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MTD ITSA - answers to practical points

following John Hemming's lead

Didn't find your answer?

Further to John Hemming’s posting I also think it might be easier to address some practical points that were raised as many of them seemed to get lost in the gargantuan post and perhaps a summary is useful (if you can take anymore!)

The following of course is after all only my opinion and from my own experience, others will disagree!

1. We have to prepare accounts 4 times a year now instead of 1

No you don’t.  I understand you have your professional pride and we would all like to be super useful to clients and provide them a nice set of accounts but the chances are they do not want that.

You can use the cash basis for small businesses remember, and in my view unless there is compelling reason to do so or the client’s business is such that the values are easy to find I will not even be thinking about debtors, creditors, prepayments, accruals etc for the Quarterly updates.

2. Banks feeds will solve all the problems

No they will not, neither will the software automatically do all the work, Bank Feeds are an excellent tool but they are just one tool in the hands of a human.  But there is no doubt that feeds and rules can save a lot of time. 

3. What about cash?

Just like you do now, you will have to find a way to capture it.  For example one of our clients fills in a shared excel file that they fill in each night with the days takings, those that have a large amount of cash purchases will use receipt capture.

4. All the work needs to be done in one month or 5 weeks

No it doesn’t, the clock starts ticking 1st April, get your systems in place so that you can start the book-keeping right away.

If the client themselves are doing the book-keeping (bad idea) you need to be clear about timescales.

5. The software is too expensive

You need to look beyond Xero, there are very good packages out there ranging from free to £5 a month. Keep an eye open for deals and grab them while you can.

6. Its going to be quadruple the work

It just isn’t. I cannot tell you how much more work (or less work for that matter) it will be because every client and practice is different.  But I can tell you from experience that in some cases it is less work, I know some people didn’t want to hear that, but I am only telling you what I know from doing it.

Of course there is the initial setup so that needs to be taken into account

7. How can we possibly get the clients to give what we need 4 times a year

It does need an honest discussion with the client so that each side knows the expectations, whether you agree with MTD or not you are making sure that they comply - our approach was 1. talk to the client, 2. Put the systems in place and 3. Setup an automatic reminder system (in our case AM) 

Replies (49)

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By David Ex
30th Aug 2021 14:24

As far as my own affairs are concerned, I’d far rather just give HMRC access to my business bank account. If they can find anything remotely useful in there, over and above what’s in my tax returns, then good luck to them!

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Replying to David Ex:
By petersaxton
30th Aug 2021 17:57

David Ex wrote:

As far as my own affairs are concerned, I’d far rather just give HMRC access to my business bank account. If they can find anything remotely useful in there, over and above what’s in my tax returns, then good luck to them!


What's the point of giving access to the business bank account? It's much better to have access to transactions with attached document. That's why it's better to use cloud bookkeeping software. Documents are easier to file and easier to retrieve.
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Replying to petersaxton:
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By David Ex
30th Aug 2021 22:41

petersaxton wrote:

What's the point of giving access to the business bank account? It's much better to have access to transactions with attached document. That's why it's better to use cloud bookkeeping software. Documents are easier to file and easier to retrieve.

So the immediate impact of MTD on me is that I have to completely change the way in which I account and maintain records? I did fear as much.

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Replying to petersaxton:
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By DKB-Sheffield
31st Aug 2021 00:20

petersaxton wrote:

What's the point of giving access to the business bank account? It's much better to have access to transactions with attached document.

I'm hoping you are jumping the gun a little.

My understanding is (or rather 'was') that HMRC will not be granted access to cloud software, to attachments etc. I don't understand exactly what is sent through the API but, I' take a punt and say document images are not included in the submission!

If it does become law that every transaction must have an image attachment, the clients I have with 1,000-2,000 $3 SaaS charges per annum will have their work cut out. Until I know that is mandatory, there will be no way me, or the client will waste valuable time on completely immaterial charges!

I was also of the understanding that full 'cloud' accounting software is (or rather 'was') not yet a mandatory requirement. So how do HMRC access the documents and full accounting package on a non-cloud system then? Do they need access to my hard drive, remote server, local and cloud file structure etc.? How do I stop them accessing every file on my computer/ cloud drive/ remote server?

I'd certainly be wary of allowing unfettered access to any HMRC officer whether cloud-based or, even more so, locally based. It's not that there is anything to hide, more that they don't necessarily understand what they're looking at.

Furthermore, is it likely all HMRC Compliance Officers will be fluent in all supported cloud packages in the event that access is required? I doubt it! It's not many years since the only accounting package any Compliance Officer had any knowledge of was Sage! Even then, they wanted everything printing!

Assuming it is mandatory to use cloud accounting software, and assuming HMRC will have full access, I am assuming my clients using packages such as LandlordVision (basic accounting but top notch property management package) will have to change. The software promises to be MTDITSA compliant but I doubt very much HMRC woud have that itemised on their "software to learn" list.

Finally, your comment...

petersaxton wrote:

That's why it's better to use cloud bookkeeping software. Documents are easier to file and easier to retrieve.

When you say "cloud bookkeeping" you mean Xero. Not ALL cloud packages are the same. Some are better than Xero in some respects (price, adaptability, simplicity - i.e. better for a client's specific needs), others are worse (by which I mean have LESS functionality, or are dearer - but they may be perfect for some clients).

You seem to be forgetting that many traditional packages offer exactly the same thing. Sage 50 for example allows attachments, integration with Office 365 (etc.) and a 100 company version is MUCH cheaper per client that Xero.

Then we reach the "new-comers"* Nomisma and Capium offer everything for less. They may not suit everyone, and I wouldn't really refer to them as cloud 'bookkeeping' providers (more full suite) but, I'd never completely rule them out.

Finally...
IF I have missed revisions to the proposed legislation,
IF it is proposed that cloud software is compulsory,
IF it is mandatory for document images to be attached to transactions,
IF HMRC are to be given unfettered access to accounting software, and
IF HMRC are either fully conversant with all cloud applications (or are going to insist on us using 1 or 2 from a list)

THEN I will gladly provide everything required and make the required wholesale changes for every client. Until that time, I don't intend to move every client onto the only cloud solution you believe we should all be using.

As an aside, what final accounts/ CT/ tax solution do you use? I mainly use a combination of Taxfiler, Taxcalc and Sage (for IE). They are the best and are the only options every other practice in the UK should consider!**

* When I call Nomisma and Capium "newcomers" I mean after 2010!
** Tongue wedged firmly into cheek!

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Replying to DKB-Sheffield:
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By johnhemming
31st Aug 2021 08:15

Essentially you are right.

MTD ITSA asks for totals for smaller taxpayers who are self-employed it is the short form analysis (income or expenditure).

There will be a requirement for an electronic audit trail (digital links). I would expect it to be the same as VAT or similar principles.

Cloud accounting is not required.
Digitising the paperwork is not required.
HMRC are not asking for generalised access to cloud accounting or local accounting.

Obviously if HMRC do some form of inquiry they will ask for some information that is not changing.

I am not myself certain what is happening to the 31st January deadline. I would expect it to move forward, but at the moment if people are doing MTD ITSA the deadline is in fact 31st January.

What changes is having quarterly submissions.

There are lots of ways of doing the work for this. Some are more efficient thne others. I think Winnie Wriggleroom has the right strategy for efficiency.

Over time being more efficient is better for people, but some people may never change. Some people will be exempted from the requirements.

From a broader economic perspective it is good when the government and the Bank of England have more timely information. That enables policy to adjust more smoothly.

We are in quite a difficult macroeconomic position at the moment and I am sure that will happen again in the future. In those situations timely information about the economy makes a real difference. From a broader economic position having taxation occur closer to the events that give rise to it is also a good thing. We can see that this has been a gradual development with things like CIS and residential CGT.

The OECD do an interesting comparative tax report every 2 years. I glanced at the most recent one, but I did not see that much comparing personal income tax submissions. I know some countries send out a tax return in a draft form and if the taxpayer does not respond it is deemed accepted.

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By johnhemming
30th Aug 2021 14:35

I think that is a good summary.

It is possible using technology (and I think you are using Accountancy Manager) to set up processes that chase human beings to ensure that things are done on time.

This is an example:
https://www.vat.direct/workflow/function/redirectlink/authlink/1/2/Yorks...

It will enable anyone with a Yorkshire Building Society account to authorise open banking to give an accountant access to their account.

Similar processes exist for other third party authorisations.

What MTD ITSA does is to create a situation where if people work carefully with the grain of the wood they can get a good result.

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Replying to johnhemming:
paddle steamer
By DJKL
30th Aug 2021 14:57

So long as they are not using a tenon saw.

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Replying to johnhemming:
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By cbp99
31st Aug 2021 15:43

This is interesting John. As I dont have a YBS account I cannot check how it works, but who initiates this facility? Does the bank say to all software developers (eg Accountancy Manager), "if you want you can enable your customers to access their bank details using an API"? If so, could an accountant arrange the same, given the appropriate expertise?

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Replying to cbp99:
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By johnhemming
31st Aug 2021 16:15

This is what Open Banking is.

The vast majority of UK banks have open banking facilities. I gave an example from Yorkshire Bank, but I could give at least 55 other examples.

You as an accountant can set up one of your clients so that they get a link emailed to them to enable them to give you access to their bank data. This lasts for 90 days and the system can then recognise that they need to authorise it again.

Hence you the accountant and book keeper don't have to handle the day to day operations and only have to look at the exceptions.

If you want me to give an example for another bank then please tell me which one (not Starling for example).

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Replying to johnhemming:
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By Winnie Wiggleroom
31st Aug 2021 16:40

johnhemming wrote:

This is what Open Banking is.

The vast majority of UK banks have open banking facilities. I gave an example from Yorkshire Bank, but I could give at least 55 other examples.

You as an accountant can set up one of your clients so that they get a link emailed to them to enable them to give you access to their bank data. This lasts for 90 days and the system can then recognise that they need to authorise it again.

So we are back to the old 90 day problem anyway? The biggest issue we have with feeds is that the client has to reauthorise it every 90 days.

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Replying to Winnie Wiggleroom:
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By johnhemming
31st Aug 2021 17:04

True, but if the chasing process is automated then at least you don't have to chase them yourselves.

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Replying to johnhemming:
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By cbp99
31st Aug 2021 16:59

Thanks John. Let's try my bank, Santander.

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Replying to johnhemming:
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By johnhemming
31st Aug 2021 17:46

I have sent a private message.

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Replying to johnhemming:
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By cbp99
31st Aug 2021 17:47

Thanks John. That went smoothly through Santander, and took me to a page https://newaccounts.vat.direct/workflow/tasks/login which seems to assume I am registered with Cirrostratus.

Although there is a box "Log in or register", clicking on that brings me back to the same page. Is one supposed to be pre-registered with Cirrostratus?

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Replying to cbp99:
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By johnhemming
31st Aug 2021 18:31

In this situation I was acting as the accountant and you were my client. The principle is one of making it really easy for the client to authorise access to the bank account. Hence the client only has to log in to the bank's website and the authority is updated.

If it is too much effort for the client the job will be left for a later stage or not done.

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Jennifer Adams
By Jennifer Adams
30th Aug 2021 16:01

Ok.. so how exactly am I to tell a subcontractor client who doesnt submit invoices (ie all of them) that he (she?) will have to send me their figures every quarter? Many just rely on their Contractors certs isseud (sometimes) at the end of the tax year.
It just wont happen - so its estimates as suggested under Rachaels most recent article.

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Replying to Jennifer Adams:
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By legerman
30th Aug 2021 21:51

Jennifer Adams wrote:

Ok.. so how exactly am I to tell a subcontractor client who doesnt submit invoices (ie all of them) that he (she?) will have to send me their figures every quarter? Many just rely on their Contractors certs isseud (sometimes) at the end of the tax year.
It just wont happen - so its estimates as suggested under Rachaels most recent article.

So what's wrong with getting the contractor certs 4 times a year instead?

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Replying to legerman:
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By cbp99
31st Aug 2021 18:00

I think Jennifer's point is that the subcontractor may only receive certificates once a year. Of course they *should* receive one for each month they are paid, but that does not always happen.

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Replying to cbp99:
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By Winnie Wiggleroom
31st Aug 2021 18:45

cbp99 wrote:

I think Jennifer's point is that the subcontractor may only receive certificates once a year. Of course they *should* receive one for each month they are paid, but that does not always happen.

This is an interesting example, HMRC already have the details on a monthly basis from the contractor - why can they not allow agents to access that data, even allow whatever software the agent uses to be populated with such data?

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Replying to Winnie Wiggleroom:
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By Hugo Fair
31st Aug 2021 19:24

Presumably for the same reason (whatever that is) that they have ignored my request for nearly 10 years ... to allow an Employer to view online the FPS data that the employer has submitted, after it has been processed by HMRC and in the format of an FPS file.

My objective was to assist the discussion between employer and HMRC in those situations where the YTD tax/nic due figures submitted and those held by HMRC don't tally ... leading to interminable discussions as to which actual figures differ (per employee not just as employer totals).

It's not a difficult technological issue (compared to MTD) and would be a win/win for all concerned, but has always been rejected ('too much transparency')!

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Replying to Winnie Wiggleroom:
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By johnhemming
31st Aug 2021 19:28

An interesting point is that MTD ITSA is planning to provide the contractor with a list of subcontractor payments made through CIS.

That does not mean, however, that the subcontractors are getting this information.

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Replying to Jennifer Adams:
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By Paul Crowley
30th Aug 2021 23:12

Similar opinion
Subcontractors and couples with a couple of residential rents are the main concerns for increased time.
None keep what HMRC would call proper records and are the clients that Winnie would not be acting for
All the papers and transactions need to be dealt with by person as all transactions are made in normal domestic bank accounts.
Letting agent pays money in for one with varible deductions
Contractor pays the other with variable tax deductions
Bank feeds useless

A worse example would be the family letting group
One family of four, one of three with every version of ownership shares.
Having spent an entire Saturday just identifying who is in and who is out, it is noteworthy that the increased costs and time fall on the lowest income group.
Not one of my MTD group pays 40% tax
A very significant number rarely pay any tax and a very big group usually pay less than £1,000
So even if HMRC wanted real time payments on account quarterly the accounts cost would be overwhelming compared with tax take

I ignored in the above the registered for VAT (Compulsory) group. They already have a version of MTD

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Replying to Paul Crowley:
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By SXGuy
30th Aug 2021 23:06

You're spot on actually.

The fees will impact the least earners and may well end up being the same as or more than the actual tax they pay.

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Replying to Paul Crowley:
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By Winnie Wiggleroom
31st Aug 2021 06:40

Paul Crowley wrote:

Similar opinion
Subcontractors and couples with a couple of residential rents are the main concerns for increased time.
None keep what HMRC would call proper records and are the clients that Winnie would not be acting for

With respect let me stop you there, Winnie acts for plenty of these types of clients, I know because I am Winnie!

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Replying to Winnie Wiggleroom:
Stepurhan
By stepurhan
31st Aug 2021 08:43

Winnie Wiggleroom wrote:

With respect let me stop you there, Winnie acts for plenty of these types of clients, I know because I am Winnie!


With respect, in the other thread when I mentioned rentals, you offered up a 30 property landlord as an example. Hardly the typical small rental we are talking about here.

If you had smaller examples, why didn't you offer them then.

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Replying to stepurhan:
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By Winnie Wiggleroom
31st Aug 2021 09:05

stepurhan wrote:

Winnie Wiggleroom wrote:

With respect let me stop you there, Winnie acts for plenty of these types of clients, I know because I am Winnie!

With respect, in the other thread when I mentioned rentals, you offered up a 30 property landlord as an example. Hardly the typical small rental we are talking about here.

If you had smaller examples, why didn't you offer them then.

Sorry I don't really follow, just because I offer you one example you assume that I only deal with those types of client? It was one example of how software has reduced our workload, one example, one. I have repeatedly said some clients it will be more work some less.
Plus the thread is not just about a client with one rental property we are talking about small businesses in general here, it would be ludicrous to use a sledgehammer when a pin hammer does the job better.

Not really sure why you are fixated on what types of clients I deal with, I am not interested in an argument, I am just trying to present a balanced view based on my experience with my clients.

So once again I say if you are intent on misreading things, making assumptions and arguing for the sake of it, I will with all due respect to you not be responding.

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Replying to Winnie Wiggleroom:
Stepurhan
By stepurhan
31st Aug 2021 16:28

Winnie Wiggleroom wrote:

Sorry I don't really follow, just because I offer you one example you assume that I only deal with those types of client?

It seems to be you who are wilfully misinterpreting the words of others.

I talked about small businesses and rentals where computer records were not the norm and of little benefit. In return you gave an example of man with 30 different properties, not a small rental business by any stretch of the imagination.

So do you operate for any small businesses/rentals or not? Do you find that they benefit from electronic records and, if so, how? Do they find them easy to use themselves, or do you insist on charging them an extra fee for electronic book-keeping?

The other thread is too long to easily navigate now. However, I recall noting that your push towards more electronic records seemed more for your benefit than your clients. If you are hooking small businesses up with simple solutions that they can use themselves, then I would be interested to hear about it. If you are moving them into ways of keeping records that you can charge extra for, I will stick to my original view of who is benefitting.

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Replying to stepurhan:
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By Winnie Wiggleroom
31st Aug 2021 16:55

stepurhan wrote:

Winnie Wiggleroom wrote:

So do you operate for any small businesses/rentals or not? Do you find that they benefit from electronic records and, if so, how? Do they find them easy to use themselves, or do you insist on charging them an extra fee for electronic book-keeping?

Yes we certainly do! As I have repeatedly said its horses for courses we do not insist on any particular system for our own benefit, we advise the clients of the easiest and cheapest way for us to be able to ensure that they comply.
Complying in this context will mean submitting quarterly figures.
One cannot say that there is only one way that works for all clients but there are certainly many cases where using cloud software for example for a small business will be beneficial and cost effective and more efficient.
As far as fees are concerned, lets look at it this way. We have always done the book-keeping for lets say 80% of clients whether that comes in a bag or electronically, I cannot give you an exact figure because we are only part way through the process but certainly from our experience with VAT, only in a few cases did fees increase, and even then it was less than 20%, and mostly it was because it their particular case it needed more expensive software.

I have also said on a number of occasion that MTD should not apply to clients with one or two BTLs and the "hobby" businesses, but if it does I will do what needs to be done to comply.

Let me be very clear, we have never insisted on doing something just because it makes our life easier, in fact it is quite the opposite.

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Replying to Jennifer Adams:
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By cbp99
31st Aug 2021 15:57

I think in the case of subcontractors, bank feeds will be very useful. There would be no need to see invoices/certificates before year end - only need to know which payers are contractors. Of course it would not be so straightforward if materials are involved - not a simple *amount received x 100/80*.

This is not to suggest that the MTD proposals are not burdensome and draconian - just a way of dealing with the requiriement in a pragmatic way.

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By JD
30th Aug 2021 19:24

I have a feeling that there may be a shift to accounting based on listing and coding invoices rather than bank feeds, especially with IT Companies and our friends at hmrc focused taking a pic with your mobile and all is done automatically.

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Replying to JD:
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By Winnie Wiggleroom
30th Aug 2021 20:49

JD wrote:

I have a feeling that there may be a shift to accounting based on listing and coding invoices rather than bank feeds, especially with IT Companies and our friends at hmrc focused taking a pic with your mobile and all is done automatically.

A very interesting point, I am not sure what others think but certainly with our clients we have found that when you show them the App they say "wow thats great I'll use that" and then never do, or they only use it for half of their receipts, or they just carry on the way they always have.

So we have found that the most accurate way is to rely on something that is sure (bank transactions) and perhaps use the App for cash expenses (we tell them if you dont tell us they wont get included and you will pay more tax).

Either way, there will always be things that receipts capture will not cover (insurances, bank charges, loan payments etc)

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Replying to Winnie Wiggleroom:
paddle steamer
By DJKL
30th Aug 2021 23:07

The bank to a degree (cash transactions excluded) gives some comfort re completeness, which as anyone from an auditing background knows can be the most difficult thing to establish- accuracy of treatment of what you have within your transaction list is the easy part of completing accounts, it is knowing you have all the data that is key.

This is why double entry is important re accounts preparation, using control accounts is crucial, HMRC relying on submissions of income and expenses re MTD is stupidity on stilts if everyone merely takes photos of paperwork and uses feeds without also spending the time thinking and analysing what they are observing, will accountants really have the time for this every quarter, will over time they actually do it, will the hard won skills of working with incomplete records be lost to the profession as you all rely on what may be junk for your client's submissions?

The result of MTD will in a large number of cases result in clients merely having lists of transactions with few checks, the entry of some transactions twice and all the other errors clients are notoriously prone to make if the profession just works from this without spending the time to check, errors will happen.

I do not think I have ever completed a set of client accounts in my life without squaring cash transactions, net pay control, PAYE/NI rec, Vat Rec, Bank Rec, debtors and creditor controls if appropriate, when are these checks going to be made, every quarter, really, or with the volume of work will you all start dropping standards?

I am sure I am a dinosaur re all this but something keeps telling me deadline pressures will compromise quality and integrity?

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Replying to DJKL:
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By DKB-Sheffield
31st Aug 2021 00:16

I agree (not that you're a dinosaur). Double entry, trial balance, balance sheet, P&L - and that was just my school tuck shop!

I don't understand how any meaningful accounts can be prepared without checks and balances. Neither do I agree (entirely) with the cash basis!

I reviewed a new-ish client's books recently (small group). They outsource bookkeeping and get some very pretty management reports consisting of a P&L and ratios. When I analysed the results, the £1M profit became a £100K loss. Why? No VAT, no payroll posted, no accruals, no prepayments, no deferred income, no creditors, no depreciation and a "fudged" bank rec. I was told, in no uncertain terms - "it's the P&L that matters, if that's right, the balance sheet is right"!

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Replying to DJKL:
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By Winnie Wiggleroom
31st Aug 2021 06:56

DJKL wrote:

I do not think I have ever completed a set of client accounts in my life without squaring cash transactions, net pay control, PAYE/NI rec, Vat Rec, Bank Rec, debtors and creditor controls if appropriate, when are these checks going to be made, every quarter, really, or with the volume of work will you all start dropping standards?

There are two points I would make here - firstly the quarterly updates are not a set of accounts, as I said in the OP we would all love to be preparing 100% accurate figures with debtors creditors etc analysed that the client will love reading and pay us handsomely for, and we do have clients that want and need that, but that just is not what we are talking about here, those things can wait until the annual submission, or you can get correct figures that satisfy HMRC each quarter using the cash basis.

The second point I would make here is that you need to remember what kind of clients we are talking about here, we are not dealing with 1m businesses we are talking about very small traders, landlords etc, generally they pay the same suppliers for the same things every week and month so a good number of those transactions can be coded accurately using rules in software.

That does not mean we prepare the figures with no checks and balances, before every submission a minimum would be to reconcile the bank and run a quick TB, but that is usually a very quick exercise.

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Replying to Winnie Wiggleroom:
paddle steamer
By DJKL
31st Aug 2021 10:27

So does the fifth MTD submission have a balance sheet? Does the SA return that follows from the five MTD returns continue to have balance sheet figures on it, or is MTD dropping the need for reporting of trading profits and rentals in detail on SA as it is all already reported?

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Replying to DJKL:
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By Winnie Wiggleroom
31st Aug 2021 10:33

DJKL wrote:

So does the fifth MTD submission have a balance sheet? Does the SA return that follows from the five MTD returns continue to have balance sheet figures on it, or is MTD dropping the need for reporting of trading profits and rentals in detail on SA as it is all already reported?

Theres no requirement for a Balance Sheet to be submitted under Self Assessment so why would there be under MTD?

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Replying to Winnie Wiggleroom:
paddle steamer
By DJKL
31st Aug 2021 11:03

I thought there still was over £85k turnover, full return boxes 83-99

"You’ll need to fill in the ‘Self-employment (full)’
pages if:
• your business is more complicated or your
turnover, including any taxable coronavirus
support scheme payments, for the year is
£85,000 or more
• you’ve changed your accounting date
• your taxable self-employed period, known as
the basis period, is not the same as your
accounting period and one or both of the
following applies
— the income for the basis period is more
than £1,000
— you received a SEISS grant
• you have adjustment income because you
changed your accounting basis
• your business ceased before 6 April 2021
and overlap relief is due
• you need to adjust any profits chargeable to
Class 4 National Insurance contributions (NICs)
• you were within the Managing Serious
Defaulters (MSD) programme during the year
• you had, at 5 April 2019, an outstanding
untaxed balance on a disguised remuneration
loan arising from this self-employment, even
if it ceased between 6 April 2020 and 5 April
2021, and at 5 April 2021 you had not paid
all of the Income Tax due on the loan amount
outstanding at 5 April 2019"

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

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Replying to DJKL:
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By Paul Crowley
31st Aug 2021 16:59

Agree
Balance sheet over the VAT limit
Odd how that VAT limit just keeps getting used

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Replying to DJKL:
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By johnhemming
31st Aug 2021 10:52

This gives the details of the 5th Submission (which is strictly not a fith submission, but an adjusted summary)
https://developer.service.hmrc.gov.uk/api-documentation/docs/api/service...

As you can see in the data submitted:

{
"income": {
"turnover": 1000.49,
"other": 1000.49
},
"expenses": {
"costOfGoodsBought": -1000.49,
"cisPaymentsToSubcontractors": 1000.49,
"staffCosts": 1000.49,
"travelCosts": 1000.49,
"premisesRunningCosts": 1000.49,
"maintenanceCosts": -1000.49,
"adminCosts": 1000.49,
"advertisingCosts": 1000.49,
"businessEntertainmentCosts": 1000.49,
"interest": 1000.49,
"financialCharges": 1000.49,
"badDebt": 1000.49,
"professionalFees": 1000.49,
"depreciation": 1000.49,
"other": 1000.49
},
"additions": {
"costOfGoodsBoughtDisallowable": 1000.49,
"cisPaymentsToSubcontractorsDisallowable": 1000.49,
"staffCostsDisallowable": 1000.49,
"travelCostsDisallowable": 1000.49,
"premisesRunningCostsDisallowable": 1000.49,
"maintenanceCostsDisallowable": 1000.49,
"adminCostsDisallowable": -1000.49,
"advertisingCostsDisallowable": -1000.49,
"businessEntertainmentCostsDisallowable": 1000.49,
"interestDisallowable": 1000.49,
"financialChargesDisallowable": 1000.49,
"badDebtDisallowable": 1000.49,
"professionalFeesDisallowable": 1000.49,
"depreciationDisallowable": 1000.49,
"otherDisallowable": 1000.49
}
}

There is nothing balance sheety there.

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Replying to Winnie Wiggleroom:
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By lh3f9764bg1g
02nd Sep 2021 11:13

The quarterly updates are not a set of accounts (how could they be given the time it would take) but as they are not then what is the point of them? It can only be, I think, for collecting Tax sooner in the future (though I can think of much easier ways for them to have achieved that) and then, when that becomes the case, the fact that the quarterly updates are not a set of accounts will mean that people will be squaring liabilities based on a load of half-ar$ed gumph. Not an ideal scenario methinks. The only other reason that I can think of is that HMRC WANTS a load of half-ar$ed gumph. That might suit their purposes down to the ground (think of the future penalties). The end game for HMRC cannot be based on their current proposals - they are soft-landing us for their long game. The trouble with their long game (when accuracy will be necessary) comes back to the original problem - the quarterly updates will not be actual accounts and will, therefore, lead to taxpayers submitting a load of . . . . . . half-ar$ed gumph. Has anybody read Catch-22 recently?

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Replying to Winnie Wiggleroom:
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By NotAnAccountant2
31st Aug 2021 07:45

Winnie Wiggleroom wrote:

So we have found that the most accurate way is to rely on something that is sure (bank transactions) and perhaps use the App for cash expenses (we tell them if you dont tell us they wont get included and you will pay more tax).

Man down the pub to his mate who has just bought the round: "You know if you scan the receipt you'll save the tax."

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By DKB-Sheffield
30th Aug 2021 21:38

Hi Winnie

This is a good summary, and as per the previous post, we agree and disagree on many aspects of this.

Implementation times will vary. Incremental processing times will vary. Some clients and practices many win, others will almost certainly lose.

The key problems that seem to have been suggested (not by you per se) are that those using cloud accounting are well prepared, whereas others are not. That is not really the case. As with MTDfV I have numerous clients using perfectly compatible 'compliant' solutions, whether or not they are cloud-based. I admit they may not have an image attached to every £2 bank transaction, or use bank feeds but they comply with the law and do the job.

Until the last few days, I was not under the impression that cloud accounting or digital images of transactions were also being made mandatory. Now I wonder if I've missed something.

However, notwithstanding the software matters, MTD is the issue here. If we truly believe MTD will benefit our clients we would all be welcoming it with open arms. My current reading however suggests that MTDITSA (not improved, more regular bookkeeping) does not hold a justifiable benefit, either for the taxpayer or - judging by the numerous suggestions of 'estimated'/ 'incomplete' submissions - to HMRC/ UK Plc.

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Replying to DKB-Sheffield:
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By legerman
30th Aug 2021 21:58

DKB-Sheffield wrote:

Until the last few days, I was not under the impression that cloud accounting or digital images of transactions were also being made mandatory. Now I wonder if I've missed something.

I don't believe you have. It's the data that has to be submitted digitally. How it gets to that stage is for you to decide.

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Replying to legerman:
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By Paul Crowley
30th Aug 2021 23:07

I think and hope youare correct
But HMRC will never know if MTD is being done as per the rules
Same applies to MTD VAT

What ther get is just the reports, not any useful detail

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By GHarr497688
30th Aug 2021 23:15

My average client fall into the age range 55 to 85 mainly manual workers who have their partner help with the books. Most have kept the same records fo 30 or so years. All clients are well educated and a service is provided to make sure all Accounts / Tax forms comply with the law and are filed before 31.7. The service is tailored to each client taking into account age/fee/ability/mental health etc. The service works perfectly. This new system will be like throwing a pack of card in the air and will not benefit any single client and could cause non payment of tax and poor record keeping possibly affecting the business profits etc. How can HMRC possibly justify MTD in this perfect set-up to the benefit of all. Please someone explain the point in it all when everything is working 100% well now. I just don't understand.

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Replying to GHarr497688:
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By Paul Crowley
30th Aug 2021 23:46

I cannot explain and I agree as I have a similar client set
Mine less able as mine are spread and the only date relevant is 31 Jan. Just like the number 5 MTD report.
In the group you mention quite often the only email I have is wife's email @ hotmail or Gmail
The 120 tax returns I submit in January each year are all tiny little jobs.
60 would be in MTD and my guess is that at least 30 will be exempt with the other 30 not complying in any meaningfull way

Thanks (3)
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By North East Accountant
02nd Sep 2021 14:01

Winnie Wiggleroom wrote:

4. All the work needs to be done in one month or 5 weeks

No it doesn’t, the clock starts ticking 1st April, get your systems in place so that you can start the book-keeping right away.

7. How can we possibly get the clients to give what we need 4 times a year

It does need an honest discussion with the client so that each side knows the expectations, whether you agree with MTD or not you are making sure that they comply - our approach was 1. talk to the client, 2. Put the systems in place and 3. Setup an automatic reminder system (in our case AM) 

You can have the best systems in the world, the best chasing software, charge extra for late docs but can you answer the $64 million dollar question....

"How on earth do you get 100% of your clients to give you 100% of the docs needed, on time every week, month or quarter?"

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Replying to North East Accountant:
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By Winnie Wiggleroom
02nd Sep 2021 14:35

North East Accountant wrote:

Winnie Wiggleroom wrote:

4. All the work needs to be done in one month or 5 weeks

No it doesn’t, the clock starts ticking 1st April, get your systems in place so that you can start the book-keeping right away.

7. How can we possibly get the clients to give what we need 4 times a year

It does need an honest discussion with the client so that each side knows the expectations, whether you agree with MTD or not you are making sure that they comply - our approach was 1. talk to the client, 2. Put the systems in place and 3. Setup an automatic reminder system (in our case AM) 

You can have the best systems in the world, the best chasing software, charge extra for late docs but can you answer the $64 million dollar question....

"How on earth do you get 100% of your clients to give you 100% of the docs needed, on time every week, month or quarter?"

Yes wouldn't life be so great if clients just did what we asked when we ask, all I can say is that bank feeds helps a huge amount, and we have plenty of clients that do play ball and while we do whatever we can if they don't, hey guess what - its not our responsibility is it

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