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MTD Fees

Feel like we're sticking a wet finger in the air at the moment

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Like a lot of firms, we've been doing some calculations around future fee levels post-MTD. We've had no clients yet asking about it (unsurprisingly - there's a whole silo of stuff that's going to hit the fan at some point when it all dawns on people) but clearly we want to be on the front foot with warning and preparing them, especialy given their first question will likely be "how much?"

Having done some initial back-of-envelope work, we're estimating a typical non-VAT sole trader will be looking at a doubling of fees. A limited company currently not VAT registered/only on FRS, something like 3x. A small company already VAT registered 2.5x.

All these are in addition to whatever bookkeeping solution they take, plus the usual optional extras (tax enquiry protection, etc). Very rough calculations clearly, and not knowing exactly what form the quarterly submissions will take - we've rather assumed it'll be 4 sets of accounts which may be pessimistic.

From the limited information I've gleaned so far from others these numbers don't look too far out, but I'm sure we'd all be curious to know what others are thinking.

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By DJKL
31st Mar 2017 12:43

I think for currently vat registered entities, where your firm already does the vat return submission you are over egging. If books are already maintained quarterly (and party maintaining stays the same) then I cannot see the extra work doubling the annual cost, I reckoned 150% for these might be nearer the mark re my clients.

The difficulty in estimating is will the requirement to maintain records in different form mean the task of record keeping reverts to the accountant as it has become beyond client ability, if that happens then yes, your estimates could be accurate, in fact I doubt one can have a formula, each client will be different.

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31st Mar 2017 13:01

It is not 4 sets of accounts - you or the client just submit the data and prepare annual accounts.

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31st Mar 2017 13:05

Most of my clients are manual records jobs, so probably not a lot of extra work really - just the nuisance of calling the jobs in.

Ignoring software prices, and the pain of quarters falling at similar times, then...

If we already do the VAT for them, I doubt its going to cost much more. Perhaps we could justify sticking a couple of hundred quid onto the bill over the course of the year.

If we don't already do the VAT, then I suppose I'll just ask the client to analyse their purchases into expense columns. If they do that - then I guess a couple of hundred quid over the year for popping their figures into the computer.

For non-VAT registered/FRS clients, then this is where it will cost a bit more. Maybe an extra 4-500 for having to chase it up and go through records 4 times a year. At least it will let us get the final accounts done earlier and quicker than before though.

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By DJKL
to TheLambtonWorm
31st Mar 2017 13:17

Re client analysis, that will need to be in prescribed form re the draft bill, whilst Excel may suffice (if compliant re feeding into submission software) paper will not.

Will each transaction (not just the totals) likely need to conform to the record keeping requirements whatever they will be?

Record keeping could be really interesting, currently we run petty cash floats (one in van one in office) on imprest, sheet prepared (excel) vouchers attached to back, funds drawn re total which triggers its entry in our cash book as one line- now currently one cash book transaction but might be 40-50-60 individual purchases- parking slips etc,.

So,what is an accounting transaction to be, how will it be defined that it will require individual entry into the digital record keeping, that is surely the question?

Same with purchase invoices, if a cash/bank accounting system these are bundled by supplier, total computed, total paid, entered as one line in a cashbook. If an accruals system each individual purchase invoice will need entered.

There is going to need to be some very clear guidance as to what is required.

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to DJKL
31st Mar 2017 15:03

@DKL, i think you highlight in the analysis of "real world" accounts that there is no such thing as 100% digital.

There is always an element of paper totals, feeding into entries in excel or on software, feeding into total submitted

HRMC have tried and failed several times to define what is and what is not "proper" bookkeeping. I am not sure why MTD will be any different.

The way I see it is just like Lambtonworm, the clients can do what they like, so long as there are final accounts in digital form and we "press the button" on the quarterly figures.

We certainly dont need to get into quarterly accounts, it will just be "raw" Q data, on a basic cashflow basis, with all the normal errors in, and then tidied up in Q5. You have to remember that nothing actually HAPPENS to the data at HMRC side.

My initial thoughts is it will cost about the same as doing VAT which is about 75% getting the data and 25% doing the numbers. Which for a landlord with one et property will mean their fees doubling, but a VAT reg limited company then I dont think there will be anything in it, we are already seeing the numbers quarterly, and will just send to HMRC the raw data 'as is'. No-one gives a_shit if its accurate or not.

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to paulgrca.net
31st Mar 2017 15:45

paulgrca.net wrote:

It is not 4 sets of accounts - you or the client just submit the data and prepare annual accounts.

dave.forbes, the bloke who's writing the software, says it IS four sets of accounts - albeit not published to anyone but HMRC.

He said it yesterday on another thread.

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31st Mar 2017 13:10

TheLambtonWorm - you seem to have missed the point manual records not allowed clients have to keep digital records!

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to paulgrca.net
31st Mar 2017 13:21

Which is what we do for them anyway - just whack it into excel as part of the accounts prep.

As far as I'm aware excel counts as digital, as long as its sent over to hmrc using some sort of approved software.

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to paulgrca.net
31st Mar 2017 15:07

Yes - it was as clear as day on the recent MTD webinar. Clients need to keep records digitally in order to submit quarterly reports. Clients need to submit quarterly reports in order to prove that they are keeping records digitally. That's what they said - honest.

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to John Stone
01st Apr 2017 15:08

They did say that, but they also said that records could be kept in a spreadsheet as long as that spreadsheet was categorised in line with HMRC requirements! (Stuff what the business wants!!)

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31st Mar 2017 17:46

This article and the comments underneath it give a good idea around MTD fees:

https://www.accountingweb.co.uk/tax/hmrc-policy/prepare-for-mtd-impact-a...

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01st Apr 2017 14:35

I think if you are looking to double or treble your fees for MTD you won't have many clients left.

The market just won't stand it and you will need to look at how you are doing things. are you also planning on doubling and trebling your staff numbers.

Young firms that have set up over last 3 or 4 years will probably have set up using cloud only bookkeeping for most of their clients, with bank feeds etc the books are always pretty much up to date and if vat registered the MTD will just be another filing to do. I would be suprised if these firms will be looking to charge more than 20% to 30% more than they currently do.

I dont think the market will stand the sort of increases you are talking about. Will you be able to produce 3 times the work you currently do come next April.

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01st Apr 2017 14:35

I think if you are looking to double or treble your fees for MTD you won't have many clients left.

The market just won't stand it and you will need to look at how you are doing things. are you also planning on doubling and trebling your staff numbers.

Young firms that have set up over last 3 or 4 years will probably have set up using cloud only bookkeeping for most of their clients, with bank feeds etc the books are always pretty much up to date and if vat registered the MTD will just be another filing to do. I would be suprised if these firms will be looking to charge more than 20% to 30% more than they currently do.

I dont think the market will stand the sort of increases you are talking about. Will you be able to produce 3 times the work you currently do come next April.

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to Glennzy
01st Apr 2017 15:59

Agree with this to some extent. My clients will have to adapt and I'll probably end up with less clients paying more money. Some of the work I do will be the same work done earlier than I would have done, some of it will be extra work.

It comes back to the point I made on another thread in response to a claim that MTD involved the same work - if you have four tasks to do on a job, would you do one, put the whole job away, take it out again and do the second and so on ? No. Why not ? Because it would take more time.

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