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MTD - small firms and best software for clients

Planning ahead

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Hi,

We have been looking and trialing some software, most of which some clients already use, in preparation for MTD.

We have looked at Quickbooks, Xero and Freeagent.

What are other smaller firms considering as the best way forward for their business and that of their clients when MTD hits?

We consider that the majority of our clients will want us to do this on their behalf, but may want access. However, like all other firms, we have a number of clients who don't use computers.

Replies (44)

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By ireallyshouldknowthisbut
02nd Mar 2017 09:13

Well until we know who it will affect, the timing, what the work around are and the actual method this is going to be, I don't see there is anything you can do but wait.

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Tornado
By Tornado
02nd Mar 2017 09:24

Yes. I have had a general look at what is on offer but at the moment I am not impressed with what I have seen. The accounting systems that I created myself and have used for over 17 years are better and more relevant to my clients than some of the commercial offerings so as there is a chance that I will be able to continue like this, I am holding off making any final decisions until there is actual working MTD compliant software available that is tried and tested.

It may well take until the end of the year before we are in a situation to properly assess the offerings and having had much experience of these types of situations in the past, I am certainly not going to commit myself and my clients until I am absolutely sure I am making the right decision.

Cost is also a factor. I expect software developers to be paying me to recommend their software and provide unlimited support to my clients, so by the end of this year, it should be clearer which developers are truly committed to MTD and those that are just in it for the money.

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Replying to Tornado:
By Tim Vane
02nd Mar 2017 09:40

Tornado wrote:
it should be clearer which developers are truly committed to MTD and those that are just in it for the money.

That's an odd thing to say. Are you suggesting that developers should be creating MTD compliant products for purely altruistic purposes rather than running their businesses for the purpose of making a profit?

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Replying to Tim Vane:
Tornado
By Tornado
02nd Mar 2017 09:53

No.

I am just saying that levels of support and software quality will vary between developers and in my experience (going back 35 years) some software is expensive, does not do the job properly and is poorly supported and other software is well made, well supported and reasonably priced.

I consider those that produce the poorer quality software to be more likely to spend less on development, support and software quality than those that are genuinely in business to provide a good honest product and service to customers.

As Accountants, of course, one of our main reasons to exist is to help our clients make a profit and expand their businesses but in my view, there has to be a moral obligation to provide a fair product to consumers in the pursuit of profit.

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Replying to Tim Vane:
Glenn Martin
By Glenn Martin
07th Mar 2017 11:33

I was at recent MTD meeting where HMRC sent there guy along to our local practitioner group.

Also attending were 2 software developers from cloud software firms based in Edinburgh and Newcastle.

When asked about free software the HMRC insisted that they see the availability of free software as essential for the whole thing to work.

When put to the software companies the suggestion was met with much spluttering and I have not seen as much back peddling since Micheal Jackson was around.

The big boys clearly have no appetite to build and support anything that is free. So from that I would imagine any free versions will be so restricted on transaction numbers that 99% of punters will have to pay.

So it is clear the main players are committed to MTD as it potentially forces 4 million customers there way.

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Replying to Tornado:
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By D V Fields
19th Mar 2017 13:50

I suspect that the reason why your accounting system developed by yourself is far better than "all" the commercial software is for a few key reasons:
1. You developed it.
2. You know what is required.
3. It does what it needs to do.

I also expect that:
1. If a feature was difficult to implement - you found a way to implement it.
2. You could have included many pictorial graphs quite easily but considered they were more gimmicky than of great value.
3. Not being cloud based is still not a problem.

Oh! Before I forget:
4. The really useful report you wanted but couldn't find on the commercial software, despite searching through the vast array of icons cluttering its desktop or exploring every odd sounding menu item, isn't actualy there. But on yours it is.

Long may it continue.

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Replying to D V Fields:
Tornado
By Tornado
19th Mar 2017 17:14

Your analysis is spot on.

I was once complimented by a VAT Inspector who had booked in for a 6 hours session to check through the records of one of my clients at my office but appeared a my door an hour and a half after starting saying that there was no point in continuing as the records kept by us for the client he was inspecting, were the best he had seen in twenty years.

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My photo
By Matrix
02nd Mar 2017 09:52

I may look at VT since you can file the quarterly returns from there. If the client would never go onto the cloud and you do it all for them (or they use spreadsheets) then this would be an option.

I would only use FreeAgent or Xero if the clients did the bookkeeping themselves, no point if they never accessed it.

I have spoken to two of the suppliers above about costs.

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Hallerud at Easter
By DJKL
02nd Mar 2017 10:29

Well, depending on business size I think a fair few will operate with a Clark's box, I may have a few of the larger operators using Timberland boots, but they could be the exception.

The poly bag brigade have diminished a fair bit since the retailers slapped their charges, though bags for life are very popular.

Reality is client lists will likely split in two, those capable of maintaining records and those that will require us to do it for them, whilst software choice for the former will need to be a compromise between fitting into what client is able to use and what fits with accountant's systems, for the latter the choice will really be made on what the accountant wishes to use as he/she will likely be the sole party using/looking at the software/its output.

Now, which smart software house will develop a platform that can readily extract the data from the myriad applications/solutions clients will wish to adopt and act as a distribution centre to HMRC re same?

At the end of the day for a practice it will be tracking and controlling which have been lodged that is key so a unified application recording quarterly updates and reminding on status will be essential.

MTD is likely merely going to be a vast logistics issue of recording what needs done, when it needs done by, its progress and its completion.

Chasing clients will now become our entire life!!

Thanks (4)
Replying to DJKL:
Tornado
By Tornado
02nd Mar 2017 10:56

Your summary is good.

"Now, which smart software house will develop a platform that can readily extract the data from the myriad applications/solutions clients will wish to adopt and act as a distribution centre to HMRC re same?"

This is a good general description of what I am looking for. A software package that is flexible and can easily adapt to the needs of Landlords of all sizes and small businesses whether soles traders, partnerships or companies and eventually larger companies. etc.

The software needs to be partitioned in such a way that clients can maintain their records if they wish but access to other sections (such as the preparation of final accounts, statutory company accounts, corporation tax returns, Payroll, etc) can be restricted to the accountant or any other combination that the client and accountant agree.

All of this to be MTD compliant, accounting standards compliant and (as DJKL suggests) includes a comprehensive system of recording the submission status of each client.

This is all to obvious, of course, which I why I think no one will create such software. It falls into the same category as my argument for the Government to commission complete and comprehensive MTD software for all to use and does everything that the Government require. This is the obvious progression for MTD but it will not happen.

Even the obvious advantages of moving from a 5th April year end to a 31st March year end are ignored by the Government. I think it will be a running joke that the Government strive for the UK to be one of the most digitally active countries in the world ........ but this does not include a digitally logical tax year end.

This is priceless !!!

https://www.accountingweb.co.uk/tech/practice-software/mtd-pilot-offers-...

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Teignmouth
By Paul Scholes
02nd Mar 2017 12:29

I think accounting software companies will be daft to not offer a basic free MVP (Minimum Viable Product) for say 3 line account businesses. There's a huge potential market out there (probably without accountants being involved) where they can be captured now and migrated to more sophisticated subscription systems as their businesses develop.

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Tornado
By Tornado
02nd Mar 2017 12:47

Also, should we support British Companies or will billions of pounds be spent on accounting software created and operated from outside of the UK ?

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Replying to Tornado:
Teignmouth
By Paul Scholes
02nd Mar 2017 15:07

If we follow that logic, should we ban UK software companies from having foreign customers? Or maybe banning IT and the Net is probably a better option?

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Jennifer Adams
By Jennifer Adams
02nd Mar 2017 14:28

The 'free software' will be a very basic 3 lined as in enough to declare income from one property but income being in excess of £10K. The software providers arent silly - they will have to recoup their large costs of creation and compliance with the new regime from somewhere .... give you one guess who from. And thats not being nasty - just practical.

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By llysty
03rd Mar 2017 11:27

This is a question that we have spent the last 12 months considering. We probably don't quite qualify as a smaller firm and so have access to a particular cloud solution at significantly lower cost, that with integration with our accounts production software made the decision itself.

In the year though we spent a long time considering the impact of being locked in to a single provider, how clients will warm to our solution, how we deal with recharging costs, etc. None of the questions are easy to answer as there is no one solution fits all either at practice or client level. In the end we made our decision on the basis of what we considered we could operate most efficiently when MTD hits and of course cost.

Ultimately then I think the solution that's right for you will be the one that allows you to work most efficiently - this may mean that you need to be open-minded about how you work, how your clients work with you and how you educate your clients. We see our biggest challenge over the next couple of years is educating clients so that we can deal with MTD in the most efficient way possible. For example, explaining bank feeds into cloud software - potentially very efficient for us but very challenging for a large number of our clients to accept as safe and reliable.

I would say though (in response to another poster in this thread) I don't see any benefit in waiting. The solutions for MTD are already out there and will not change significantly. We believed the HMRC response to consultation would be the time to stop waiting which is why we have spent the year (and last 6 months in particular) analysing the how we would practically do it. Since MTD clearly will not now go away, we have already started the implementation. The education of clients is going to take time and we could see no alternative to putting that time in pre-MTD - post-MTD we figured we would be under-pressure.

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Replying to llysty:
Teignmouth
By Paul Scholes
03rd Mar 2017 17:39

Having spent 5 years educating my clients in Cloud accounting there really is a silver lining in how much more efficient everything can become.

There's a common misconception on here that clients (that great amorphous mass of robots) are too stupid to take on the book-work, but this has not been my experience, plus educating them on the Cloud stuff is so much easier than on the deskbound stuff, Skype & its screen sharing was a godsend in the early days.

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RLI
By lionofludesch
03rd Mar 2017 12:35

Can't believe we're discussing what software to use before we even know what the software will need to do.

Cart and Hoss spring to mind.

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Replying to lionofludesch:
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By llysty
03rd Mar 2017 13:49

Sorry lionofludesch but the 'what the software will need to do' was clear from day one of the consultation (keep books and file a quarterly summary to the gateway). HMRC have been working with developers from day one and so the 'how' went into testing with developers last year.

The software we will use will be (largely) the same software we use for bookkeeping now - the main developers seem to be indicating that they will be MTD ready in the coming weeks ready for MTD beta opening shortly.

All of which is a long winded way of saying the cart and hoss are appropriately aligned and are off already!

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Replying to llysty:
RLI
By lionofludesch
03rd Mar 2017 14:47

Who'll be eligible to submit three line accounts hasn't been clear since day 1.

And the goal posts will probably be moved on turnover levels.

Will the taxpayer need proper accounting software if he only needs to enter three (maybe two) numbers in his PTA ?

I disagree - there's a lot we don't yet know.

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Replying to lionofludesch:
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By llysty
03rd Mar 2017 15:27

The day 1 reference was to your statement about knowing what the software needed to do.

I've been to a number of HMRC discussions and I really don't think the £10k+ threshold will move and it's the timeline for this group that's open to (political) debate. HMRC have made it very clear that it's the £10k-VAT threshold group that are in their sights. I would love you to be right but short of cold feet from the government, I don't think you will be.

The answer to your question re proper accounting software for the 3(2) liners is I understand sort of. The 3 liners don't gain an exemption from the requirement to keep digital records but I understand that HMRC will concede to the use of Excel etc but will only accept submission from approved software (so will require import/export between spreadsheet and software).

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Replying to llysty:
RLI
By lionofludesch
03rd Mar 2017 17:07

llysty wrote:

The answer to your question re proper accounting software for the 3(2) liners is I understand sort of. The 3 liners don't gain an exemption from the requirement to keep digital records but I understand that HMRC will concede to the use of Excel etc but will only accept submission from approved software (so will require import/export between spreadsheet and software).

If payments don't have to be analysed by the taxpayer - on the grounds that he only submits the total - that does make a difference.

Again, we don't know. You say that "you understand that....." - not that "you know that...." Most businesses won't need this until 1st April 2019. Can we not wait until Wednesday or such time as HMRC gets off its corporate backside and gives us some clearer information?

And, personally, I'd like to trial some software before I recommend it. Not just have the software house say that it'll be available sometime in the future before folk have to use it.

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Replying to llysty:
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By D V Fields
19th Mar 2017 14:41

What is the definition of quarterly summary, please? I couldn't find it in HMRC's blurb; so will look again.

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Replying to D V Fields:
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By D V Fields
19th Mar 2017 20:17

According to the Draft Finance Bill 2017: Making Tax Digital for Businesses published 17 March, 2017 the Government confirms (page 10) businesses have to update HMRC quaterly with income and expenditure. Business with turnover upto £15,000 p.a permitted to submit three line accounts can use the same data for their quarterly returns (page 11). The precise definition of the "summary" of this income and expenditure remains undefined. It could of course be just two figures; or perhaps all transactions or somewhere in between. I guess the delay might be HMRC's wish to go as far up that ladder as they dare. Summarised data equivalent to category headings on tax return seems appropriate - and possibly HMRC's presumed hope of being able to provide any meaningful guidance to tax liability. Bless.

Until resolved there can be no real evaluation of any software for its transmission facility; but one can presume the methodology will be similar to current online VAT Returns, RTI, CT Returns and accounts submission etc. Alas, as a bolt on to existing accounting software I guess there will be no improvement on what is currently on offer.

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By petersaxton
03rd Mar 2017 15:01

I think the key will be the exceptions amount. Besides people who can't use the software for various reasons they could have exceptions under the VAT registration level of £83k or whatever it will be. Once HMRC judge how that is going they could reduce the exception level to £60k, £30k, £15k every couple of years giving them time to judge the effect. They could then decide to delay the next reduction if there are problems and/or change things. I'm in favour of digitisation but it is important that accountants can help their clients. If somebody like me has a minimum of 50 clients I have to introduce to online bookkeeping at the same time it will be a nightmare.

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By petersaxton
03rd Mar 2017 15:40

"Why not stagger the introduction to online bookeeping?" I hear you say!
Most clients wont transfer to online bookkeeping unless they need to.

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By lh3f9764bg1g
07th Mar 2017 10:44

We are seriously considering what software might be appropriate to the majority of clients. Surely access to online bank feeds will be vital (as it is difficult to get some people in once a year as it is) and surely an online and collaborative approach will be key - otherwise the deadlines will be unachievable (I think). Cost too will be a major, major concern and it seems likely that there's going to have to be some cost (i.e. spreadsheets and possible free software are unlikely to work for all or even many clients). At the moment we are considering Sage One and Quickbooks Online as likely options - but we are far from convinced and are open to persuasion. We too are keen to know what solutions others are proposing to use.
Chris.

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Replying to lh3f9764bg1g:
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By janefg
07th Mar 2017 11:06

You saying that bank feeds are essential presumes that all self employed people have a separate business bank account. In my experience, most of the smaller ones just have one account through which all their business and personal transactions are fed. In these cases, one would spend a lot of time re-analysing personal items from a bank feed

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Replying to janefg:
RLI
By lionofludesch
07th Mar 2017 11:14

We don't yet know whether we have to record all the transactions on the bank account or just the business ones.

If it's all of them, I'll be recommending that my clients open a separate account and keep the number of transactions as low as possible.

Once again, we're all saying what we will and won't do without waiting for the facts.

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By John Wheeley
07th Mar 2017 12:19

With MTD on the horizon, I have started to move my spreadsheet and cashbook clients onto cloud based software. This will allow me to ensure that data is up to date and available for quarterly reporting.

I am currently trialling Quickfile. Clients seem to get on well with it. It has similarities to the old Sage Line 50 and has been easy to learn.

The best bits for me have been:
1 Importing Bank Statements
2 Auto Tagging of bank transactions

Both of these features are brilliant time-savers. Quickfile is also reasonably priced, even if you decide to pay a bit extra for an Affinity Dashboard.

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Replying to John Wheeley:
By Charlie Carne
19th Mar 2017 14:56

Why on earth would you trust the core part of your professional, chargeable services to a platform that advertises itself as free? Take a look at a proper, commercial accounting system like QuickBooks or Xero.

You say that its best bits are the bank imports and auto-tagging. That's the bare minimum for a cloud bookkeeping package these days. That's like saying your favourite car is X and its best feature is a steering wheel. If Quickfile has no feature that is better than basic bank integration, then it is a very poor product indeed.

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Replying to charliecarne:
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By D V Fields
20th Mar 2017 02:51

Perhaps he did look at the commercial software packages you suggested, along with many others; and made his conclusion.

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Replying to charliecarne:
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By John Wheeley
23rd Mar 2017 16:27

I have looked at most of the 'proper, commercial accounting systems', including QuickBooks and Xero, and was not impressed with them. I found that they are aimed at accountants and use too many technical terms for smaller clients to understand.

I could not move to VT / Dropbox because VT does not work on the Apple Mac, as used by several clients.

Quickfile has all of the features required by my clients (easy to use, fast data entry, sales and purchase ledgers, VAT Returns, annual accounts etc) and I am very pleased with it.

There is no need for my clients to pay £20 per month for QuickBooks or Zero.

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By mfbrown185
19th Mar 2017 12:14

I agree with Matrix about VT. Our skill set in the practice and client base means that many clients use spreadsheets and won't be (easily) moved over. VT has a spreadsheet input option or you can use their "classic style" journal entries to bring in the spreadsheet totals to trial balance and then file for MTD.
Cash traders or those on cash accounting - bank statements can be imported from Exel.CSV files (converted using Able2Extract)
and that works well also.
We have already converted several Ltd's and sole traders records over to VT and we are comfortable that it is a workable solution.

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By LAC47
19th Mar 2017 12:25

This is all interesting reading as by sharing information we can all hope to benefit, during this very difficult transition

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By JGAgent
19th Mar 2017 14:26

Front office V back office: Spreadsheets to Software
For clients part of the justification of the cost of moving to a software produce V Spreadsheets and diaries I also consider the increase in potential for purposeful business information and financial management.
I have looked a several packages and so far I like FreeAgent as it works for front office and back office needs. My clients, who generally fit into to the "small trader with several customers or projects, and use subcontractors can time track" group, produce estimates and invoice manually but software would help this, particularly using time tracking for the sub contractors and billable and non billable hours. I then do the manual book keeping and check everything before submitting quarterly VAT returns or monthly CIS returns. My clients own their sales ledger I manage the rest.
As the accountant I am looking to view and support cash flow advice which includes self assessment, and VAT payments, and support my clients with better management information and business strategy discussions.
I have perfectly good spreadsheet models I currently use that I have developed for each client over the years, with out the additional monthly cost and I am my own help desk! The though of moving a whole client base to off the shelf packages leaves me in a cold sweat, and take each client one by one and look at their business model and consider front office benefits, I feel like I'm doing more to help my clients shift into the digital age, rather than just finding the MTD solution for the back office Tax returns.
FreeAgent is good as a product, the phone app for the clients is a useful onsite tool, but when you call the sales team they don't want to give the accountants anything, and they seem rude and not interested in the smaller accounting practises, they want to sell a centralised solution which means signing up all your clients and the on-billing and keeping track of admin for the software provider, which I'm not personally keen on. So I have decided each client can subscribe separately then I'm not tying my everyone to one particular supplier.

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By C J EYRE
19th Mar 2017 16:44

MTD is something I will not even consider for my clients for the next 12 months as I am sure requirements from the Revenue will alter. Why start to do things now, if it is going to change again. I remember all the problems when Self Assessment's came in in 1996. We were years sorting that out

As at the moment, only 3 of my clients use a computer for their book keeping. The reason, as I keep telling Sage and the rest, is that most of my client would use a computer if there was a simple cash in and cash out system. They do not understand days books, ledgers and journal entries, none being registered for VAT. All the programmes I have looked at are just too powerful for a small painter & decorator. They are more that happy using a duplicate invoice book for their sales invoices.

If there is such an easy cash in/out system out there, then please can somebody let me know.

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Replying to C J EYRE:
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By John Wheeley
23rd Mar 2017 16:33

I completely agree with you, most accounting software is far too complicated for small clients.

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Replying to C J EYRE:
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By D V Fields
25th Mar 2017 15:56

Yes, there really does appear to be a big gap in the market!
Could be gone sometime....wish me luck!

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Replying to C J EYRE:
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By JGAgent
28th Mar 2017 18:09

I completely agree, but a simple invoicing system at the front end, is all that's required for the client part of a book keeping profile, but if paying a licence fee then I would expect the software to provide the accounts summary (Trail Balance) at the end of the year for my use and to be HMRC compliant. Freeagent works well in that you can lock the users to different sections, so I can't scare my clients by allowing them to see the "magic" bits I do for them! They can raise sales invoices and email straight to their customers, nearly all my clients are part of the army of small trades who keep our micro economy going! They defiantly identify with the benefits of invoicing directly for jobs as they have done, and they aren't a set of boring old baby boomers who still prefer to write lengthy narratives when a smiley will do ;-) Ive got several using google calendar now to manage diary and that's been a great success, shared access applications are the way forward for small businesses.

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Replying to C J EYRE:
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By JGAgent
28th Mar 2017 18:13

.

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Replying to C J EYRE:
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By JGAgent
28th Mar 2017 18:14

.

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By MartinLevin
20th Mar 2017 15:27

I also attended a Making Tax Digital (sorry, guys, but I DON'T use initial letters as we learn in WORDS) "lecture" (on The Ides of March). We (even the Revenue) are in the dark. When it is marketed, we were told "take photographs on a smartphone". What good is that? My own ABC Accounts Book was "computerised" following a contact that I met when I exhibited at Accountex 2016. The developer is under instructions to keep it "digitally compliant". So wait-and-see.

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By MartinLevin
20th Mar 2017 15:27

I also attended a Making Tax Digital (sorry, guys, but I DON'T use initial letters as we learn in WORDS) "lecture" (on The Ides of March). We (even the Revenue) are in the dark. When it is marketed, we were told "take photographs on a smartphone". What good is that? My own ABC Accounts Book was "computerised" following a contact that I met when I exhibited at Accountex 2016. The developer is under instructions to keep it "digitally compliant". So wait-and-see.

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By Homeworker
02nd Feb 2018 16:13

Well we are just about a year down the line now and MTD for VAT is only a year away.

I have just read this in an AW article by Dale Simpson:
"Choosing the correct software for clients is extremely important. In the South West there are some ‘digitally challenged’ geographical areas with either weak or unstable internet signals. Although these clients’ internet signals may cope with submitting VAT returns to HMRC via the API it is either not strong enough or not stable enough to run a cloud accounting package on. Therefore, for some clients, an MTD compliant desktop solution will provide the right answer."

I would dearly like to know where these non-cloud accounting packages can be found, as trying to find anything on google is a nightmare! I want to get some of my less confident clients on to software in the next couple of months, so that they have a full year to get used to the products.

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