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Clients can no longer record transactions on paper

MTD changes scrapping paper recording

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Listening to a HMRC webinar now, I came across something.

Clients can no longer use a Simplex book (or similar) for recording transactions and giving their accountant the figures to enter quarterly totals (e.g. like completing a VAT Return online now). ALL the transactions have to be on at least a spreadsheet.

How can HMRC get away with enforcing how people keep records?

Replies (38)

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By Cheshire
28th Mar 2017 12:11

Yes I heard that. Dont forget that the spreadsheet needs to be, how did they put it, categorised to meet MTD requirements. Oh and the comment about the reason they are doing the updates is to 'check that records are being kept digitally' - classic!

What a waste of an hour of my life, full of political statements, hardly any real answers. They want to get agents on board to get clients on board but are still not providing agents with the tools to do so. Typical.

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Replying to Cheshire:
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By SpreadsheetUser
28th Mar 2017 12:25

Yes agree, still no further ahead in what we know. I hope tomorrow's has more meat on the bones but doubt it.

I imagine the spreadsheet format has to have the same headings as a full self-employment page

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By Vaughan Blake1
28th Mar 2017 12:11

Just because they are trying doesn't mean that they will succeed!

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By Southwestbeancounter
28th Mar 2017 13:49

Lets hope not. Someone needs to take them to task before the whole thing just gets too ludicrous!

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RLI
By lionofludesch
28th Mar 2017 12:20

How can they get away with it ?

They're the Government. They make up the rules.

Doesn't mean they're fair. Or that they'll be the Government after the next election.

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RLI
By lionofludesch
28th Mar 2017 12:23

The fact will be that many, many traders will continue to keep their books on paper before handing them to their kindly accountant to load up onto some software.

Obviously, it'll cost a fortune but the Government doesn't care about that.

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By SpreadsheetUser
28th Mar 2017 12:23

Don't get me wrong, I'm no Luddite, I love technology BUT only when it improves something. We now seem to be in an age where you have to use technology just for the sake of it.
Not many of my clients do use paper recording, but some do and they're all immaculate records. I then prepare the accounts using Taxfiler and submit electronically to Companies House/HMRC so have no idea why this can't carry on.

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By Cheshire
28th Mar 2017 12:35

Did they say a transcript of the whole thing will be available? They usually supply one - I am dying to check it as Im sure one of them said that ALL records legally now had to be kept digitally, but want to know if thats when I was nodding off and only half listening!

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Maytuna
By DJKL
28th Mar 2017 12:40

Not even as good as that, I believe spreadsheets will need to be linked to lodging /submission software, so maintaining on spreadsheet, sending to agent, who manually inputs totals also does not look an option.

I expect Excel totals will need to be mapped/extracted into submission software-expect this may need more than the dozen excel commands I have to date mastered-maybe a course beckons or get my other half to do this though expect she will not be best pleased with the idea.

Given my tech skills I think an integrated solution will be my preferred choice, I had enough difficulties mapping IXBRL submissions when I had tweaked the software I used to use (PTP).

The days of my integrated retailer spreadsheets I supplied to some of my clients accordingly look numbered; they are simple for clients to fill, had checks to assist squaring bank quarterly , linked to sheets for proforma vat return submission, including retail scheme calculation , and also linked to proforma ETB which resulted in year end being merely stock, accruals, prepayments and depreciation to final ETB.

They were a fairly efficient easy to follow approach for clients who have limited accounts/computer skills, they could be tweaked to fit client particular approaches and were easy for me to adapt to say split main credit card and AMEX receipts for different accounting treatment within the receipts sheets. They were in effect at my tech level, one step up from an Abacus; even HMRC seemed to like given one client's records were complimented on a vat visit.

I notice TaxCalc have some form of cashbook offering to link with their accounts/tax offering, given I use TaxCalc I suspect, unless it is a lemon, that may be where I end up if I continue.

Once the offerings from the software houses firm, and the exact scope re MTD gets confirmed ,it is going to be a busy eighteen months-the alternative is just wind up my practice and go and work part time for someone else's practice, over the years there have been a couple of "older" members of staff within the firms I have been with, both had been partners in other firms, both had got fed up with the hassle and spent the last 3-4 years of their careers without the pressures and hassles of running the place- at the time seemed strange to me, now I can really see the attraction.

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By BIGWAL
28th Mar 2017 12:46

in answer to a question asking "what is the point of quarterly reporting" the answer given was that it will reduce errors.
I did ask what evidence there was that quarterly reporting will result in fewer errors - that question that was not answered.

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Replying to BIGWAL:
By SteveHa
28th Mar 2017 12:59

I asked a follow up question to that, which they ignored (along with three other questions):

"So the sole purpose of quarterly reports is to enforce penalties, and has no taxation value whatsoever?"

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Replying to SteveHa:
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By Cheshire
28th Mar 2017 13:09

I asked 6 randomly very different questions - not one was answered.

On the no taxation value - I found his comment about not reconciling the last return to the others a wee bit strange.

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Replying to SteveHa:
RLI
By lionofludesch
28th Mar 2017 14:18

SteLacca wrote:

I asked a follow up question to that, which they ignored (along with three other questions):

"So the sole purpose of quarterly reports is to enforce penalties, and has no taxation value whatsoever?"

Yes, of course it is. we all knew that.

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Replying to SteveHa:
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By DMGbus
28th Mar 2017 14:34

SteLacca wrote:

I asked a follow up question to that, which they ignored (along with three other questions):

"So the sole purpose of quarterly reports is to enforce penalties, and has no taxation value whatsoever?"

HMRC wanted a new computer system (**), so they had to put a business case to the Treasury for it, ie. additional tax yield and/or cost savings that would arise from the "investment".

HMRC chose to invent a "Tax Gap" figure that MTD would miraculously close and justify the "investment".

Now, as most of us probably know, this "Tax Gap" is a fiction in HMRC's minds.

What, however, is NOT a fiction are the difficulties that small businesses will face complying with MTD. Non compliance creates penalties. The penalties will flow in and fund the computer system.

(**) Or someone wanted to continue £billion pound IT contracts to outside contractors (no vested interests here of course!). Contracts for MTD implementation signed off before MTD approved by Parliament - that's the current state of democracy.

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By Cheshire
28th Mar 2017 12:48

There were an awful lot of unaswered questions. Including aorund the only getting a month to report for VAT businesses, when historically there has been an additional week.

Big gainers of course are the software peeps.

I might just do (almost) the same as you, DJKL, wind up, but instead become a lady of leisure - not sure I can be bothered with all this faff!

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By BIGWAL
28th Mar 2017 13:30

Interesting to note how many questions were not answered.
Not sure walking away is the answer - we need to continue challenging HMRC's more nonsensincal assumptions about quarterly reporting.

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Tornado
By Tornado
28th Mar 2017 13:41

The Government works for us and should reflect our wishes and not dictate to us.

If Agents and HMRC 'Customers' simply refused to co-operate with the Government, then MTD would be dead.

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Replying to Tornado:
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By Southwestbeancounter
28th Mar 2017 13:55

I seriously think that's the way forward but it needs to be done en masse or else it will be totally ineffective. Also it needs to hit the headlines in normal everyday lingo - loads of my clients haven't heard of MTD other than what we've told them so I'm sure the rest of the population haven't but if they're not self-employed then they won't care as after the Class 4 debacle they seem to think that self-employed people don't pay tax or declare their earnings etc in any event!!

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Replying to Southwestbeancounter:
Tornado
By Tornado
28th Mar 2017 14:35

You may be underestimating the long term aims of MTD. Whilst we are only concentrating on the 5 or 6 million in business, MTD will extend to another 45 million people who will eventually be required to communicate with HMRC (The Government) through their Personal Tax Accounts. The natural progression of MTD will be to require EVERYONE to check their PTA each year and I think it will be expected that the pre-populated data will need to be checked and approved and any other income, gains, etc, must be entered into the PTA in order to arrive at the final tax liability.

The lie is that Tax Returns are being done away with but in practice, 11 million people will no longer have to submit Self Assessment Tax Returns but 45 million people and 5 million businesses will all have to check and verify Personal and Business Tax Accounts instead.

This may seem fanciful, but what is the point of the Government embracing the digital age if it is not going to make full use of the facilities it offers.

Think about it.

So protest needs to be aimed at everyone and not just those in business.

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Replying to Tornado:
RLI
By lionofludesch
28th Mar 2017 14:44

Tornado wrote:

Think about it.

I have done.

My views are well known.

The cost/benefit ratio is poor for the people who are standing the cost.

It's very good, on the other hand, for the bully boys who are driving this forward and a minimal cost to themselves.

Getting someone else to work for you for nowt is always attractive.

William Wilberforce must be turning in his grave.

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Replying to Southwestbeancounter:
Maytuna
By DJKL
28th Mar 2017 14:37

Yes, I have not been that forthcoming to my clients re MTD, however as I have a meeting tonight with an extended family with five partnerships to discuss , amongst other things, structure going forward, I suspect it will be introduced by me as part of the matters to be considered re maybe unifying the family interests.

There are downsides, small rates relief being high on the list if the various different entities get wholly/partly unified, but this will need to be balanced against forecast increases in my charges and general faff- tax planning would be much simpler as one partnership.

They key will be how much additional /different recording they will be prepared to undertake, currently they post into excel daily sales (retail, from till z)and enter in cash expenditure, credit card bankings and other bankings plus all purchases, both cash and bank with vat analysis and account allocation.

Difficult to know art this stage if adopting more regulated software rather than existing excel sheets will be a happy synergy, may be a Bridge Too Far.

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By Cheshire
28th Mar 2017 16:48

Beware if you want to discuss a change of year end - HMRC had the audacity to suggest we shouldnt suggest this until they had madea decision on how it will impact. Have to say I sat there open mouthed at that line!

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By Trish Baillie
28th Mar 2017 15:47

I listened to the webinar this morning and am now listening to it again - the questions seem to be identical - in fact I think they are just using the same ones over again.

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Replying to Trish Baillie:
By SteveHa
28th Mar 2017 15:59

I think that they simply ignore the questions that highlight the flaws and utter stupidity of MTD in its current form.

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By Cheshire
28th Mar 2017 16:45

I did suspect at one point that the questions were all of their own making, the only ones they wanted to answer as these would be the only ones they were prepared for. Although then they honed in (attempting) to answer three along the same lines - you could here the guy fluffing it a wee bit then!

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By SpreadsheetUser
28th Mar 2017 16:15

Something else I recall now. I was in contact with one of the tax return software developers just over a month ago, and they stated I COULD cut and paste figures into their software for submission. This doesn't tie in with what HMRC said today.
So it looks like HMRC are making guidelines on the fly .

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Replying to SpreadsheetUser:
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By Elvis11
28th Mar 2017 17:10

Yes, they are making it up as they go along.
Another contributor on another thread reminded me how before self-assessment and the current year basis were introduced (back in 96/97) HMRC produced two very thorough, accurate guidebooks (SAT 1 and SAT 2) which provided comprehensive and accurate guidance full of worked examples. These were very useful and well written documents.

If you contrast that approach with the current shambles you can see just how much HMRC have deteriorated, or possibly just how much the Government/Civil Service have declined. This is going to be an epic balls up.

I am currently exchanging emails with Theresa Middleton (Director of MTD at HMRC). I have asked her to confirm that my client with self employed income (31st August y/e) and rental income will move to making eight quarterly submissions per year plus at least one annual adjustment instead of one tax return. Once she has confirmed this is correct, I shall ask her to confirm that she believes this will save my client money.

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By legerman
28th Mar 2017 16:18

I missed the first 20 minutes as I was late back from a clients, but one thing I picked up was that clients have to keep digital records. My understanding was that they can still give you the shoebox (albeit on a monthly/quarterly basis). As most of my income is sourced this way (usually monthly) I did intend to continue in the same vein and submit using VT+ on the required basis. Is my understanding wrong?

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Replying to legerman:
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By SpreadsheetUser
28th Mar 2017 16:55

I think you're ok in that case. A lot of my clients do their bookkeeping on spreadsheet and then I have the receipts to check against.
So it looks like I am moving into more bookkeeping as more clients now will just want to give me their paperwork to "get on with it"

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Replying to legerman:
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By Cheshire
28th Mar 2017 17:03

The thing they mentioned about spreadsheets John was the fact that they would need to be 'categorised' to suit HMRC. So if they are categorised to suit the client (which lets face it thats how they would be!!) then they need to be re-categorised or re-drafted. (Way I thought about it when they said it was the fact that things get dumped by clients in one pot for bookkeeping and then into the correct pot for year end Accounts and computations!) You doing the bookkeeping and using VT will be easy enough as now.

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Replying to legerman:
RLI
By lionofludesch
28th Mar 2017 17:19

legerman wrote:

I missed the first 20 minutes as I was late back from a clients, but one thing I picked up was that clients have to keep digital records. My understanding was that they can still give you the shoebox (albeit on a monthly/quarterly basis). As most of my income is sourced this way (usually monthly) I did intend to continue in the same vein and submit using VT+ on the required basis. Is my understanding wrong?

My understanding is that clients' books need to be kept on software. They don't have to do it themselves.

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Maytuna
By DJKL
28th Mar 2017 16:31

Well, most apt song for the day, courtesy of the Manics.

"And if you tolerate this
Then your children will be next
And if you tolerate this
Then your children will be next
Will be next
Will be next
Will be next"

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Replying to DJKL:
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By SpreadsheetUser
28th Mar 2017 16:36

Oh boy, song choices could be a whole new thread! Here's some more:-

"I'm going slightly mad" by Queen.

Another one by Queen, this time for David Gauke "Show must go on"

"Opportunities" by Pet Shop Boys for the software developers

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Replying to SpreadsheetUser:
Maytuna
By DJKL
28th Mar 2017 17:46

Well, on a Pink Floyd theme, for HMRC, "Another Brick in the Wall (part 11)" -we don't need no education, as process will be so simple.

For the accountants on here, "Comfortably numb"

For the developers, "The Great gig in the Sky" or for those with an online offering, "Obscured by Clouds"

We can also consider HMRC's approach as "Fearless", objections to HMRC could be seen as akin to "Echoes" , and the one sentiment accountants wish upon HMRC would be "Wish you were here"

And for those who fully manage their way through the process, to the promised land, it will certainly be "Have a cigar"

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Replying to DJKL:
RLI
By lionofludesch
28th Mar 2017 17:58

Or, on a Motörhead theme, what about "Bastards"?

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By SpreadsheetUser
28th Mar 2017 17:59

Here's one I hope happens, Duran Duran "Come Undone"

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Tornado
By Tornado
29th Mar 2017 11:40

Road to Hell (Chris Rea)

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Maytuna
By DJKL
29th Mar 2017 12:32

Really apt, especially these lines,

"And common sense is ringing out the bell
This ain't no technological breakdown
Oh no, this is the road to hell"

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