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MTD software for property agent's landlords?

Anyone know of software for property agents that will produce MTD data for their landlords?

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This is a real long shot, and I doubt anyone has got this far whilst MTD is so murky re its workings, but does anyone know of any software company developing software for a property managing agent to ingather  rents/pay costs and either forward these in detail to landlords  electronically for import into landlord MTD compatible  software, or  the managing agents could themselves register as a Accounting Service Provider/Tax Agent and themself submit quarterly returns direct on behalf of their landlords.(with appropriate authorisation)

Maybe there is a possible synergy between a  firm of accountants and a firm of surveyors re this.

The  latter seems difficult to expect but given managing agents do a fair chunk of the landlord's intromissions already, and would just in addition likely need to somehow enter  some form of Dr cost Cr cap introduced   loan interest and insurance journal that has been paid directly by the landlord, as property management agents rarely deal with either via their records, it might be possible.

I ask as I was chatting on other matters with the director of a  firm of Chartered Surveyors today(actually Monday re delay getting this posted), we were discussing possible software they might need re expanding their management offering, I mentioned MTD looming (got blank look re this- not much awareness beyond accountants it seems) so I said I would see if there was anything out there.

This effectively would be property managent software (rents received, fees applied, direct costs paid, balance paid to landlords) but with some MTD software compatibility or direct submission capability for say initially up to 250-500  landlords.

Any software company thinking along these lines please drop me a note and if things come to pass I could introduce them to the surveyors.

I will this weekend be going abroad so apolgies in advance  for any delayed response  to anyone who does respond

Replies (13)

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Ivor Windybottom
By Ivor Windybottom
29th Jun 2022 11:45

I'm not sure about specific letting agent software, as I assume that is often significantly customised to suit the agency, but for landlords running their own portfolio https://www.smartpropertymanager.com/ has some tax functionality, but I don't know their plans for MTD integration.

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Tom Herbert
By Tom Herbert
29th Jun 2022 16:35

I can't specifically answer your question, but 'Arthur' deals with larger landlord portfolios and commerical landlord operations - would be surprised if they didn't have MTDI plans at least in train...

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By Calculatorboy
30th Jun 2022 00:49

Back to the future marty mcfly

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By NotAnAccountant2
30th Jun 2022 09:44

I don't know of any software but this is how MTD for landlords ought to work.

For any managed property, the agents should have to report (monthly or quarterly, doesn't really matter and they must already have processes in place to report to their clients so it should be no more difficult to implement that MTDfVAT was... - which many presumably are already using):

o HMLR property reference (there might be some old properties that don't have this, IIUC, first registration is free so it could be made a condition of letting a property)
o NINO(s) of taxpayers (or UTRs, gateway ID, whatever magic unique number HMRC is using this week)
o Income
o Expenses
N.B. I do not think the agents should be responsible for deciding if expenditure is capital, revenue or disallowed (or anything else) nor should they be responsible for reporting accrued income where a tenant is in default. They are literally just reporting "this is the money we got from the tenant" and "this is the money we spent on behalf of our client(s)" They also don't keep track of the proportions applicable to each taxpayer.
(deposits are the only thing I can think of off the top of my head that might go wrong here, presumably they shouldn't be reported at all unless/until some/all of a deposit is forfeited by a tenant)

(If the property isn't managed then the (a) taxpayer/owner is responsible for reporting this information - this could be "phase 2" once the managed properties are dealt with and the issues sorted - I have less sympathy for taxpayers who will be in this boat as they've chosen to take on the management of the property themselves)

On the taxpayer side the taxpayer is able to login and see what agent(s) have reported against their NINO and they are able to report to HMRC what proportion of a property they are beneficially entitled to. Their "obligation" might be to do this every quarter. They might be able to flag where something is wrong (but should also be responsible for letting the agents know - and, in general, it seems unlikely that there can be many disputes here as the agents are only reporting to HMRC what they're also reporting to their clients)

They might (optionally) provide adjustments - expenditure that isn't revenue is the obvious one - although this becomes problematic when properties are jointly owned so easier initially at least to just let the taxpayer see what the agent has reported to HMRC. Egregious errors maybe need reporting to HMRC but I suspect this will just result in noise where people object because "that new tap" didn't appear in a particular quarter's figures rather than things like "the figures are reported in pence instead of pounds"

In regular SA those figures flow through to the SA return. The taxpayer can amend these figures (and likely there will be amendments in all but the simplest cases as it's rare for 100% of the expenses to be done via the agent)

Now HMRC can "data mine" to find properties where income is missing from SA. Some of the time that is going to be because the agents don't have the full list of who is entitled to the income - that can be fixed with time - and sometimes it will be because a passive part owner has never been declaring income (possibly unbeknown to the other owners) which must be particularly hard for HMRC to spot.

I suspect the non-agent managed properties is likely to have more tax evasion, and that will be a tougher nut to crack, but at least now HMRC have a list of HMLR properties that are declaring income. If they identify a property that is let that isn't on their list then they know that's worth investigating.

(Obviously properties let through companies or any other ownership structure will have to be brought in too for this to work.)

And collecting back taxes and penalties must be particularly lucrative for property income as, even for foreign nationals living abroad, they have, by definition, an asset in the UK.

I can imagine there might be (presumably rare) corner cases where one HMLR property reference corresponds to two different lets, possibly even by two different agents, or by two different self managed landlords. HMRC will need to make sure they don't inadvertently show information to the wrong taxpayer. This shouldn't be hard as the reported data includes the NINO but they shouldn't assume that the HMLR reference on its own is sufficient to disambiguate lets.

There you are, HMRC, my MTD ITSA for property proposal. Further refinements might be available for $HUGE_CONSULTANT_FEE. (But probably not, I like my current job)

And a small step towards PAYE for property income (for which my gut feeling is that it will never work well enough but you've now got the information to start seeing how close it could be - the key issue, although you won't care, is taxpayers with not much income who would be overpaying tax and getting (what will be small) refunds later)

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Replying to NotAnAccountant2:
By ireallyshouldknowthisbut
30th Jun 2022 10:03

Current of course you just get a bit of paper from your agent annuals, and type in two figures into your tax return, and add in anything you paid yourself.

What could be easily done is add in addresses of the properties let to the return to allow HMRC to cross check easily to the land registry etc. But that would involve actual effort for HMRC to do such checks, so it wont happen. They used to get lists from letting agents of landlords but don't bother with that any more either.

if HMRC were serious about tax collection they would put in a withholding tax at source on rents, reclaimed via the tax return. Or indeed quarterly reporting which would at least then provide an incentive to to do it. System already exists for non-resident landlords, although very poorly enforced.

Ditto CGT, withholding taxes are used widely in the rest of the world.

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Replying to NotAnAccountant2:
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By Hugo Fair
30th Jun 2022 11:59

Well there's the (missing) specification ... now all we need is for:
* HMRC to get on board with it; and
* Someone to develop the software!

But it's truly sad (nay a disgrace) that HMRC have had next to nothing to say on the subject so far ... and I fear will find most of your points a novel concept.

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By maxmillion
30th Jun 2022 11:19

One of my clients uses a system called Landlord Vision.
Comprehensive accounting system suitable for any landlord with more than 2 properties or tenancies.
There is a free trial period too.
I believe it is MTD ready.
And once the data is input for each property, it all becomes easier to manage.
It is far better than battling with multiple spreadsheets as we did before. And before that, we found Sage and other basic packages, don't provide the same range of relevant reporting.

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Noel Fraser
By noelfraser
30th Jun 2022 11:49

Hi DJKL

I believe we have a solution at Aqilla. I will send you a private message with more detail.

Regards

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By mrshamilton
30th Jun 2022 14:54

I've seen the Hammock property software for landlords and it looks ideal

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By MartinJones
01st Jul 2022 01:10

Have you looked at or spoken with Eurolink? https://www.eurolink.co/
If their Veco product doesnt support this they might be interested in adding it.

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By NotAnAccountant2
01st Jul 2022 09:02

I don't see how any software can deliver what DJKL asked for in the question currently.

"forward these in detail to landlords electronically for import into landlord MTD compatible software"

because there needs to be a defined interchange format to support this.

HMRC need to document (and mandate) what must be supported. This can be very simple - a single line in a csv file with values in a particular order (a header and the data would probably be better) - but all software needs to support exporting it and all software needs to support importing it. (A header with a version number might be most sensible so this can be changed in the future and compatibility maintained)

This is also required to support jointly managed property as HMRC currently have it working. (Some) landlords are going to have to collect MTD data from multiple sources (multiple properties with different agents, multiple properties with different ownerships) and then merge it before submitting and there might be no software in common.

FWIW HMRC also specify that MTD software must be able to export the data in the landlords MTD app - but they still haven't actually specified what the minimum set of data is, nor what format the export needs to be in.

I think, at a minimum we need csv with:
startdate,enddate,tag,amount

startdate,enddate would possibly mostly be the same but are needed to support accruals.

TAG needs to be a list of (predefined) values. Something like:
RENT-DUE
RENT-IN
REPAIR
INSURANCE
FINANCE
etc

Apps that only support cash accounting might not have RENT-DUE records and would drop them when importing - but surely even for cash accounting you want to do a reconciliation between the rent you've received and the rent you should have received?

I'll let the accountants here come up with the minimum set that is needed (HMRC should talk to accountants and work this out). While software might support more tags for better analysis, it should be able to export using only the defined tags (which should be the minimum necessary to get ITSA returns right. If you never need to distinguish between insurance and repair then they should be under a single tag even if accounting software needs to distinguish them to get VAT right - I think the tax return has separate boxes for insurance and maintenance so I guess they do need to be separate in some cases)

I've said all this to HMRC too (not in so many words or so much detail). But I'm a nobody software engineer who wants to write software that works which appears to be orthogonal to whatever HMRC want from MTD ITSA (which isn't clear)

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Replying to NotAnAccountant2:
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By Hugo Fair
01st Jul 2022 11:29

"I've said all this to HMRC too (not in so many words or so much detail). But I'm a nobody software engineer .."

I know what you mean ... I've sat in too many meetings to count with HMRC (including ones specifically set up for software developers) where their attention seemed split between working out how to repudiate any concerns raised and eying up the attendees' faces wondering which would benefit from a slap with a wet fish.
Listening & questioning were not much in evidence!

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Glenn Martin
By Glenn Martin
01st Jul 2022 13:14

Look at Arthur its the best I have seen, they will also have the facility to do MTD filings from it. I am in talks in supporting a property agent who are looking to do the filings for their clients for an enhenced managment fee using the Arthur system. It is very good for those people who want to be a good landlord and make a business from it.

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