpose whatsoever.

Timing bothers me too. The impression I get from the discussion documents is that most/a lot of businesses will submit their transactions on a cash basis and then make end of year adjustments for stock or whatever. Those adjustments may come after the next quarterly accounting has been submitted.

Surely that's going to be hugely confusing for everyone. Particularly HMRC who continually demonstrate that they don't understand accounts.

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Replying to lionofludesch:
Tornado
By Tornado
18th Aug 2016 17:20

If you sit back and carefully consider the current self-assessment system, it is well thought out and ultimately delivers the correct results for those that use it (excepting deliberate fraud of course). With the proposal for a MTD final submission 9 months later .... what is point of the massive change. This is just a more complex version of self-assessment that is not required.

I remember when self-assessment was first proposed and this was meant to apply to every taxpayer. The Revenue soon realised that they could not actually deal with 30 million self-assessment Returns and opted for just 8 million in the end. With MTD also including a number of exemptions and limits, the Government are still going to fall short of their ideals for every taxpayer to be in their system.

Mass confusion and no point at which you can say that a taxpayers tax affairs have been finalised.

We are being presented a system that has no standards, is highly complex with taxpayer information that is likely to change by the minute. How and who will verify information for mortgages and loans, for example, and what figures will be used, UK GAAP or cash accounting figures that are open to all types of manipulation or perhaps a few figures on the back of a fag packet. We have standards at the moment so that everyone knows what the information means, or is that not something that is relevant to those that live in the GoogleLand bubble and only live for today.

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Replying to Tornado:
Morph
By kevinringer
18th Aug 2016 16:45

I'd be surprised if even 20% of small businesses use accounting software. If my clients are anything to go by then it's 5%.

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Eagle
By Financial Eagle
18th Aug 2016 18:27

It's actually not just small businesses that don't use computerised accounts. I have a client with a £750k turnover and a net profit of around £300k a year who refuses to have anything to do with computers and maintains beautifully written books and ledgers. Indeed they are so beautifully written I suspect he has a back room somewhere with a team of monks producing these manuscripts.

His attitude is very simple, he keeps perfect records, he pays the right amount of tax, and why should he be dictated to by some faceless bureaucrat and why should he have to pay me to redo his books online.

Agreed he may be a rarity, but since when were HMRC the best arbiter of how businesses should be run?

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Replying to Financial Eagle:
Morph
By kevinringer
19th Aug 2016 11:29

I've got plenty of clients with 6 figure turnover who do not have digital accounting records, even some with 7 figure turnover and 6 figure profits! They use spreadsheets or bespoke software (which can't have the HMRC API's integrated). One client with bespoke software has to continue to use it because it integrates with their supplier's systems. If HMRC forces them to use software that integrates with HMRC the client will have to run two accounting systems!

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Replying to kevinringer:
Tornado
By Tornado
19th Aug 2016 11:54

I also have plenty of clients with 6 and 7 figure turnovers using bespoke systems that have evolved over the years and they are generally well on top of their monthly performance data. The client that I have the most problems with is the one that uses Sage and after many hours of tuition, still does not really understand how it works.

If the Government want quarterly figures, then it is likely that the information can be extracted from the current accounting systems that people use, electronic or manual, and submitted on an online form.

Insisting on everyone using electronic accounting is not going to happen, and it is simply not necessary. If the Government back-off on this requirement, then there is a much better chance of success with MTD.

We seem to be dealing with ignorant idealists in this MTD project. A more pragmatic approach to the situation is going to get more support from everyone and still give the Government the information they seek.

On the other hand, just sticking with an enhanced Self-Assessment system would be the best solution all round, except for those with vested interests, of course. After all, there is £1.3 billion up for grabs.

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Replying to Tornado:
Eagle
By Financial Eagle
19th Aug 2016 15:43

Tornado wrote:

The client that I have the most problems with is the one that uses Sage and after many hours of tuition, still does not really understand how it works.

Does anyone? I have to admit that I have a pathological hatred of Sage. They say that if you give enough chimps enough typewriters one of them will produce the works of Shakespeare, I wonder which Chimp produced Sage accounts?

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Replying to Financial Eagle:
Morph
By kevinringer
19th Aug 2016 16:22

Financial Eagle wrote:

I wonder which Chimp produced Sage accounts?

I think the latest Sage is an improvement. Chuck us a banana.
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Replying to Financial Eagle:
paddle steamer
By DJKL
19th Aug 2016 16:52

Always seems to come back to HHGTG

"Arthur looked up. "Ford!" he said, "there's an infinite number of monkeys outside who want to talk to us about this script for Hamlet they've worked out.""

Infinite improbability.

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By DMBAcc
20th Aug 2016 11:57

This will be my last post here. It appears that most comments here coincide with mine, that we can do nothing to change what HMRC want to do. I have even told our local MP that there will be a backlash against his Tory party from local voters because of this. He seems unable to do or say anything. I am thoroughly depressed because I am currently helping 50 l0cal small businesses who's turnover (but not profit) is over £10,000 but I will not be able to continue to help and advise from 2018 onwards. Currently their small profits help our local economy and gives me a very modest income. None of them use commercial software. Excel is quite sufficient for us all. I currently have 10 months to complete the 50 tax returns. That's 5 per month which allows me to run my other business. The new regime will make this impossible. I will stop my accountancy business after completing their 2017-18 tax returns leaving 50 businesses to try to comply with HMRC new easier system - I know I will get loads of emails and telephone calls from them. Sadly I will be spending all my time trying to sort out the returns for my other business, my wife's business, my son's in law business, my mother's tax return etc......
Everything had been going so well with the potential for more clients but with HMRC's new system looming I have had to start turing away new clients. Goodness knows where they go in Cornwall to find an accountant or any basic advice. There are not enough book-keepers in Cornwall now so what it will be like next year and beyond heaven help any small business here. The £10,000 threshold is laughable - it's below the personal threshold for goodness sake. I can't rant any more. HMRC has won - well done guys. Just when we need all the help to improve the economy you guys come along to screw the very people you purport to want to help. Nice own goal guys.

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Replying to DMBAcc:
Tornado
By Tornado
20th Aug 2016 13:17

I can sympathise with you and there are probably hundreds, or even thousands of others who are in the same boat.

The message is not getting through to the masses yet and I am pretty sure that of 650 MPS and 760 Lords, there are more than a few who will be required to provide quarterly figures 'from the electronic software they already use just by pressing a button'. When the penny drops as to what is going on, they will be just as perplexed as we are by the myth that has been peddled by HMRC that most people already use such software.

The Government use the same approach time and time again trying to scare people into doing what they want, and then at the last minute they back down significantly.

I remember the 30,000 possible tags required for electronic filing of accounts, in the end it was reduced to just a few mandatory tags and you can still file paper Accounts at Companies House.

I shall not be moved until the Government start talking about a practical way to achieve their aims.

Remember, you can lead a horse to water, but you cannot make it drink. It would be a mad Government that allowed the horse to die for no valid reason.

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Replying to DMBAcc:
By Tim Vane
21st Aug 2016 14:09

DMBAcc wrote:
I have even told our local MP that there will be a backlash against his Tory party from local voters because of this. He seems unable to do or say anything.

That's probably because he knows that there won't be any significant backlash. Really, what are you expecting?

DMBAcc wrote:
I am thoroughly depressed because I am currently helping 50 l0cal small businesses who's turnover (but not profit) is over £10,000 but I will not be able to continue to help and advise from 2018 onwards.

Don't worry about it, the rest of us will happily take up the work.

DMBAcc wrote:
The new regime will make this impossible. I will stop my accountancy business after completing their 2017-18 tax returns leaving 50 businesses to try to comply with HMRC new easier system - I know I will get loads of emails and telephone calls from them.

There will be plenty of firms (like mine) happy to take the business, don't worry about it.

DMBAcc wrote:
Sadly I will be spending all my time trying to sort out the returns for my other business, my wife's business, my son's in law business, my mother's tax return etc......

Happy to quote you for this work, if you like.

DMBAcc wrote:
Everything had been going so well with the potential for more clients but with HMRC's new system looming I have had to start turing away new clients.

Perhaps you give up too easily.

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Replying to Tim Vane:
RLI
By lionofludesch
22nd Aug 2016 07:31

Ah! One man's misfortune is an opportunity for TV to make a quick buck.

I take it you've worked mainly in PR hitherto.

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Replying to Tim Vane:
Tornado
By Tornado
22nd Aug 2016 12:14

Three Cheers for Tim.

He is going to take on all those small clients who will need regular attention (perhaps five times a year), who will not know what it is all about and will not want to pay him more than a few pounds for his work. Information will filter through to Tim as and when the clients like and Tim will have to deal with all those fines and penalties that arise with the cry "it had nothing to do with me !

We need a few more like Tim.

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Replying to Tim Vane:
Tornado
By Tornado
22nd Aug 2016 12:18

AWeb was so slow that a comment was posted twice and cannot be deleted. This text is to fill the space left.

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By supremetwo
28th Aug 2016 11:49

I'm getting daily emails, but not related to recent posts.
e.g. today 28 Aug:-

On 21st Aug 2016 | Tornado Wrote:

Seems the digest is broken.

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