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MTD for income tax train crash incoming….

Completely unworkable proposals

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I spent this morning watching an IRIS webinar on MTD for income tax which is coming down the tracks in 2023.

Iris have clearly made significant preparations for this and their solution looks very slick and ahead of the curve.  However the prospect of MTD for income tax fills me with horror.

The upshot is that self-employed traders will need to file quarterly ‘updates’ to HMRC within a month of the quarter end for each trade and also if they have a rental property, separate quarterly updates for that also (which may be different quarters to the trade).  Add in end of period submissions etc and you end up with 14 submissions in this scenario.  

With each submission there appears to be a declaration to be made to the effect that the submission is correct and complete and warnings of penalties and prosecution.  This makes each submission a tax return in all but name.

This is going to be absolutely impossible. 

Let’s say a practice has 1,000 tax return clients and currently has from April to January to get them filed – which is hard enough. From 2023 they will need to submit 1,000 tax returns quarterly with only a month to do it.  Most of these will land the 3rd and 4th week of the month. It cannot physically be done.  Taxpayers are required to keep records digitally which will mean in most cases either the accountant has to write the books up or the client presents them with their digital records.  The client’s records will contain errors and requires the skill of an accountant to make sense of them – that’s what we do and how we make a living.  There is simply not the time available to do this for each client.  It will be January every month.

How on earth is this supposed to increase the accuracy of information and reduce the tax gap?  If accountants do not have time to properly review the submissions and resolve queries etc, or be forced by time constraints to leave it to the clients to do then rubbish is going to get filed. 

Why are the professional bodies not making more noise about this?
 

Replies (113)

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By Paul Crowley
18th Feb 2021 17:20

Because they have no backbone and are dominated by big firms that just do not have that kind of client

Look how many times the claims made are that MTD will REDUCE the time taken to comply and SAVE money for the individual HMRC client

Worse is that HMRC claim they will not use the first four returns, just the final

Time really to start increasing fees now
That way the fee resistant will be reduced and moved on before pile up day

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By DaveyJonesLocker
18th Feb 2021 17:24

HMRC will get what they get given each quarter "as accurate as can be" and a proper adjustment at the year end.

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By Jo Nokes
18th Feb 2021 17:24

You have echoed my thoughts on this exactly. But this has been coming for some time, and has attracted quite a lot of criticism. If you recall, The HoL Economic committee was scathing about the proposals, but HMRC carry serenely on to its goal. I think bodies such as ICAEW should have done much more to point out how unworkable the whole system is. I think HMRC assume that the software is the magic answer, and will not accept that it just does not work at the press of a button. Look at the MTD for VAT results. This was supposed to eliminate a whole raft of errors and raise more tax, but I believe that simply hasn't happened. When it comes to trying to keep up with the extra filing workload, I alternate between despair at how I will cope, and optimism that I will get an assistant to help cope, and charge much increased fees for the extra work. What I would like to see is a campaign to highlight the project-I doubt that the average unrepresented trader has the slightest idea of what's in store.

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By ireallyshouldknowthisbut
18th Feb 2021 17:26

Come now Jon "the computer" will do it all.

I have a large number of BTL clients with multiple properties, many of which own properties in varying %'s between spouses and third parties. Treating each one as a "business" is going to be interesting to say the least.

I cant see how you can file all your returns each quarter unless of course you submit absolute undiluted tosh. its going to be the only way - file "something" and then backfile with the proper data later on.

I can pee low quality data into HMRC's system once a quarter if they really want me to. I hope they choke on it.

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By Open all hours
18th Feb 2021 17:36

Don’t think HMRC want agents to be involved beyond taking the flak from clients because we’re the ones who are left to educate them about MTD.

If it was a good idea with tangible benefits for the trader, HMRC would be all over it and claiming the credit for reinventing the administrative wheel.

As it is, in their hearts they know how much this will be resented so they’re happy to hide behind us for now.

If clients wanted to be accountants they would have trained appropriately. They don’t so they didn’t. Sadly HMRC don’t get that. They would rather silence the one man band and this is a brave attempt to do so.

As time passes the generation for whom mobile phones with apps are as natural as fingers will be better equipped for MTD but HMRC are, despite many warnings, attempting to jump too far too fast.

Never mind though, it’s sure to close the tax gap.

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Tornado
By Tornado
18th Feb 2021 17:41

Don't worry about it.

In my opinion MTD for Tax is an impossible proposal so I will not be taking it seriously. It is so impossible that it is bound to be shelved or perhaps ditched altogether eventually.

Perhaps your mistake was to take part in an IRIS Webinar. You will only hear about how great the MTD for Tax idea is and how IRIS can help you with incredible software at an incredible price.

Look though the topics and postings on AWEB and time after time you can read reports of HMRC failing in just about all areas of Making Tax Digital and it is clear that they are a long way from getting much of this right. It would help them if they started to simplify the systems, not make them more complex.

I see nothing that gives me any reason to believe that the submission of quarterly Tax Returns is going to happen in the foreseeable future, mainly because there is absolutely no reason for this to be done.

Believe IRIS if you wish, but I think it is just their wishful thinking (in the hope of making huge amounts of money).

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Replying to Tornado:
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By Southwestbeancounter
22nd Feb 2021 14:44

Spot on Tornado!

I stressed about this a few years ago but no longer - it is completely unworkable and will not reduce the tax gap one iota as realistically how can it, especially with represented tax payers?!

I have not even voluntarily discussed MTD with any of my non-VAT registered clients as I am hoping common sense will prevail and it will be shelved!

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By Jo Nokes
18th Feb 2021 17:59

Anita Monteith. of the ICAEW, wrote in a recent edition of Taxline, about her wishes for a modern tax system. One suggestion was to adopt a sensible tax year end, ie 31 December or 31 March, but she also highlighted the fact, germane to the OP's point, that these quarterly submissions would run to the 5th of the month, whereas VAT returns will (do) run to the month end. How idiotic is that? Can we not as a body of concerned professionals explain that this is not special pleading, but concern about the car crash that is coming, and get some kind of dialogue going to discuss these issues. Clearly, the accounting and tax institutes seem to have no stomach to fight this, keeping good relations with HMRC seems to be the priority. I feel that I should resign as an FCA if I thought it would make the slightest difference

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By Crouchy
18th Feb 2021 17:45

you can bet your life that if we currently had this system in place, some bright spark would be suggesting we change to one return a year for simplicity

despite what HMRC say, this is leading the way for quarterly payments for SA cases, so why not just switch to quarterly payments on account, I know the majority of our clients would probably welcome that

In terms of coping with the workload, I see it that we'll have less clients and just do more for them, anyone who is a PITA or consistently last minute under the current self assessment system will be shown the door, its only going to be feasible to work with those who'll work with you in the right way

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RLI
By lionofludesch
18th Feb 2021 17:45

As a colleague of mine once said*, "anyone can make a mistake but, if you really want to [***] things up, get a computer".

*Referring to clients keeping records on their computers. To be fair, this would be nearly forty years ago.

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Replying to lionofludesch:
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By Paul Crowley
18th Feb 2021 18:14

Not much changed in forty years then

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Jane
By Jane Evans
18th Feb 2021 18:25

I watched the ICAEW webinar last week and decided to try and add someone to the trial. My clients are really only affected by the rental income aspect, as I have very few self employed clients.

You can only add someone to the trial who has only income from a sole trade and / or rental income. Therefore no employment or pension income, no interest or divs. Also no-one who has received SEISS grant. Also they have to be recording their rental income on a software package.

None of my clients lives entirely off their rental income and therefore I cannot add anyone to the trial. Even if they were they are not using rental software. In due course some bridging software may become available, but I don't know if any is available in time for the trial.

I have no idea how I would deal with the capacity issues as there is just me and I don't want to take on an employee or sub-contractor. I could make some arrangements and perhaps ask some clients to leave to free up some capacity, and then we would get to a few months to go and HMRC would change to rules to gross rental income of say £50,000 instead of £10,000 and 95% of my extra work would disappear. I would have asked clients to leave for no reason. I am not taking that risk.

Having been slightly interested in learning about the proposals I now think it is so flawed that it won't work. The issues I face are replicated across the accountancy sector and until some major progress is made I'll sit it out.

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Replying to Jane Evans:
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By DaveyJonesLocker
18th Feb 2021 18:16

Yes, this, I came very close to leaving the sector when this was first close to launching, I would have sold a business I built from scratch because I couldn't face the January deadline every quarter.
I'm pleased I held off selling and won't be making any decisions until VERY close to the time.

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Replying to Jane Evans:
By Charlie Carne
22nd Feb 2021 14:29

Jane Evans wrote:

None of my clients lives entirely off their rental income and therefore I cannot add anyone to the trial.

.........

Having been slightly interested in learning about the proposals I now think it is so flawed that it won't work. The issues I face are replicated across the accountancy sector and until some major progress is made I'll sit it out.

I agree with many of the comments here that this has been poorly thought through by HMRC and it will almost certainly take longer to launch than HMRC anticipate (hence mandation will likely be pushed back a year or two, as for MTDforVAT). But I would make a couple of comments.

Firstly, the point of the initial trial is to test simple scenarios first. If HMRC want to test taxpayers who ONLY have S/E or only rental income, then that seems a sensible first step. The fact that we may not have any clients that fit the trial criteria is not a problem with the trial. When they expand the trial to more complex clients, that is the time to join if you have clients that meet those expanded criteria.

I suspect that the point of MTD for IT (as opposed to MTD for VAT) is not to force accurate records to be filed quarterly (unlike VAT which does need to be accurate with each return, as was always the case for quarterly VAT filing), but to ensure (on a quarterly basis) that the business is keeping their books in an MTD-compliant system. HMRC will (in the early years) surely not be examining the mid-year data for accuracy, as they must appreciate that there will not be time for accountants to review it all prior to submission and it will omit many (if not all) accounting adjustments. Indeed, the recent ICAEW webinar made that point clear: HMRC have said that in-year accounting adjustments are optional (per ICAEW).

So, what is the point of this, you ask? My opinion is that HMRC want all businesses on modern, computerised systems (with direct links to the internet) so that, in time (over many years), all accounting data can be tracked and checked from source to destination. They will then be able to check that my sale is recorded as your purchase on the same date for the same sum, with the same VAT. Ultimately, some version of iXBRL codes will be added to all transactions so that even the coding will track from supplier to customer. MTD for IT (and then CT, too) starts them on that path.

I had a client VAT inspection years ago and it was clear that the VAT inspector was checking specific sales invoices of my client to match to purchases claimed by another taxpayer that they had also investigated recently (thankfully, they did, indeed, match!). Under MTD-mandated, internet-accessible accounting systems, this will allow HMRC's AI systems to look for errors automatically and almost instantly, giving HMRC the utmost transparency at all times. This initial phase of MTD for IT, is a very early first step in that direction. They will, for the initial phase, (and this is just my educated guess) care less about accuracy mid-year than ensuring compliance with the principle. The year-end submission will continue to be the important filing that will (as now) need to be accurate.

MTD for VAT was a nightmare as it was being developed but, now that it has been live for a while, it is a perfectly workable system. Far be it for me to praise HMRC (their implementation of all systems continues to be appalling and they never listen to the professionals), but I suspect that, in time, this will lead to all businesses (except a rare few outliers) keeping proper computerised records which (like reducing the volume of cash transactions) will make it harder to cheat the system and will aid in reducing some (but, of course, not all) errors.

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Replying to charliecarne:
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By johnhemming
22nd Feb 2021 15:08

Just before Xmas a new production subscription was switched on by HMRC which covers things like Employment Income, but not things like HICBC or Clerical returns.

Some MTD providers can, therefore, process things like pensions, foreign income etc.

The existence of digital links means that mathematical errors need to be intentional rather than careless which will impact on the way in which penalties are calculated.

Hence if someone is not using digital links and makes a mathematical error which results in them paying less tax that will be likely to be seen as intentional.

What happens with MTD is that MTD suppliers have subscriptions to live APIs. There is only one production subscription for VAT. However, ITSA has:

Business Details
Business Income Source Summary
Business Source Adjustable Summary
CIS Deductions
Individual Calculations
Individual Losses
Individuals Charges
Individuals Reliefs
Individuals State Benefits
Self Assessment

A supplier needs to pass a test to get production credentials for each of these. For example if the Supplier has not passed the State Benefits test then they cannot submit adjustments to the HMRC data on State Benefits. Similarly for CIS.

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Replying to charliecarne:
Jane
By Jane Evans
22nd Feb 2021 15:53

Charlie

Your take on the situation is fine, but inevitably your reply strays into describing the situation for small businesses.

My post referred to clients who are included solely because they have rental income. I am not aware of any software used by landlords when the landlord has only a very small number of properties, say one or two.

This report shows that there are 4.5 million private landlords in the UK, and page 5 says that 45% of landlords have one rental property. A further 38% own between 2 and 4 properties, so 83% of landlords (3.7 million) own 4 or fewer properties.

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

A typical rental property has say 12-14 rental income receipts per tax year and say 4 to 25 rental costs per property.

Given the very small number of transactions undertaken by landlords what on earth is achieved by forcing these landlords to record their transactions every quarter in digital software?

I am still not impressed by a trial that cannot be accessed by a single landlord who is not also a sole trader because no landlords rely solely on rental income. 4.5 million landlords are being excluded from the trial at present.
At the stage that the trial is made available to the public it should be for the benefit of the taxpayers. HMRC should already have developed the software to achieve the outcomes that it is seeking. HMRC should have made further progress with their software before opening the trial.

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Replying to Jane Evans:
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By johnhemming
22nd Feb 2021 17:16

Simple landlords who also have employment income should be able to participate now. That API was turned on the week before Xmas.

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Replying to johnhemming:
Jane
By Jane Evans
22nd Feb 2021 17:37

John

Thank you for this information.

HMRC needs to update its pages here then:

https://www.gov.uk/guidance/sign-up-your-client-for-making-tax-digital-f...

https://www.gov.uk/guidance/follow-the-rules-for-making-tax-digital-for-...

Who can follow the rules
You cannot sign up if you need to report income from any other sources.

Keeping digital records
You’ll need to keep digital records of all your business income and expenses - this includes income from self employment or property.

You should start to keep digital records at the start of the accounting period you are signing up for. You’ll need to do this for the whole of the accounting period.

You’ll use software to keep records and send updates. Make sure you have software that’s compatible with Making Tax Digital for Income Tax.

My clients do not keep digital records on any of these software products, or anything except spreadsheets so they still cannot join. Until my tax return provider (Digita) makes a product available I won’t be able to add anyone to the trial.

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Replying to Jane Evans:
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By johnhemming
22nd Feb 2021 21:08

Jane Evans wrote:

HMRC needs to update its pages here then:


That's true.
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Replying to Jane Evans:
By Charlie Carne
24th Feb 2021 10:40

Jane Evans wrote:

A typical rental property has say 12-14 rental income receipts per tax year and say 4 to 25 rental costs per property.

Given the very small number of transactions undertaken by landlords what on earth is achieved by forcing these landlords to record their transactions every quarter in digital software?

The purpose of MTD for IT is NOT to prepare and submit accurate quarterly accounts, but merely to reassure HMRC each quarter that you are using a digital system. That really is all it is. Use a basic digital system to link to the bank. The client allocates the bank transactions as best they can (you can set up rules for them in advance to make it easier for them) and then (almost literally) just press a button once a quarter. It is not like MTD for VAT, where there is a legal obligation that the data be accurate (as inaccuracy in VAT returns can lead to a loss of tax to the Revenue). No tax is due based on the quarterly MTD for IT submission, so it need not be accurate; its purpose is solely to prove that the taxpayer is operating a digital system, even of the most basic kind.

So, for your simple landlord, ALL that they will need to do is open a bank account with Tide or CountingUp (or myriad other combined banking/MTD systems that will spring up in the next two years) and pay their rental income into it, note in the banking app that it is rental income and then press a button to submit once a quarter. Will the data be accurate? No, because they may not have recorded all of their costs, etc. Does it matter? No. As Rebecca Benneyworth said on her excellent AccountingWEB webinar this morning, HMRC will NOT be conducting in-year compliance checks on the data received. At the end of the year, you can then do your normal work and submit proper rental accounts that will supersede the in-year submissions. For more tech-savvy clients, or where you are prepared to get more involved with the books throughout the year, you can update the software (whether it's something as simple as Tide or CountingUp, or something more complex like QBO or Xero or FreeAgent) daily/weekly/monthly, in which case the quarterly submissions will be much more accurate, but that is NOT a requirement.

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Replying to charliecarne:
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By 0098087
24th Feb 2021 10:48

And the ones who find it impossible to let us have their info before January each year, do you really think they are going to do this. Don't make me laugh. We all know it's a bloody nightmare getting the info each year...And after a pandemic when we still don't know where we are.

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Replying to 0098087:
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By bernard michael
24th Feb 2021 11:06

0098087 wrote:

And the ones who find it impossible to let us have their info before January each year, do you really think they are going to do this. Don't make me laugh. We all know it's a bloody nightmare getting the info each year...And after a pandemic when we still don't know where we are.

Perhaps a liberal helping of fines might change their behaviour

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Replying to bernard michael:
David Ross
By davidross
25th Feb 2021 11:10

But this is how it will work FOR US. When clients are forced to enable a Bank Feed, they won't be able to withhold their data and make our lives a misery. They also won't be able to invent round sum figures, which is why HMRC will increase the tax take

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Replying to davidross:
RLI
By lionofludesch
25th Feb 2021 12:05

davidross wrote:

But this is how it will work FOR US. When clients are forced to enable a Bank Feed, they won't be able to withhold their data and make our lives a misery. They also won't be able to invent round sum figures, which is why HMRC will increase the tax take

Can you get a feed for his cash payments ?

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Replying to charliecarne:
Tornado
By Tornado
24th Feb 2021 10:56

I think you have neatly highlighted the real problem with MTD.

Why go through all of this when a simple question like 'Have you prepared your Tax Return using Digital Software' on the one and only Tax Return to be submitted each year would do the trick.

Why oh why make it so complex????

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Replying to Tornado:
By Charlie Carne
24th Feb 2021 12:01

Because HMRC want everyone to be keeping digital records throughout the year. As a profession, we complain that some of our smaller clients pitch up every January wanting their SA tax return done in double-quick time. Ticking a box on the SATR to say that they (or we) put that data into a digital system is not the goal sought by HMRC. They want these businesses to keep records digitally throughout the year. MTD for IT's quarterly submission is only there to ensure compliance with that very basic requirement. You aren't telling HMRC after the event that you complied; you are proving it every quarter.

As Bernard Michael said, HMRC penalties will spur them on and those that refuse to be compliant will form the list of clients that you can choose to disengage. They will, necessarily, be your smaller clients and so no big loss of fees and this will be more than compensated by the new clients who rush to our doors who need help with MTD filing.

Incidentally, we will benefit from this 'always-digital' regime, as we can start working on the year-end data soon after y/e and not need to wait 9 months until our lazier clients send it to us the following January.

For those clients who refuse to embrace any form of technology, how did you cope when HMRC refused to accept paper VAT returns or when they demanded digital PAYE submissions under RTI? It's just the next stage of the inexorable move towards a completely digital economy.

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Replying to charliecarne:
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By 0098087
24th Feb 2021 12:20

well they don't have anything to do with RTI. They just give us the wages. And as landlords they have nothing to do with VAT.

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Replying to charliecarne:
RLI
By lionofludesch
24th Feb 2021 12:44

charliecarne wrote:

For those clients who refuse to embrace any form of technology, how did you cope when HMRC refused to accept paper VAT returns or when they demanded digital PAYE submissions under RTI? It's just the next stage of the inexorable move towards a completely digital economy.

Charlie, whatever your beliefs, that is a truly carp analogy to make.

There's a world of difference between entering a few numbers on an SA or VAT return and digitising the entire underlying records.

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Replying to Tornado:
By Charlie Carne
24th Feb 2021 11:56

Duplicated

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Replying to charliecarne:
Jane
By Jane Evans
24th Feb 2021 11:44

Charlie

You obviously have a very different client profile to mine. Typical IT literacy includes email, looking at the internet, making simple online purchases, talking to their grandchildren on zoom. My estimate is that c 50% of my landlord clients have online banking, the chance of them using an app is tiny. Smart phones are not universal by any means. 2 stage verification is hopeless as many of my clients do not use texts.

There is no way they are going to acquire the IT skills to use an app, when all that occurs is around 20 transactions pa per property.

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Replying to Jane Evans:
By Charlie Carne
24th Feb 2021 11:49

They don't need to. You can link the software to their bank account and you can do it! With the low volume of transactions that you refer to, it will take about 5 or 10 minutes per quarter to do the minimum required for MTD for IT filing. As I said above, this will not produce accurate quarterly rental accounts; you can leave that until the year-end, as now.

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Replying to charliecarne:
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By 0098087
24th Feb 2021 11:55

They won't want to link the software. They are not interested. One of them, she's in her early 30s. Has a job with a college and is a landlord. Her IT literacy is shocking. Takes ages to get replies out of her by email. She lives in the dark ages. Her father is much the same. Prefers the old days when he had to queue to bank cheques rather than BACS directly into the account.

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Replying to charliecarne:
Jane
By Jane Evans
24th Feb 2021 15:07

Charlie

I am still trying to understand your replies. For my clients without online banking, how would I link the software to their bank account. How is this possible?

[sorry for getting my reply in the wrong order, I don't know how to make Aweb work.]

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Replying to charliecarne:
By northernmonkey
24th Feb 2021 16:53

Firstly, whenever someone says 'it'll only take 5 or 10 minutes', it never really takes that time! I'd suggest that it would be more like 30 minutes, to an hour, per client - certainly in the first year! And that's not counting the time we would spend setting it all up, hand-holding, dealing with the inevitable questions, etc.

But, let's just say it was 10 minutes per landlord client per quarter for arguments sake - we have around 250 landlord clients (some with 1 or 2 properties but many with a lot more than that) so that's over 40 hours of additional work that would have to be carried out each quarter; We have a tax team of three, are they expected to work extra to cover that? Unlikely that we would hire another part time person (as the work is all likely to fall in quarterly intervals so will bottleneck) - and it would be difficult to be able to charge anything for 40 minutes per client per annum so the extra staff costs would be absorbed by us! And that's before we look at our 400 sole trader/partnership clients and their MTD quarterly returns!

Completely unworkable for the average general practice.

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Replying to northernmonkey:
RLI
By lionofludesch
24th Feb 2021 17:25

northernmonkey wrote:
- and it would be difficult to be able to charge anything for 40 minutes per client per annum so the extra staff costs would be absorbed by us!

Well, that would be your choice. Pro bono work would be down to your generosity.

But, on the other hand, you're saying that it would be more than ten minutes a quarter. How long does it have to take before you would consider charging for your time ?

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Replying to lionofludesch:
By northernmonkey
25th Feb 2021 09:49

It would clearly depend on the client and how price sensitive they are - I suspect we'd charge where the extra work was an hour or more a year. Still doesn't get round the fact that employing someone extra shouldn't be necessary and would be difficult.

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Replying to northernmonkey:
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By 0098087
25th Feb 2021 09:53

The screams we've had for the small amount we've charged in the last 12 months for doing JRS claims you wouldn't believe. They think it's all so easy.

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Replying to 0098087:
RLI
By lionofludesch
25th Feb 2021 11:55

0098087 wrote:

The screams we've had for the small amount we've charged in the last 12 months for doing JRS claims you wouldn't believe. They think it's all so easy.

I don't put up with that.

"Feel free to have a go," is my usual riposte.

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Replying to Jane Evans:
Tornado
By Tornado
24th Feb 2021 12:19

Hello Jane

Your observations are correct in that there are differing views on AWEB about how we should deal with our clients. Charlie quite blatantly has no time for anyone that does not do things his way and seems only interested in the money. To hell with all those that cannot comply, it is not his problem. But there are many others that do care a great deal about their clients and go out of their way to help them.

Charlie lives in his own world and that is OK if that is the way that he wants to do business, but I am a great believer in trying to look at things from other peoples point of view even if I don't agree with them. Perhaps those like Charlie would be a little more helpful by trying to understand the situation of others who don't meet his standards and stop looking at things in simple black or white way. There are are many shades of grey in-between.

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Replying to charliecarne:
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By North East Accountant
24th Feb 2021 12:31

How's this work for joint owned properties?

How's this work for properties mixed % owned properties?

I'm not being funny i just really want to know as no-one at Sage, Xero or HMRC can tell me.......

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Replying to North East Accountant:
RLI
By lionofludesch
24th Feb 2021 12:49

North East Accountant wrote:

How's this work for joint owned properties?

How's this work for properties mixed % owned properties?

I'm not being funny i just really want to know as no-one at Sage, Xero or HMRC can tell me.......

I'm not sure how it's going to work for any partnership, to be honest.

There's a lot of work to be done to accommodate businesses which don't quite fit in the standard box.

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Replying to lionofludesch:
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By johnhemming
24th Feb 2021 15:32

lionofludesch wrote:

I'm not sure how it's going to work for any partnership, to be honest.

There's a lot of work to be done to accommodate businesses which don't quite fit in the standard box.


Partnerships other than where people own a proportion of a property have not been dealt with yet. I am expecting some form of system whereby the figures for the partnership are submitted quarterly, but this is not even in test yet. The figure for each partner's profit, however, went live in December 2020.
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Replying to North East Accountant:
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By johnhemming
24th Feb 2021 15:29

North East Accountant wrote:

How's this work for joint owned properties?

How's this work for properties mixed % owned properties?

I'm not being funny i just really want to know as no-one at Sage, Xero or HMRC can tell me.......


I am handling some of these through MTD ITSA. Each owner makes a submission for their percentage much like the tax return.

Sage and Xero haven't done the software yet
https://www.gov.uk/guidance/find-software-thats-compatible-with-making-t...

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Replying to johnhemming:
By northernmonkey
24th Feb 2021 17:00

John - but Charlie suggested that the software will link to the bank feed and then it's just 'press a button and whoosh!' But you say each owner makes a submission for their percentage, like their tax return. It's likely that only one of the owners will keep the digital records - just as is likely now for manual records - so how will the other owner submit their share? Or will the record keeper do this for both?

Reading your responses about MTD, it's clear you're a fan as you're involved in the development of it - but surely you can see that in general, accountants are saying it's unworkable - and that taxpayers are going to find it even more difficult - how about taking some of this feedback on board and passing it through to the powers that be so that open dialogues can be had, rather than taking such a blinkered approach?

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Replying to northernmonkey:
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By johnhemming
24th Feb 2021 21:35

northernmonkey wrote:
but surely you can see that in general, accountants are saying it's unworkable - and that taxpayers are going to find it even more difficult - how about taking some of this feedback on board and passing it through to the powers that be so that open dialogues can be had, rather than taking such a blinkered approach?

Its not really blinkered, but that I deal with taxpayers directly and through accountants and MTD ITSA works. It is really moreso saying as it is.

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Replying to johnhemming:
By northernmonkey
25th Feb 2021 09:46

But we're all taxpayers AND accountants - are we're saying we believe it to be unworkable so I don't believe that! So how many taxpayers are you 'dealing with'? what is the demographic? How many currently provide their accountants with a bag of paperwork once a year? What's the demographic of the accountants you speak with who are seemingly on board? As looking at this thread alone, it's clear that around 90-95% say we are not! Sorry John but my opinion stands.

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Replying to johnhemming:
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By North East Accountant
24th Feb 2021 17:01

So each owner needs their own separate software.

Assuming a joint property bank account who links the bank feed and reconciles the account?

What does the other property owner do?

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Replying to North East Accountant:
RLI
By lionofludesch
24th Feb 2021 17:28

North East Accountant wrote:

So each owner needs their own separate software.

Assuming a joint property bank account who links the bank feed and reconciles the account?

What does the other property owner do?

Exactly. That's a non-starter.

We need something along the lines of the SA800. Partnership has its own records, split in the "crystalisation" statement at the end of the year. Even that will be difficult to manage if there are changes in partnership membership.

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Replying to North East Accountant:
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By johnhemming
24th Feb 2021 21:36

North East Accountant wrote:

What does the other property owner do?


Take a copy of the bank feed and submit it with a different percentage.
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Replying to johnhemming:
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By North East Accountant
25th Feb 2021 08:45

Do I understand this right you're saying reconcile the bank twice in each joint owners books?

Surely not.

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