MTD and retirement

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Well yesterday was horrendous and stressful, it was teaching someone how to do payroll. Teaching him out to use the payroll software was easy but it was the first payroll run for new client. The NEST pension scheme was nearly impossible to set up, to get us in has delegates to run the account for the client and tell NEST what payment was needed to be collected. The previous accountants had a junior member of staff dealing with the situation, so he was no help. The NEST advisor just couldn't be bothered to give any advice. It took 5 hours to finish the payroll off for 13 staff members and there were three of us in the office dealing with it. My colleague disappeared out of the office to do other things and left two of us banging our heads against the wall.

The whole point of this is the full MTD of the system now approaching and clients will not want their fees quadrupling to deal with their financial affairs. It will mean small practices will be running at a loss and owners of accountancy practices claiming benefits to live. How many more, just like me, are considering retiring when or before MTD arrives? How many business owners, doing their own accounts and tax returns, are going to be able to cope when they've got their own businesses to run to earn their living? Can't this government stop the HMRC's plunge into even more derisory public services? I've had stress before working 3,000 hours a year running my own business and also when working for the first practice I worked for for 29 years.

Replies (37)

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By sonoftwosheds
11th May 2021 12:21

apart from this last s**t show of a year, and doing furlough claims for nothing, the looming spectre of MTD has done it for me, I will be calling it a day early

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By Geoff56
11th May 2021 12:25

My presently most likely option for dealing with MTD for IT when it is scheduled to arrive in two years, will be to retire. I shall be 66. It wouldn't be my timing or choosing, but my heart sinks into my boots at the thought of implementing it. I just feel bone-weary.

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Replying to Geoff56:
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By minkie
13th May 2021 09:42

Agree word for word - i'm 64 and bone weary is an apt description. Stress levels are already through the roof with the VAT MTD alterations so I will keep a few clients to supplement the pension, work one day a week and disappear to the Highlands. If only the legislators had spent time working at the coalface they might understand the serious consquences for small businesses - the backbone of the economy

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paddle steamer
By DJKL
11th May 2021 12:43

Undernoted from the Eagles sums up where I am, at least re practice ,though will still have to address re the various companies/entities I still work for via my employments, but at least with these I get to control the data rather than chase around correcting the errors and omissions of others.

"Well, I heard some people talkin' just the other day
And they said you were gonna put me on a shelf
But let me tell you I got some news for you
And you'll soon find out it's true
And then you'll have to eat your lunch all by yourself
'Cause I'm already gone
And I'm feelin' strong
I will sing this vict'ry song, woo, hoo,hoo,woo,hoo,hoo"

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Replying to DJKL:
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By Jane Wanless
11th May 2021 13:00

I saw the Eagles at Manchester Arena in 2019 - fantastic. As to retiring, I did it last year. The planned travels in 2020 were all cancelled, but I wouldn't change the decision.

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Replying to DJKL:
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By loverboyfullofjoy
11th May 2021 13:25

Really loved your comments and the Eagles song. Have to put it on You Tube to have a listen.

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By K81
11th May 2021 12:56

I am seriously concerned about MTD for self-assessment & have made my employer aware that I am worried about this but they have shrugged off my concerns & have a just wait & see approach. I wish I was able to retire.

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Replying to K81:
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By I'msorryIhaven'taclue
11th May 2021 13:11

It's my belief that backdating self employed year ends to 31st March (from 5th April) would mean an extra year's grace (because MTD is due to commence "for Income Tax from their next accounting period starting on or after 6 April 2023.")

So that'd be the year ended 31st March 2025. Ditto for landlords.

Stop worrying! There'll be super-strain covid, mass unemployment (when furlough pay ends) and quite possibly a war with China before MTD for IT hits us.

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Replying to I'msorryIhaven'taclue:
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By johnhemming
11th May 2021 13:14

I think you are half right about this. I don't think landlords have a choice.

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Replying to johnhemming:
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By Hugo Fair
11th May 2021 13:23

Is that "choice" or "chance"?

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Replying to Hugo Fair:
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By johnhemming
11th May 2021 13:32

It is choice. AFAIK landlords have to report on the tax year. There is the odd thing that 1st April-31st March is considered equivalent to 6th April-5th April for Income tax, but not for whether or not one is mandated for MTD.

The Secondary Legislation for this has not been published yet and obviously that could approach things in another way, but my understanding is the same.

I must admit, however, that being as I am myself 61 I don't agree with the argument that all people over the age of 60 find change difficult to handle. I accept, however, that some do.

I have not given any time to considering when I might retire.

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Replying to johnhemming:
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By I'msorryIhaven'taclue
11th May 2021 14:47

johnhemming wrote:

I think you are half right about this. I don't think landlords have a choice.

I may be off piste here, but it's my understanding that if you make up landlord accounts to a date other than 5th April then you simply time-apportion profit into the relevant year of assessment.

So preparing accounts for the 11 months and 27 days ending 31 March 2024 and then for the 12 months ending 31 March 2025 should surely be possible. Good loophole, I'd have thought; at least as things currently stand.

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Replying to I'msorryIhaven'taclue:
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By johnhemming
11th May 2021 15:18

I'msorryIhaven'taclue wrote:

I may be off piste here, but it's my understanding that if you make up landlord accounts to a date other than 5th April then you simply time-apportion profit into the relevant year of assessment.

The difference as I see it is that when you submit periodic returns to HMRC for Self Employment they use the financial year that they have been told is the financial year for the taxpayer.

However, with property they just go for quarterdates based upon the tax year.

It may be the case when the SI is published that there is wriggle room on the strict construction, but as it stands I don't think they know what financial year is used for property accounts. Hence they cannot decide whether anyone is not mandated.

However, if people do produce property accounts on other than the tax year they may still need to do quarterly figures of some form (with a digital audit trail) for each quarter. Hence the apportionment route has some challenges.

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Replying to I'msorryIhaven'taclue:
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By Tim 59
13th May 2021 12:59

It is difficult enough to ensure clients file annual returns by 31 January. The cost in terms of time and stress of ensuring compliance with MTD will not be covered by the the substantial fees that would be required to to ensure servicing small businesses/personal clients can be a viable as a business. As has been highlighted there will be an exodus of qualified/ and unqualified accountants. The irony is that HMRC is looking to restrict the registration of tax agents to qualified individuals only. So presumably ex HMRC staff would not be approved? So who is going to service the small clients?

Presumably, HMRC have been sold the idea by the large software firms that with AI/ Fintech etc, etc you will only need to point your mobile phone at some documents and accounts will be produced, submitted online and every tax payer with their intimate knowledge of tax statutes will be able to ensure strict compliance.

However, I suspect the ultimate goal is to having a few large accounting firms servicing the work and outsourcing overseas. HMRC will have successfully outsourced all the work they performed pre self assessment to a few large firms now at the tax payers direct expense.

I am 62, an FCA and registered auditor, and had planned to continue in practice for several more years. We have decided to close the practice this year. We cannot be bothered with training clients and setting up new systems in advance of MTD.

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Replying to I'msorryIhaven'taclue:
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By loverboyfullofjoy
11th May 2021 13:30

I'msorryIhaven'taclue wrote:

It's my belief that backdating self employed year ends to 31st March (from 5th April) would mean an extra year's grace (because MTD is due to commence "for Income Tax from their next accounting period starting on or after 6 April 2023.")

So that'd be the year ended 31st March 2025. Ditto for landlords.

Stop worrying! There'll be super-strain covid, mass unemployment (when furlough pay ends) and quite possibly a war with China before MTD for IT hits us.

Thanks for this comment, so now can have a year's grace so I can eradicate my losses brought forward from 2011.

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Replying to I'msorryIhaven'taclue:
Morph
By kevinringer
13th May 2021 13:55

I'msorryIhaven'taclue wrote:

Stop worrying! There'll be super-strain covid, mass unemployment (when furlough pay ends) and quite possibly a war with China before MTD for IT hits us.


Lots to look forward to. Happy days.
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By GHarr497688
11th May 2021 14:10

I will glad to be out in 2023........can't wait.

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Replying to GHarr497688:
the sea otter
By memyself-eye
11th May 2021 14:23

I'm out (I think) and (sailng?) my narrowboat down the cut tomorrow
I will give some thought to PAYE, MTD etc.

There - that's it: 'thought' over.

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By SXGuy
11th May 2021 15:13

Not quite understanding your points as they seem to contradict each other.

On one hand you say that accountants will be claiming benefits because they will be operating at a loss, and on the other you question whether businesses will cope with Mtd.

If businesses can't, then we pick up the work, therefore why would I be claiming benefits? Extra work extra charge for it.

Not my problem if a business can't justify the extra cost, that's down to hmrc.

If businesses can't cope with their own accounts and Tax returns now they sure as hell won't cope with Mtd.

And they will be forced to comply with it, so either they suck the extra cost up or they don't.

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By Open all hours
11th May 2021 17:38

Client of many years with poor records took much convincing about MTD.
Got him onto software which we looked after for 6 months.
Q3 we asked for the VAT records and after 3 phone calls he said he’d gone back to his old ‘system’.
Claims he rang HMRC and they laughed when he told them what we had done for him.
In the coming days he’ll be looking for another accountant.
Avoid, there are other contentious issues ahead in his affairs.

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By bernard michael
12th May 2021 09:27

I think that we may be missing the obvious reason behind this MTD nonsense ie to diminish the power of accountants getting between HMRC and their" danegeld"

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By Michael Davies
13th May 2021 09:47

Yeah I jacked it in as soon as I could see MTD coming down the pipeline.I wasn’t that miffed when HMRC put it back a couple of years.I am just trying to finish off my last freelance work;but as HMRC have gone down the pan,it’s proving difficult.Of course the benefits of retirement have been blown out the water by Covid restrictions;still I have done my best to make the most of it.AML costs and restrictions was another prompt to retire.The lunatics are out of the asylum!

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By loverboyfullofjoy
13th May 2021 10:09

Well I am considering very closely the way I want to go, after a burn out in 2007/08, apart from doing some freelance work, I took time off setting up and running a guest house. Then in 2013 I struck lucky and obtained £20k plus of fee income for £9k of freelance fees I wasn't paid; but now I am past retiring age I am not looking forward to suffering another stressful burn out and I know that MTD would take the pleasure out of the work. I've always liked to have had something to occupy my brain, that I enjoy, but really didn't have any hobbies. Well many thanks to this last lockdown, I've found an hobby that I enjoy, which is poetry, and I have been told by other poets just how talented I am. The benefits of this hobby is when you self publish, using Amazon, you receive 70% of the profits as income and no one pushing you and no stress. I now know what I am going to do now and it also means more time for holidays.

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By johnjenkins
13th May 2021 10:21

MTD has two major aspirations. One to make sure that smaller business cannot cope with all the digital stuff and updates and so they will have to go on PAYE. Two to allow HMRC a digital look at all transactions so their algorithms can throw stuff out without HMRC having to open an investigation.
Both these aspirations will lead to mass unemployment (business will not be able to afford more employees) or large business getting larger and finding ways to avoid tax (just as they are now). So Government income will be hugely reliant on large business doing a deal with them. Boris and Rishi take note if you want to win the next GE cos it'll only take a Tony Blair to shake up Labour for them to take the next GE. Maybe that's why Boris is getting rid of the 5 year election plan. (I'm actually a Boris fan).

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Replying to johnjenkins:
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By johnhemming
13th May 2021 12:56

johnjenkins wrote:

MTD has two major aspirations. One to make sure that smaller business cannot cope with all the digital stuff and updates and so they will have to go on PAYE.


HMRC have specifically tried and got free software from at last three suppliers. Some smaller businesses are already coping with MTD ITSA.

johnjenkins wrote:
Two to allow HMRC a digital look at all transactions so their algorithms can throw stuff out without HMRC having to open an investigation.

MTD does not provide transaction level data.
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Replying to johnhemming:
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By johnjenkins
13th May 2021 14:01

John, if you believe that HMRC are giving anything away (FREE) then you will be severely disappointed. Some business will cope, but with quarterly updates for those earning above £10k, that's another ball game.
Sorry, John, if you don't think MTD is mainly for the purpose of HMRC looking at each transaction then you must live in a different world.

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Replying to johnjenkins:
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By johnhemming
13th May 2021 14:20

johnjenkins wrote:

John, if you believe that HMRC are giving anything away (FREE) then you will be severely disappointed. Some business will cope, but with quarterly updates for those earning above £10k, that's another ball game.
Sorry, John, if you don't think MTD is mainly for the purpose of HMRC looking at each transaction then you must live in a different world.

This is the list of providers. Three currently have a free offering at least for some taxpayers
https://www.gov.uk/guidance/find-software-thats-compatible-with-making-t...

I know what the details are of the data sent to HMRC. It is not sent at a transactional level.

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Replying to johnhemming:
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By johnjenkins
13th May 2021 14:46

Free for some taxpayers (with additional costs). Always read the small print.
We all know that as of now you only send totals to HMRC, however once all is up and running then HMRC will tag all transactions, otherwise what is the point of MTD, certainly not to eliminate errors or to make it easier for the taxpayer. I would think all business with a turnover of £85k or over are on digital records. So we are left with the small business which HMRC intends to destroy.

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Replying to johnjenkins:
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By johnhemming
13th May 2021 14:20

johnjenkins wrote:

John, if you believe that HMRC are giving anything away (FREE) then you will be severely disappointed. Some business will cope, but with quarterly updates for those earning above £10k, that's another ball game.
Sorry, John, if you don't think MTD is mainly for the purpose of HMRC looking at each transaction then you must live in a different world.

This is the list of providers. Three currently have a free offering at least for some taxpayers
https://www.gov.uk/guidance/find-software-thats-compatible-with-making-t...

I know what the details are of the data sent to HMRC. It is not sent at a transactional level.

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Replying to johnhemming:
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By bernard michael
13th May 2021 14:51

johnhemming wrote:

johnjenkins wrote:

John, if you believe that HMRC are giving anything away (FREE) then you will be severely disappointed. Some business will cope, but with quarterly updates for those earning above £10k, that's another ball game.
Sorry, John, if you don't think MTD is mainly for the purpose of HMRC looking at each transaction then you must live in a different world.

This is the list of providers. Three currently have a free offering at least for some taxpayers
https://www.gov.uk/guidance/find-software-thats-compatible-with-making-t...

I know what the details are of the data sent to HMRC. It is not sent at a transactional level.


You stopped too quickly. What is being required??
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Replying to bernard michael:
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By johnhemming
13th May 2021 14:57

bernard michael wrote:

You stopped too quickly. What is being required??

Here are the figures for self employment:
https://developer.service.hmrc.gov.uk/api-documentation/docs/api/service...

Quite similar to SA103F, but there is an SA103S equivalent submission as well for those that don't provide full details.

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By North East Accountant
13th May 2021 10:40

2020 will look like a breeze compared to 2023 when MTD hits.

Unfortunately, Government and HMRC have got used to working in an agile way and delivering rules and regulations 5 minutes before everyone has to comply and then going on a recess or in HMRC's case missing in action (letter replies anyone). I predict rule and guidance changes as late as 5th April 2023.

Imagine the garbage being poured into HMRC computers by your average self employed person clicking a few buttons on their phone.

Imagine as an Accountant trying to sort out the mess at year end and adjust everything on a transactional basis.

If you're of an age and fancy retiring in a few years why would you bother with all that nonsense.

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By bernard michael
13th May 2021 10:42

The black economy will thrive

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By Arbitrary
13th May 2021 11:26

It looks like those accountants who will still be in business will be well placed to make money, there being a shortfall in supply.

If fairly close to retirement why go through the probably unprofitable process of setting clients up for MTD and not reap the rewards, having done so?

Some of course may relish doing something less boring than usual, although finding dealing with HMRC software interesting may prove a stretch.

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Replying to Arbitrary:
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By johnhemming
13th May 2021 12:57

Arbitrary wrote:

Some of course may relish doing something less boring than usual, although finding dealing with HMRC software interesting may prove a stretch.


I do find writing the interfaces quite interesting. The stretch is to make things easy to use as well.
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By bluebaron
13th May 2021 12:58

The looming spectre of MTD for Income Tax has given me anxiety. The thought of having to do 4 or 5 times as many submissions for most clients, fills me with dread, and no doubt eventually it will be monthly or even weekly submissions. Imagine clients having to drop records off weekly! Is anyone really looking forward to that?!! I will end up living off a bare minimum number of clients, even though I still have 2 decades to retirement. It just won't be worth the hassle.

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By bernard michael
13th May 2021 15:12

My Solution.....at present

Keep the clients who are already digital -both Ltd Companies and larger self employed and tell the rest to go. Income will drop by approximately 1/4 offset by normal fee increases and sundry other jobs eg company sales
Will anyone want to buy the non digital clients to ease the income drop ??

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