Share this content

MTD getting out of hand?

Bring MTD to heel

Didn't find your answer?

How do we stop the MTD tail wagging the Self Assessment dog?  

Replies (19)

Please login or register to join the discussion.

avatar
By AdamMurphy
23rd Jul 2021 12:48

Not sure but I’m in a mess in 2023. Most of my clients are very small businesses, software is a cost they don’t need and excessive for their needs. Using spreadsheets, they have meticulous record keeping but that won’t be enough and sites like this don’t help worshipping Xero

Thanks (2)
Replying to AdamMurphy:
My photo
By Matrix
23rd Jul 2021 13:14

By 2023 I am hoping to have these types of clients on FreeAgent for free. I started for new sole traders but decided it was too much handholding so will wait until mandatory.

You will find inexpensive software for them - the additional cost will be our fees since sole traders/landlords will take up a multiple of the few hours they each pay for our services currently.

Thanks (0)
avatar
By snickersinatwix
23rd Jul 2021 12:55

can we get Martin Lewis on our side? - or at least on the taxpayers side? - especially re rental income where they only have one rental property. the most ridiculous requirement I have come across. I have a number of elderly clients who have a rental property supplementing their income. they don't even have a computer. And how many of your rental clients currently keep their records on an accounting package software?

I don't think the taxpayers are aware of the huge burden that is about to hit them.

Thanks (4)
Replying to snickersinatwix:
avatar
By AdamMurphy
23rd Jul 2021 13:24

With Brexit, then Covid, small businesses have been hit hard enough. It's shambolic that MTD is going ahead and adding to it.

Thanks (3)
Replying to snickersinatwix:
avatar
By Open all hours
23rd Jul 2021 14:08

Have tweeted M Lewis and emailed P Lewis, BBC Moneybox. Anyone else up for the same?
Will also contact MP who seems to think this will all blow over.

Thanks (0)
Replying to snickersinatwix:
avatar
By Crouchy
23rd Jul 2021 14:15

is this the same Martin Lewis that told Ltd company clients to take a bounce back loan and then take its a directors loan.....he's going to be responsible for an awful lot of company insolvencies over the next year or so

Thanks (0)
Replying to Crouchy:
avatar
By Open all hours
23rd Jul 2021 15:55

If he sticks to consumer stuff and away from things he doesn’t fully understand he could be worth a punt?
Up to us to educate him and point him in the right direction?

Thanks (0)
Replying to Crouchy:
RLI
By lionofludesch
23rd Jul 2021 19:14

Crouchy wrote:

is this the same Martin Lewis that told Ltd company clients to take a bounce back loan and then take its a directors loan.....he's going to be responsible for an awful lot of company insolvencies over the next year or so

Insolvent? With a huge director's loan to collect?

Thanks (0)
Replying to snickersinatwix:
By K81
23rd Jul 2021 14:50

totally agree, a large percentage of my clients are pensioners with rental income that is basically their pensions, some have been hit by COVID as tenants not paid rent & there was no help from government for them, they don't have computers & most go round monthly to collect rent & write in a rent book. I am seriously worried about MTD for self-assessment.
I did have a client who was a hairdresser, all cash only clients, no till, just a drawer for the money, hand written receipts. She decided to retire when COVID hit.

Thanks (0)
avatar
By pauld
23rd Jul 2021 17:54

Have HMRC said spreadsheets will no longer be acceptable for MTD income tax? they work fine for MTD VAT.

Thanks (0)
Replying to pauld:
avatar
By AdamMurphy
23rd Jul 2021 19:31

It looks like they may still be ok looking at this from Taxcalc https://campaigns.taxcalc.com/taxcalc-business-filer/

Thanks (0)
Replying to pauld:
avatar
By johnhemming
24th Jul 2021 04:05

Its the digital links thing.

There are other aspects, however, to ITSA where you would not wish the faff of bridging.

Thanks (0)
Replying to pauld:
avatar
By johnhemming
24th Jul 2021 04:05

Its the digital links thing.

There are other aspects, however, to ITSA where you would not wish the faff of bridging.

Thanks (0)
Replying to johnhemming:
avatar
By adam.arca
24th Jul 2021 08:30

johnhemming wrote:

Its the digital links thing.

There are other aspects, however, to ITSA where you would not wish the faff of bridging.

That may be so, John, but there are JUST SO MANY aspects to this which HMRC (or, dare I say it, software developers) haven’t considered:

* Clients of the future may be interested in real time info (although I doubt it) but clients of the present are used to the annual cycle and see no value in more frequent numbers. Obviously, I am generalising massively there but that would be my overview of where we are at.

* We’ve already hit the point of diminishing returns with digitalisation of accounting records: those who are interested / competent have already done it and the remainder who will now be forced to do it won’t have a clue and will make a dog’s dinner.

* That being the case, those clients are going to need the easiest solution possible and one with which they have at least some familiarity: that means spreadsheets.

* And, looking from the supply side of the equation, accountants are NOT bookkeepers and don’t want to become ones either. Yes, we can do it as a subset of our skills but that is a waste of what we trained years for and reduces our earnings potential as a further put-off. In your terms, would you as a software development guy really want to spend all your time trouble-shooting / maintaining other people’s hardware?

* With many honourable exceptions who post on here, bookkeeping is also a cottage industry with many incompetent practitioners: HMRC will be encouraging a situation where clients will be forced to use agents who are only a little more able than they are.

* So we’re then going to have the unstoppable force of client / agent incompetence meeting the immovable object of HMRC deadlines and their selfishness / inability to think beyond themselves.

* Back to accountants, we’re only going to have the resource to take a few clients on for the full bookkeeping service. That means the remainder will be pushed towards some simple software solution where we think they may be able to handle that or, in the main, a spreadsheet because as noted above that’s all they can handle (and there will be plenty who won’t even be able to do that).

* And that means (for me at least but, I’m guessing, for most other accountants too) we will be encouraging those clients to just enter something / anything on those spreadsheets for the quarterly upload even though it may not even be a 20% picture and that will obviously complete defeat one of the key planks of what this is supposed to be all about. I’ll then start again from scratch at the year end pretty much as I do now except it may be a lot more expensive for the client if we’re expected to type every transaction in rather than use our well-tried and slick workarounds.

And all of this is progress exactly how?

I don’t want to be a backwoodsman about all of this and I recognise that things may be different in 20 years time with a younger generation running their businesses but we’re really n9t there yet.

Thanks (2)
Replying to adam.arca:
By ireallyshouldknowthisbut
24th Jul 2021 09:59

@Adam, I think that is a fairly strong summary of the current position.

The central plank of this aim -digitalisation and quarterly payments - will be defeated by simple inertia and low quality of the data. Whilst new businesses coming through might be digitised from the off, you cant turn around to clients in their 50's who have had a business for 25 years and tell them to bin their currently excellent record keeping system (which could be anything, but it works) due to HMRC's latest whim.

It will be "any old tosh in and sort at the year end".

Quite frankly forecast data from the prior year is liable to be stronger than "actual messy data", which brings us back round to the "making tax up", ie filing from a pre-prepared sheet quarterly numbers based on the last set of known accounts rather than letting rip on quickly filing just any old rubbish you can get your hands on every quarter with your eyes closed. There simply wont be time to do anything other than "collect, look for bonkers figures (eg the loan which is down as 'income') and send". Budgeting is actually the more sane approach.

The gulf of understanding between HMRC and dare I say some of our leading lights in the industry and the institutes and the reality on the ground for the sole trader and landlord is astonishing.

I think a lot of people could do with doing a tax return for someone who makes £15k a year sewing curtains, or has a couple of BTL through an agent and consider the folly that is MTD. Those businesses by sheer volume are probably 4 or 5 times as many as clients with a "proper" small business such a plumber or someone with a chip shop which is what HMRC seem to think of as the persons affected here, when there are in reality nano busineses who's records will often fit on one sheet of A4 (and come in hand written like that!)

Thanks (0)
Replying to adam.arca:
avatar
By johnhemming
24th Jul 2021 15:23

I have a few accountants as clients, but most of my clients are smaller businesses who do their own thing. That includes submitting the whole return through MTD ITSA. I also have some larger companies with turnovers up to the 100 millions.

I accept entirely that the systems need to be simple. The point about bridging, however, is that there are aspects where you don't need a digital audit trail. Hence you can just type it into software as a figure. There is no sense poking it into a spreadsheet and transferring the data to another system to submit it. You can submit it from a spreadsheet if you have a system to do that.

We have had the discussion about digital tax. I see the system from a different perspective.

My analysis is that if we are to digitise tax submissions then there are two ways to do it:
a) Submit all the data
b) Submit totals in various ways and have a digital audit trail.
Some countries are going for a). I personally think b) is better from a number of aspects.

On a purely practical basis I don't agree with the argument that people without specialist knowledge cannot do this on their own. I know people without specialist knowledge who handle MTD perfectly well.

With ITSA I am doing a lot of handholding because it is new.

Will it reduce the tax gap? I personally think it probably will. I cannot quantify it. There are quite a few things which happen where people are not doing things the right way and don't have paid advisors. The requirement for a digital audit trail will make a difference here.

Thanks (0)
avatar
By bernard michael
24th Jul 2021 10:38

Shoot the dog, which is what HMRC are aiming to do eventually
Also
I may have missed this but will non VAT registered limited companies have to supply MTD quarterly returns ?? If not incorporation is the way forward

Thanks (0)
Replying to bernard michael:
avatar
By johnhemming
24th Jul 2021 15:25

bernard michael wrote:

Shoot the dog, which is what HMRC are aiming to do eventually
Also
I may have missed this but will non VAT registered limited companies have to supply MTD quarterly returns ?? If not incorporation is the way forward


Not until MTD Corporation tax comes in.
Thanks (0)
avatar
By the_fishmonger
24th Jul 2021 14:48

If there's any chance to do something, it's by us all asking (very, very strongly urging) our affected clients to write to their MP, explaining what this will mean for employment and business in the constituency. Make the thought "Oh dear, my votes" get into their heads.

Draft a skelton letter; give the client an idea of the cost for additional professional fees and software that they can include. Most importantly, tell them who is their MP.

Only then might the MPs get together and ask questions of this and maybe even talk to local accountants to get a thorough understanding of what this will actually mean.

It's also incumbent upon us to let them know what a disaster this could be for the public purse when the figures received mean ta xtake will be well down. After all, we know that Mr/Mrs Trader will likely put PAYE/NI and VAT payments through as an expense without professional input!

Thanks (1)
Share this content