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Fees and MTD

Planning an increase

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We use a few different systems for VAT returns at the moment, SAGE, Xero and Freeagent where clients use those. Others done in house are on Excel and will need to moved over now, and obviously software licences increase annually as well as number of entities and I see that some software will be increaseing after 6 months of use.

I have spoke to a few affected clients, whose fees are at a level I don't feel I need to increase, but other simply wouldnt cover additonal costs. What are your plans - general increases, individual increases, or ins some cases.....selling up and forgetting about it!!

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RLI
By lionofludesch
05th Feb 2019 13:49

You have to look at it on a case by case basis.

There are certainly some clients who'll be looking at big fee increases. Others will probably see more modest increases. I can only think of one, off-hand, who'll likely be on the same fee.

Selling up and retiring ? Well, I'm in thed happy position of being able to do that but it wouldn't have been my original plan.

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By ireallyshouldknowthisbut
05th Feb 2019 13:55

Eh?

What do you mean by "Others done in house are on Excel and will need to moved over now!"

Move to what?

There is no legislative requirement to use cloud software.

Out client who use bookkeeping software pay for it.
Our clients who don't use bookkeeping software, dont.

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Replying to ireallyshouldknowthisbut:
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By murphy1
05th Feb 2019 14:09

No necessarily Cloud software, but software of some sort.

Clients bookkeeping currently done using Excel cannot continue that way if VAT registered

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Replying to murphy1:
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By leicsred
05th Feb 2019 14:13

I beg to differ - what about bridging software? Certainly the route we are going down for those who do not want to use accounts packages.

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Replying to murphy1:
RLI
By lionofludesch
05th Feb 2019 14:16

murphy1 wrote:

No necessarily Cloud software, but software of some sort.

Clients bookkeeping currently done using Excel cannot continue that way if VAT registered

Well, it can for now. Though I suspect that might change.

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Replying to ireallyshouldknowthisbut:
Hallerud at Easter
By DJKL
05th Feb 2019 15:15

The catch with excel will be the digital links.

Even if one picks up all the links from the sales side there are then all the little tricky bits on the paid side.

I have at present one client , online retailer, and yes, the excel records re sales on the surface appear to comply, daily sales figures flow through from daybooks to the vat summary, all in excel.

They can avoid paying for more than one invoice in one payment so an excel cashbook sort of works re recording each supply paid.

However last vat quarter I went through in more detail what also needed auto linked through the integrated set of sheets within the excel workbook and found a few more ad hoc bits needing adjustment, for example:

Google Adwords need recorded as paid in cash book, posted to marketing and then linked from cash book to vat summary sheet re reverse charge calculation and entries re same on vat summary. Do we now need two marketing columns etc is the question begged?

Sales to non EU individual customers needs isolated as they are exempt sales so will need extracted from daily sales figures re vat sheet vat calculation, we previously prepared an excel sheet by searching all individual sales, but this has no digital link to said sales, I manually typed it into the vat summary as an adjustment as part of the vat on retail sales calculation

The net purchases figure needs compiled from the cashbook sheet via the individual columns being totaled re same, fine where everything in a column is within the scope of vat re box 7 (not box 6 as I posted), trickier if some items are and some are not.

Anything analysed net to say a Misc/Other column cannot be summarised at foot of column by manual typing of summary totals each month, each entry needs a link from within that column to its summary which feeds the vat sheet used to populate the return using linking software, do I now go for a much wider cashbook which cannot be printed landscape on A4 and still read?

My conclusion was that in a lot of cases the adjustment of the proforma excel sheets currently used by the business would require bespoke intervention every quarter to ensure all digital links were in place each quarter and there seemed to be a real element of reinventing the wheel with such an approach, accordingly I have advised client to adopt a software solution re same and that I am not continuing.

I have now told all but one client that I am bowing out of offering services as a practice, I do not want to spend my twilight years learning about myriad accounting software nor correcting client errors within same, as errors there will be.

It also seems perverse to attempt to shoehorn all clients into once software solution and verging on the negligent to suggest they use x software where I have not investigated if that is actually the best fit for them, their abilities and their business.

MTD seems a natural point to leave the arena, I will maintain some clients as an employee only (where they are big enough to justify, fee> £5,000 p.a.) with these I will control the flow of information through whatever software we will use but I will have no professional third party liability re the choice of software etc and will equip them and set them up so that when I do fully bow out A N Other can readily take over.

Excel may still sort of comply for simpler business entities, but the one I mentioned is not that large yet in this digital age fully exposed to odds and ends like reverse charge adjustments which do throw spanners into the works of using excel as a digital cashbook.

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By andy.partridge
05th Feb 2019 14:16

Here is an opportunity.

Either you will reluctantly agree to additional work with little reward or you will seize the opportunity to promote yourself as an expert and earn a fee commensurate to your worth.

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Replying to andy.partridge:
RLI
By lionofludesch
05th Feb 2019 14:25

Absolutely.

I'll do their bookkeeping if they want but I won't do it cheap. And I don't have time to do everybody's so I'll be cherry picking the best of a bad bunch.

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Replying to lionofludesch:
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By andy.partridge
05th Feb 2019 14:43

The worst result of all is the client who insists that they will do it because they don't want to pay and then pesters you relentlessly with queries.

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Replying to andy.partridge:
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By murphy1
05th Feb 2019 14:53

My fear, as we have a few using Sage one, Xero etc and honestly, the time spent answering queries is huge!

Unfortunately, the 'retiring' idea is not one route I can take at the moment, but I do feel a 'here is your new fee or move on' is looming quite quickly.

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Replying to murphy1:
Hallerud at Easter
By DJKL
05th Feb 2019 15:10

Mine is not total retiring, just taking my role in house, so three days a week for main business who have employed me for the last 20 years and then between 2-4 other business entities (currently two clients signed up) for which I will work part time as an employee ensuring whatever system is chosen is kept correctly and any errors will be all mine. So rather than faffing around with x smaller clients I will only handle x/10 clients, but they will be the larger ones.

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Replying to murphy1:
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By david.bransbury
05th Feb 2019 18:54

Murphy1, we let clients use whatever system they like but we tell them we have a preferred choice and we can support that one. So we only have to have detailed knowledge of one system.

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Replying to andy.partridge:
By Charlie Carne
08th Feb 2019 10:18

Reminds me of the directors of client companies who insist upon doing their own (very simple) income tax returns rather than paying me a nominal £100 fee and then call me four or five times to ask lengthy questions about how to enter the minute amount of dividend and interest income and pension contributions. It's almost worth doing the returns for free, as I'd save so much time!

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By Maslins
05th Feb 2019 15:22

If the client's already on Xero/FreeAgent etc, already VAT registered, what extra costs to you are there?

My understanding is it'll be a bit of a one off faff for each client, tweaking software/HMRC portal settings to be ready for MTD, then beyond that the differences are all behind the scenes.

For the ones with more manual records, yup, different kettle of fish!

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ALISK
By atleastisoundknowledgable...
05th Feb 2019 18:06

We have a number of contractor-esque clients who send us an excel of their out-of-Hand expenses, to be treated as DLA credits.

Currently, we use a bank feed into Xero, then do a jnl to pull the excel costs in. I’ve just realised that this will fail MTD.

What are others doing with this sort of client?

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Replying to atleastisoundknowledgable...:
RLI
By lionofludesch
05th Feb 2019 18:15

Are you saying that petty cash payments are not allowed under MTD ?

I'm saying that's nonsense but happy to debate the point.

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Replying to lionofludesch:
ALISK
By atleastisoundknowledgable...
05th Feb 2019 18:39

No, but if they put the info on excel, then I retype it into a journal, the digital link is broken.

Or am I wrong (please, please)

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Replying to atleastisoundknowledgable...:
RLI
By lionofludesch
05th Feb 2019 18:45

No problem.

Get them to copy it onto a piece of paper and hand you that.

Seriously, you're taking this too literally.

For a start, if it's policed as well as the idea that all invoices have had to be entered separately when you're on the cash basis - which, apparently has always been the case since the cash basis was introduced about 1977 - I don't think any of us have much to worry about.

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Replying to atleastisoundknowledgable...:
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By david.bransbury
05th Feb 2019 18:49

I think so, the rule is type once and then the information should in the VAT records/return.

However if their excel info, is then converted into a compatible manual journal template file and that is uploaded into Xero, the information has not been retyped, just linked from one sheet to another. I think that is fine.

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Replying to david.bransbury:
ALISK
By atleastisoundknowledgable...
05th Feb 2019 19:15

Im trying to avoid this extra work though - I’ll go with “it’s ok Mr Inspector, Lion said it was”.

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Replying to atleastisoundknowledgable...:
By ireallyshouldknowthisbut
06th Feb 2019 09:06

All the rules talk about is a digital link between the records and filing.

They don't talk about digital links within the records.

You can prepare those however you like, so long as its "digital", ie not in a manual pad.

At no point do they say you cant key stuff in.

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Replying to ireallyshouldknowthisbut:
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By leicsred
07th Feb 2019 09:38

My understanding is that clients can still keep manual records - they just need to be entered line by line into accounting software/spreadsheets.

Clearly this is inefficient but we have a number of clients who "enjoy" keeping manual records and don't want to change and are happy to pay us to transfer them into an electronic format.

I can't see how posting a line by line journal into accounting software wouldn't be compliant.

This was certainly the ICAEW guidance in the past, has that changed?

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By david.bransbury
05th Feb 2019 18:41

If you need to do additional work then you need to charge more. If the clients are unwilling to pay then goodbye.

This is more relevant for MTD for IT and CT but I told my colleagues three years ago that the effect will be more work possibly for less clients. When in 2020 quarterly reporting starts to comes in then the majority of my clients will either want me to review their postings before submission or do the bookkeeping.

Regarding excel, yes I can see it just about working for MTD for VAT. However when for MTD for CT is required, your spreadsheets will need to show dividends voted broken down by shareholder along with their tax references. This dividend information requirement I can see happening before the HMRC require individual transactions happening.

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Replying to david.bransbury:
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By DaveyJonesLocker
05th Feb 2019 20:41

I seriously doubt full MTD is coming in 2020. Even HMRC said "at least from"

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Replying to DaveyJonesLocker:
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By david.bransbury
07th Feb 2019 18:49

Yes I agree full MTD will not come in 2020. However it is not a massive leap to say that those businesses/companies who already filling under MTD for VAT can file for IT/CT purposes from their first accounting period beginning after 1 April 2020.

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By Mr_awol
06th Feb 2019 18:03

Having agonised over this for several minutes I've decided that I'm going to just follow the crowd and give up on annual fees. Instead I'm going to offer a monthly gold/silver/bronze subscription package because that's what the man from Xero told me to do when he wanted to flog me a load of bulk licences (actually the gold will be a silly price that I'll never actually sell, it's just there to look good) and the software will be encompassed within the fee.

I'm not worried about bad debts - or indeed accuracy. I'm just going to let the bank feed run its course and maybe I'll make a provision for stock, debtors, creditors, etc at the year end alongside the fudge I put in when I realise the client actually has loads of cash transactions that the bank feed didn't pick up. Obviously this wont be for the tight fisted bronze clients.

Even if clients choose to leave my shoddy new practice for a more professional outfit, I'm still going to keep their subscriptions if they choose not to hang around for the [email protected] set off accounts i'm going to churn out. HA! That'll teach them. Don't you dare call me out on this underhand practice though - my letter of engagement clearly states (at the bottom of the 63rd page out of 100) that they wont be entitled to a refund if they leave partway through a billing year...………..

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Replying to Mr_awol:
ALISK
By atleastisoundknowledgable...
06th Feb 2019 19:27

bad day?

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Replying to atleastisoundknowledgable...:
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By Mr_awol
06th Feb 2019 19:58

atleastisoundknowledgable... wrote:

bad day?

So-so. Another day closer to retirement, and no zombie apocalypse, so mustn’t grumble.

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By pat76
07th Feb 2019 09:55

I am opting for retirement for all VAT registered over the threshold clients - just keep my small sole traders etc for another year!

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7om
By Tom 7000
08th Feb 2019 10:28

Mr client,

a. You do the return and use the bridging software on your spreadsheet and its easy.

b.I can send it in for you, its £40 :)

Which would you like please?

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