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Software vendors react to MTD con docs

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24th Aug 2016
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Accounting software providers will play an integral role in HMRC’s Making Tax Digital plans, with taxpayers using third party software to assist with their quarterly reporting.

Now that the Making Tax Digital consultation documents have revealed more about the digital regime, AccountingWEB caught up with a number of accounting software’s key players to get their reactions.

In the consultation document ‘bringing businesses into the digital age’, HMRC stressed how the MTD roll-out will reduce the administration burden for businesses.

Digita’s Mark Purdue believes this aspect of the consultation document will alleviate the most worried clients from getting into tax debt. “The flexibility for the reporting period length will also go some way to help seasonal businesses, so they can plan their own reporting periods to avoid their busiest time,” he said.

But despite the Revenue’s promise of relieving such burdens, accountants and tax agents have expressed their concern on AccountingWEB about how HMRC’s digital plans will affect their future. AccountingWEB regular Adrian Pearson believes the consultation documents shows HMRC are “thinking for a post-agent world”.

While other accountants still don’t see the benefit of convincing spreadsheet-entrenched clients to move across to commercial software. DMBacc said: “I don't need commercial software for 50 clients, nor do I want it when I see the confusion it causes.”

Speaking to AccountingWEB, the software providers address some of these common concerns and give their initial impressions after reading the consultation documents. 

* * *

Mark Purdue, Thomson Reuters:

Writing on AccountingWEB, Purdue welcomed the clarification around how quarterly reporting will work in practice, but he still had questions concerning the agent access:

“On the face of it, it looks like the agent authorisation process will only be possible via the client’s tax account, meaning that each and every client will need to create his or her own tax account, only to press a button to authorise their agent. This could quickly escalate into a major administration nightmare for businesses, accountants and HMRC, so it will need to be addressed swiftly.

This could quickly escalate into a major administration nightmare for businesses, accountants and HMRC

“There is also a question mark about the ability for an individual to challenge the third-party data held by HMRC – the resolution process is between the individual and third party directly, with HMRC taking no active role (other than deferring use of the information).

“Again, this could become a real burden so we will be making our views known when we meet again shortly with HMRC to provide our consultation feedback.”

* * *

Ed Molyneux, FreeAgent founder and CEO

Molyneux told AccountingWEB that he was "pleasantly surprised by the range and scope of the consultations".

“HMRC genuinely seem to be trying to find the best solution and there has clearly been a lot of thought gone into the proposals. Businesses with very low turnover and the genuinely digitally excluded are exempt. And the proposed reporting requirements for everyone else are clear and straightforward.

“There were significant simplifications in compliance requirements for a large number of unincorporated businesses - perhaps a recognition that implementing MTD for the existing tax framework was overambitious, but either way good news for very small businesses. It'll be interesting to discover whether further simplification extends to very small incorporated businesses too.

“There's nothing in the consultations that we think is going to involve much additional effort for clients or accountants using FreeAgent.”

* * *

Steve Checkley, TaxCalc:

Speaking with AccountingWEB’s Nick Huber, Checkley raised concern about the delivery date expected for Making Tax Digital.

[It] doesn’t give concrete direction as to what needs to be done.”

“The one major concern is that this is coming in 2018. Software does take time to develop and this consultation isn’t the final solution. It will help software suppliers make educated guesses about where their software portfolios need to head, but doesn’t give concrete direction as to what needs to be done.

"Interim updates would be very useful for us as a software supplier. It'd help us with our plans for products that we will be developing. It’ll also help our customers, accountancy practices, by giving them certainty and help them explain the changes to tax records to their clients."

* * *

Steve Cox, product director at IRIS Software:  

Cox told AccountingWEB that the Making Tax Digital consultation documents are “a natural legislative progression for our products”.

“IRIS works extremely closely with HMRC and I spoke with them on the day of release for the consultation documents, and there was a huge sense of achievement that these were now in the public domain.                                   

Whilst HMRC is still trying to get closer to the end tax payer, this actual strengthens the client / accountant bond.       

“The proposed changes and revisions contained with the consultation documents are welcomed by IRIS on behalf of our 17,000+ accountants, for whom these documents were a major concern. It definitely shows that HMRC is listening to not only software vendors, but agents and the market as a whole. Whilst HMRC is still trying to get closer to the end tax payer, this actual strengthens the client-accountant bond. As SMEs grow, they will look to their accountant to understand the MTD administrative ramifications for their growth.

“For IRIS, the revised proposals are a natural legislative progression for our products, and whilst HMRC has reduced its tax payer scope, which is good news for agents, it is no less work for software vendors – potentially more work. But the good news for IRIS is this is business as usual in that it is another piece of compliance for us to automate for our Accountant and SME customers alike.”

 

If you'd like to find out more about Making Tax Digital, you can also click here to register for AccountingWEB’s live digital MTD conference in October.

AccountingWEB is working with Thomson Reuters Digita to collate the profession's feedback to the MTD consultation documents. You can participate in our quick survey here to share your thoughts. The survey responses will feed directly in to the official AccountingWEB response to the consultation documents.

Replies (15)

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By Gone Sailing
25th Aug 2016 13:22

HMRC, please complete this sentance:

"HMRC ..... MTD roll-out will reduce the administration burden for businesses, because ......"

Thanks (9)
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By David Gordon FCCA
25th Aug 2016 13:31

Am I the idiot, or am I the only person thinking that is unseemly for software providers licking their lips at the new costs imposed on clients through what is essentially part of the privatisation of the tax system.

It is wholly unacceptable that HMRC with HM Govt tacit approval is passing these costs on to the taxpayer.
It is bullsh*T that it will improve the system.
The b*gg**s cannot even constructively operate their telephones

Yet again the professional bodies have done nothing to support their members, becasue they would rather be friends and roll over to have their tummies tickled, than deal with this imposition.
This because we the members let them so do.
The ACCA AGM is Sept.15th. If you can why not turn up and let the mandarins know what you think. Don't complain-VOTE.

Thanks (20)
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By Sheepy306
25th Aug 2016 14:09

Iris - "The proposed changes and revisions contained with the consultation documents are welcomed by IRIS on behalf of our 17,000+ accountants, for whom these documents were a major concern. It definitely shows that HMRC is listening to not only software vendors, but agents and the market as a whole"

Wow, so they actually contacted all 17,000 accountants and obtained their approval in order for Iris to welcome HMRC's consultation documents? Or are Iris as out of touch with accountants as HMRC are?

Thanks (14)
Replying to Sheepy306:
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By nickja
27th Aug 2016 16:48

Also said by IRIS, "It definitely shows that HMRC is listening to not only software vendors, but agents and the market as a whole" which drives these thoughts:
that the process is being driven by the large software vendors;

how are HMRC listening to agents? They certainly haven't asked me anything;

what in the name of heaven is the "market as a whole"? taxpayers resent being called customers;

this comment sounds more about profit potential than any great concern for taxpayers or their agents.

I haven't the slightest doubt either that software from the likes of IRIS will do the job or that the inevitable price increases will cause strained client relationships for the majority of agents.

IRIS may be able to cope with what HMRC force down our throats but large numbers of clients and agents will not.

Thanks (3)
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By Myshkin
25th Aug 2016 14:14

A post-agent world? Are they truly insane? They just do not have a clue what goes on in the real world.

Thanks (12)
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By RobertD
25th Aug 2016 15:23

What a picture this all paints. Delusional HMRC, air headed politicians and a feeding frenzy of software companies.

Is it me or is accountingweb now sponsored by taxcalc, freeagent and bankstream?

I can't seem to tell what is advertising and propaganda and what is discussion anymore.

Thanks (13)
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By Pavilionaire
25th Aug 2016 15:43

Meanwhile, in other news, HMRC continues to send out PAYE letters to agents about clients that owe money or are in credit but agents are still unable to go online and view a Client Statement of Account to sort it out :(

It feels like we as tax agents are the elephant in the room. If my job becomes redundant in the future then so be it, but HMRC are making a huge mistake by marginalising agents now
at the very time they'll need them the most.

Thanks (3)
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By michael1958
25th Aug 2016 18:06

A small thought. Banks,Building Societies and other sources of lending rely on accounts being produced to a widely accepted and understood set of rules which to some degree HMRC want to bin. Can anybody see a problem with that. So when the financial institution asks for accounts what will the client say and what will the banks say

Thanks (3)
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By DMBAcc
26th Aug 2016 12:36

So someone used my quote from another issue. Well it's nice to see someone is reading my thoughts even if they then dismiss them out of hand. Successful businesses produce profits which the Gov't can tax. So why don't I feel the Gov't are on my side since surely they want me to be as successful as possible? Am I missing something. Yes I have 50 clients NOT ONE uses commercial software. I took on a new client last year who used Sage. Their figures needed a lot of manual time on my part to correct because they were not accountants. This after their previous accountant had spent many hours trying to show them how the system works. I was able to show them (with my limited knowledge of Sage) some reports they could have run to help them but again realised they could not really understand these reports. Guess what - they used excel or its equivalent in Apple so I gave them a simple bespoke spreadsheet package. Bingo - accounts done with little correction and just the capital allowances to adjust. I have not told them the HMRC may insist they go back to using Sage or its equivalent. BTW their turnover is well in excess of £30,000. I think I'll let an HMRC employee tell them what they must do!!!! When will HMRC learn that no financial software package is simple. If it were we would be accountants. I repeat what INCENTIVE is there for most businesses to change their working practices. Why don't these software companies go and work in some of these small businesses and get a real taste of what REALITY is. I cannot believe a deadline has been set BEFORE consultation. MTD as it has been proposed should not be a given. Do you really want a lot of businesses to go bust before you get the message?

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By mydoghasfleas
26th Aug 2016 14:23

I still do not understand why everyone is so pleased at the amount in the consulting documents. All they ever are is window dressing to a decision that has already been made and process determined. I have seen them in previous issues abbreviated to "con docs", which does not go far enough, "con" will do

Thanks (1)
Paul Layte
By Paul Layte FCA
26th Aug 2016 21:37

Clients always need a lot of help regardless of what they use and how they use it. What changes in MTD is how that help needs to be delivered. Accountants generally are under paid for the value they can create for clients and with a bit of imagination new opportunities exist to help more. A spreadsheet cannot connect to a payment service, a bank feed, a CRM system etc it cannot chase outstanding invoices to generate more cash for clients or easily connect to factor or discount an invoice. I believe change is inevitable and that those in the profession who adapt will reap the rewards. Darwin had a point.

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Replying to Paul Layte FCA:
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By RobertD
27th Aug 2016 08:01

Evolution had the benefit of millions of years. Taxpayers have one and a half.

Seems to me that HMRC and the software companies and of course you will be the ones reaping the rewards. Not taxpayers.

Thanks (3)
Replying to RobertD:
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By michael1958
27th Aug 2016 08:29

My practice uses a well known software company. We have almost 100 clients who are vat registered and 85 we do on spreadsheet. In order to get them onto a system that is cloud based and will link into the HMRC system they want £10 per month each. Those who will use cash accounting £1 per month each and we have 200 plus of them. It appears most software suppliers are going cloud and charging plenty for this. A clients vat return can take 1 hour to do. Accounts about a day or 2 and we give 1 bill. Now..... Try explaining that to a hard pressed dairy farmer

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Replying to RobertD:
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By michael1958
27th Aug 2016 08:29

My practice uses a well known software company. We have almost 100 clients who are vat registered and 85 we do on spreadsheet. In order to get them onto a system that is cloud based and will link into the HMRC system they want £10 per month each. Those who will use cash accounting £1 per month each and we have 200 plus of them. It appears most software suppliers are going cloud and charging plenty for this. A clients vat return can take 1 hour to do. Accounts about a day or 2 and we give 1 bill. Now..... Try explaining that to a hard pressed dairy farmer

Thanks (0)
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By RobertD
02nd Sep 2016 10:11

Great piece here for anyone interested.
https://blogs.accaglobal.com/
I particularly like "Tax systems exist for the benefit of society, not the other way around."

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