This is NOT intended to be yet another post for moaning about the (im)practicalities of MTD, but is posted because I've been surprised by the frequency with which Aweb members are threatening to avoid involvement with MTD by the simple expediency of some combination of ... selling their practice / ceasing to trade or retiring / 'sacking' current clients / or more extreme measures (like emigrating).
The surprise lies not in the angst and stress of those contemplating an uncertain future, but in the apparent belief that this is an affordable personal solution (rather than just a cri de coeur before knuckling down, as so often before, to dealing with the mess imposed by the political classes on your clients - the taxpayer).
So I thought I'd post the same thing 3 times ... with 3 different options:
* Option 1: Accelerate your intention to retire (or wind-down provision of services)
* Option 2: Reduce your practice to size your resources can service (despite impact on profits)
* Option 3: Keep going and seek growth opportunities (even if how isn't immediately obvious)
I'm hoping you can 'register a vote' for one of those 3 options ... either by posting in the usual way but only under the appropriate Option thread, or (if you prefer to preserve anonymity even of your avatar) by selecting 'Like' for the appropriate Option.
It's not a Referendum let alone an Election, but the voting pattern may help to clarify the plans of the majority - not just those of us who are already retired or were planning it shortly irrespective of MTD!
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Replies (8)
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Im too young to retire, but old enough to have made my money.
My Ltd Co. clients whilst hit badly by IR35 changes more than make the money to pay the bills.
If I duck out of the rest of it Id much rather have a few more days to myself a week and could increase the Ltd co. side over the next few years. I might also get back into writing.
I'm somewhere between your options 1 and 2 because my retirement is still 5 to 10 years away: MTD is my incentive to start winding down ever so slightly but I'd like it to be a multi year process which is why I've plumped for option #2 over #1.
Also, whilst I will have less clients but will be charging them more, I'm unsure of the overall impact on bottom line (who can be sure?). My plan, however, is to make clients do the heavy lifting rather than take on board loads of ridiculous bookkeeping.*
I'm not sure, therefore, but am hoping that means I can maintain a similar income stream / work commitment balance to that I currently have, so to that extent don't see why profits have to reduce per your option #2 narrative.
(* But, to be clear, I only think I might be able to "get away" with this because both I and my clients as a whole are all within 10 years or so of retiring and I don't think too many will want to jump ship even if their accountant isn't blinding them with science, apps, streams, uploads, downloads and other general bollox of little interest to the average small business).
That's the problem with the site's restriction of characters for the post sub-heading
When I said "Reduce your practice to size your resources can service (despite impact on profits)", what I was trying to describe was a scenario in between the other two ... where you let your resources determine the amount of clients or services you can manage - with a likely impact on (but not necessarily reduction in) profits.
Option 2. I'm too young to retire, but done with wanting to work silly hours, and getting tied up in this MTD for Income Tax nightmare!
We'll be increasing our fees due to the extra workload, and pushing as many people on to the cloud as possible.
We'll pay attention tho those who are digitally excluded and keep them on on the old basis.
I think the increasing of our fees will automatically mean that a section of clients will leave. The increase in fees on the others should balance that out.
Yes, this option. People who wish to stay will go onto a monthly service which will cost more than their existing service. People who don't will need to find a new accountant. The increased cost of those staying will absorb some (or all) of the cost of those leaving, most likely, but even if it doesn't I don't really care, I'll happily have less SA work as to be honest I prefer small Ltds.
Let's face it, none of us wish to be less profitable by choice. However, if keeping the same bottom line means doubling or tripling the workload, would we choose that over cutting our cloth?
As a Sole Practitioner, and in order to "service" all clients, I am faced with 3 options - (i) increase practice size to 2 or 3, (ii) increase working time from a comfortable 50/ 60 hour week to 100/ 120 hours, (iii) reduce my service levels - no more "freeby advice" or in-person client visits.
I will never reduce my service levels as that is what the clients need most. 100/ 120 hour weeks are unworkable. The only option would to increase the size of my practice. However, how would this be funded?!
The first issue is client affordability. The clients who will be impacted most are landlords and non VAT reg S/Ts (no quarterly VAT, SA-only, 4-6 hours a year, plus 3-4 hours chasing/ collecting records) are the self-same clients who have been impacted most by COVID. I don't even believe they'll be able to afford pre-pandemic fees by 2023, let alone a 3 or 4-fold increase (the increased time required for these clients being significantly greater - proportionally - than others). How therefore, can they afford to pay more?
The second issue is client acceptance. Clients do not "want" MTD ITSA. Clients receive no "cash" benefit from MTD ITSA. Clients receive no "added value" from MTD ITSA. Whilst "their" responsibilties are changing, it is simply accepted that their advisors should adapt with little impact to them (which we invariably do - as with MTDfV). Why therefore, if there is no perceived benefit to the client, should they pay a higher fee?
The third issue is "headline" advertising. Take a stroll through freelancing sites, look at Google, or check your inbox and you'll find numerous posts/ ads offering "fixed fee accounting, any business, from £20 pcm", "accounts and tax returns for £30 p/a", "unlimited support from an ICAEW accountant for £10". Clients see this, they want the same deal, and by the time you point them to the small print (e.g. 100 transactions per year), they've glaze over, only to ask "well are you going to match it or what?". If clients want a reduction, how on earth will they accept an increase?
The final issue is becoming my regular contribution to this site... cloud software ads! These inaccurately portray the capabilities of their software. They suggest 25 years of training and experience boils down to taking a photo! Whilst clients don't necessarily want to be the ones taking that photo, they do "buy into" the propaganda that our job is little more than clicking a few buttons. The software giants are just confirming the suspicions they've always had about accountants being underworked and overpaid. Why therefore, would they want to pay someone "top dollar" for something their 8-year old could do?
So, in summary, whilst I do not wish to lose clients, I do not wish to double my working week for the same fees (or less). I furthermore do not wish to increase my practice size if I am unable to cover costs, let alone make an incremental loss.
My plan is therefore to contact all affected clients between now and the end of October 2021 to explain what is happening and how it could work (with options and indicative price ranges and retainer plans - the latter being something I have never done previously).
If clients are unable/ unwilling to adapt their processes, or are unable/ unwilling to pay more for their services, I will - with plenty of notice and handover - seek to disengage.
If sufficient clients are willing to adapt, and are willing to agree to price changes, I will review my processes and consider whether it is appropriate to engage bookkeeping support.
I guess, only time will tell!!!
I am 72, the remaining clients are generally older, often much older and declining in number. Profit ceased to be relevant some years ago, although much appreciated.
We continue to service the remaining clients while we can, they will not move.
The last "difficult" clients, late and slow paying, will be moved on!
For some of the very elderly landlords we will have to prepare the quarterly figures, our own will also need to be done*, but in general if they can't do the quarterly reporting they will have to find help from family or elsewhere.
This is very much a "would retire if we did not have obligations to clients" response. Not looking forward to this at all.
* hoping for excel based bridging software, otherwise doomed!
