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Software to use for MTDIT

is anyone considering a switch

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Please no more MTD rants, this is just a question about software for those that are not retiring!

When MTD first started we went mainly with Sage purely because we were able to get licenses for £1 a month.  Since then we have become more and more unhappy with Sage and have clients on Sage, QBO, Xero and Freeagent.

In the next 12 months we are now going to have to put 60 clients onto software and are consdering our options, do we move everyone we can onto a new software? Cost is a very big consideration here, and I see Pandle will cost £2.50 which is about right for our clients, but what is it like?  Xero, I dont see the point of ledger without bank feeds, so that would be £5 for cashbook. We rejected the latest offer a few months back for 100 for £100 with QBO as it would have meant paying £100 a month for 2 years before we needed the licences, and then what happens when the cost goes up.  Another option would be to push clients to open a bank account that gives them free software, but how long will that last?

What is everyone else planning? 

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By ireallyshouldknowthisbut
11th Aug 2021 17:03

For my client its far too early at this stage to be pushing clients onto software who are too small and there is no business case for this outside of MTD.

I will stick with VT & excel for now and the KISS principle.
The only prep I am doing is telling client to get a PTA next year, and from now to ensure its all booked via dedicated bank account so if we have to move from "MTU" to "real data" in 4-5 years time we can just feed it in and find someone to mash the keyboard with minimal involvement of the client. I am wondering if I can find a bookkeeper or just "someone" to do it. its clearly not an accounting role. Be ideal for a school child or similar who can 'do computers' and wants some pocket money.

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Replying to ireallyshouldknowthisbut:
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By cbp99
11th Aug 2021 17:19

Agreed, VT and Excel, and most importantly, a dedicated bank account which has all business transactions, and no others.

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
11th Aug 2021 20:14

I don't understand your reference (here and in other threads) to "in 4-5 years time". What is it that one of us has assumed wrongly?

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Replying to Hugo Fair:
By ireallyshouldknowthisbut
12th Aug 2021 08:58

@hugo, right now all you need to do is file "something". The only penalty is if you miss 4 filings, and you pay £200 for the 5th and onward failing.

This means MTU to file "something" on or before 5th August 2024, which is 3 years away is the first known penalty point, and I suspect HMRC will waive penalties for the first 12 months in any case, meaning you get until August 25, 4 years.

There may be a point in the future when the filings actually matter (right now they have no value at all in computing your tax bill), such as if quarterly payments on account arise (which seems highly probable), at which point you need to file using *actual* data as opposed to garbage (unless the clients dont really care so long as they pay the right amount eventually and want lower compliance costs) but I know for a fact some of our clients wont even be with us at that point (our churn is about 5% PA, so perhaps 20% of the current lot now, so why go through the pain of software with them), and it might well end up like the failed iXBRL project for CT where HMRC completely ignore the data anyhow and there are zero checks on it, so its too hard to say. Probably be a new government in by then too. Many, many, possibilities.

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
12th Aug 2021 13:13

Aaah thanks .. I hadn't picked up on your new acronym (which I presume represents Making Something Up and not Making Tax Up)!

I certainly take your point that the future remains uncertain (and the schedule for introducing further changes even more so) - with little incentive as an Agent to be on the bleeding-edge, let alone to try dragging clients there, kicking & screaming!

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Replying to ireallyshouldknowthisbut:
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By North East Accountant
19th Aug 2021 12:57

I can't imagine HMRC not being bothered about the accuracy of a filing.

Also, as a professional I wouldn't want to be advocating or advising a client to make a deliberately incorrect filing.

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By Wanderer
11th Aug 2021 17:02

Number of clients on Pandle already. Probably the one that we get the least queries from clients about!

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By johnhemming
11th Aug 2021 18:01

This is the list of companies that currently offer this:
https://www.gov.uk/guidance/find-software-thats-compatible-with-making-t...

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Replying to johnhemming:
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By Hugo Fair
12th Aug 2021 13:23

That's an alarmingly short list (of mostly unknown/unproven products).

Of course, I know you're not personally responsible for how this list is managed, but where are the products being used by the majority of Agents and/or taxpayers?

And why are no 'bridging solutions' listed? (Obvious cynical answer I guess).

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Replying to Hugo Fair:
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By lionofludesch
12th Aug 2021 15:40

Hugo Fair wrote:

That's an alarmingly short list (of mostly unknown/unproven products).

Of course, I know you're not personally responsible for how this list is managed, but where are the products being used by the majority of Agents and/or taxpayers?

And why are no 'bridging solutions' listed? (Obvious cynical answer I guess).

Still eighteen months to go. I wasn't keeping score but I suspect there was a similar number eighteen months before MTDfVAT.

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Replying to lionofludesch:
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By Hugo Fair
12th Aug 2021 15:56

True ... however the HMRC list is followed (on the same page) by a second list - of "Software in development":
On the +ve side this includes Taxcalc; on the -ve side there are only 4 others listed.

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Replying to Hugo Fair:
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By Rgab1947
19th Aug 2021 12:05

Only one I have heard about is Iris (expensive). Rest I did not even know existed.

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Replying to Hugo Fair:
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By johnhemming
19th Aug 2021 12:30

The list includes bridging, but that is not highlighted by HMRC.

HMRC are adding new requirements and as tax law changes I would expect the process of change to continue.

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Replying to johnhemming:
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By tracey2412
19th Aug 2021 11:03

as HMRC have not yet finalised their requirements, can't see how any software provider can claim to be compliant yet.
I spoke recently with a top chap at one of the larger software houses who is NOT on that list yet & he said they are working on what they THINK HMRC will want but the sheer number of variables (more than one trade, landlord & trade, employed & self-employed, landlord with ownership sole, with partners, etc.) is mind boggling.
I'm working on persuading current non-online business owners to start to use a system that makes it all in order & easier now regardless of MTD but it is a fair assumption that most electronic software is future-proofed & will upgrade accordingly in time.

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Replying to tracey2412:
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By johnhemming
19th Aug 2021 12:31

>can't see how any software provider can claim to be compliant yet.
There is a live MTD ITSA system functioning which is used by a small number of people to submit their tax returns.

Hence any firm that enables that has to be compliant.

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Replying to johnhemming:
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By Hugo Fair
19th Aug 2021 12:56

I'm having a (more than usual) cynical day - not directed at you John - but ...

* compliant doesn't mean contents are correct (or even that HMRC's systems will treat any output correctly), merely that software meets the technical specification given to developers; and
* the specification will keep changing (particularly under the aegis of 'agile' development), but the knock-on impacts of this are not tested by HMRC in terms of the compliance list.

So the question shouldn't really be "how any software provider can claim to be compliant yet?" ... but "what reliance can a user place on the compliance claimed when setting out to select and then use new software?"

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Replying to Hugo Fair:
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By johnhemming
19th Aug 2021 13:27

If the software is not "compliant" then it does not have an interface into HMRC's systems and some other system would have to be used as a bridge.

To what extent HMRC should get involved in anything other than defining a minimum set of requirements I don't know.

In the end there is time for accountants and book keepers to check out the options that exist today and get an understanding of how things work.

However, you are right to say that although interfacing with HMRC's systems is a minimum requirement it is not the only issue that should be used to determine which system to use.

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Replying to tracey2412:
By petersaxton
26th Aug 2021 18:53

Why does it matter if somebody is a landlord and self employed? Surely two sets of bookkeeping is needed?

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Replying to petersaxton:
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By johnhemming
26th Aug 2021 19:01

You could, of course, have a single bank account into which all the payments are made and all of the expenses charged. Having separate bookkeeping would be a nuisance.

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Replying to johnhemming:
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By Winnie Wiggleroom
26th Aug 2021 19:20

johnhemming wrote:

You could, of course, have a single bank account into which all the payments are made and all of the expenses charged. Having separate bookkeeping would be a nuisance.

You can have more than one bank account on software thats not the issue, the issue is if I have Joe Bloggs the builder who happens to own a buy to let, does that mean that I need two software licences or will there be some way of putting it all through the same one, if its all on the same one how will that work, if its two different ones surely that cannot work either, what about if he is also a partner in a business?
These are not unusual situations, and right now we do not have the answers

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Replying to Winnie Wiggleroom:
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By johnhemming
27th Aug 2021 09:39

There is MTD ITSA software around where a single licence will handle both property and self-employment even if it is in the same bank account.

If he is a partner in a business only the annual total of his profit share goes into MTD and the business really must have a separate account as the money has different ownership.

As it currently stands partnerships don't submit MTD quarterly returns. I expect this will happen in a similar manner to sole traders at some stage, but probably not in the first mandatory period.

>These are not unusual situations, and right now we do not have the answers
Those are the answers.

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Replying to johnhemming:
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By lionofludesch
27th Aug 2021 10:57

johnhemming wrote:

There is MTD ITSA software around where a single licence will handle both property and self-employment even if it is in the same bank account.

If he is a partner in a business only the annual total of his profit share goes into MTD and the business really must have a separate account as the money has different ownership.

Oh, I don't know, John.

I imagine that there'll be many MTD submissions which don't reflect the reality of what's in the bank account.

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By SXGuy
11th Aug 2021 19:24

Already with two companies that will be Mtd compliant so I won't be moving anywhere.

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By Paul Crowley
11th Aug 2021 20:32

No plan until HMRC verify the rules
MTD VAT penalised the preplanners and rewarded those who left it until too late with easy cheap bridging software as an option
Clients can buy software as they see fit
It is after all their choice to comply or ignore for a year and see what happens
Cheap software is sold after the keen people pay the full up price

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Replying to Paul Crowley:
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By Winnie Wiggleroom
12th Aug 2021 06:23

Paul Crowley wrote:

Cheap software is sold after the keen people pay the full up price

That was not our experience last time around, we were an early adopter (with Sage) and got prices that I have never seen since, not even close in fact apart from the periodic bulk QBO offers.
I think its probably a case of looking out for deals over the next 8-12 months and maybe giving Pandle a try.

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By Duggimon
12th Aug 2021 09:16

I'm planning to use spreadsheets and bridging software which will I'm sure will appear at some point in the future.

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Replying to Duggimon:
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By johnhemming
12th Aug 2021 12:13

Duggimon wrote:

I'm planning to use spreadsheets and bridging software which will I'm sure will appear at some point in the future.


There already is bridging software.
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By NewACA
19th Aug 2021 10:51

There is an excel solution for mtd itsa likely to be out over the next month or so, 123 Sheets are taking email addresses of those that want to see their offering when it's ready.

https://www.accountingweb.co.uk/community/industry-insights/spreadsheet-...

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By davidbrewster
19th Aug 2021 11:03

https://www.jiosoft.co.uk/

I have been using that to deal with some of my own QUICKEN data going back to pre 2000 as it is no longer supported in the original simple form.

Intuitive and much more sophistcated than Excel for those small businesses not up to scratch with modern integrated accountancy software systems. Only £35 forever for multiple companies and two users.

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By kevinringer
19th Aug 2021 13:14

At this stage before MTD VAT I know of practices that moved their entire client base onto software, then HMRC announced we could use spreadsheets and some of those practices had to reverse what they'd done. The vast majority of MTD VAT software came out at about the time of mandation. Currently the list of MTD ITSA software is tiny. None of the software OP has mentioned (Sage, QBO, Xero, Pandle and Freeagent) are on the list. I'm sure they will eventually appear on the list, but so will possibly several hundred others, some of which may be better than those the OP has mentioned. Why put your clients onto software when something better might be available by the time of mandation? Also, the start date for MTD has been postponed several times. It might happen again. There's also a possibility HMRC may give some ground on smaller businesses and landlords. And at the moment, many businesses are still struggling with Covid and might not be here when MTD ITSA starts. So I'm doing nothing for now.

As to costs, it's the cost of digitising transactions that makes up the bulk of MTD costs, not the costs of software. We re-sell QBO licences at £10 a month and no one says they're too expensive, it's the cost/hassle of inputting the data that is the problem. So we only recommend software to businesses that would benefit administratively from software, not because of MTD.

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By I'msorryIhaven'taclue
19th Aug 2021 16:03

Regarding your final point, OP, I think you'd be on a hiding to nothing petitioning clients to switch bank accounts just to get free software.

Most of the business people I've come across - not all of them clients - seem happy enough with their bank; indeed, many give me the impression they would change accountant ahead of switching banks.

Speaking for myself, I'd rather pay for MTDIT-compliant software than go through the wrench of a bank change.

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By richardbishop
26th Aug 2021 14:13

The majority of our clients use Excel and so we have designed a spreadsheet for them to use with the aid of bridging software (assuming this will be available!).

A spreadsheet for our "rental" clients has also been designed - catering for up to 35 properties & 6 taxpayers - again, bridging software should do the trick.

A bit of a marathon task but helps me sleep at night now!

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Replying to richardbishop:
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By johnhemming
26th Aug 2021 16:31

There already is bridging software, but you will only really want to use the bridging process for quarterly returns. The sheer faff of doing bridging for annual figures will make typing it into some MTD software or other (that may also do bridging) easier.

Digital Links will only be required (at this point) for the quarterly returns. Hence, for example, if you have a number of transactions say that make up an AIA application you will only have to provide the total figure not electronically store the details as a digital audit trail.

It is, however, important to note that MTD ITSA will replace all the SA1nn forms so there is potentially a lot of data.

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Replying to johnhemming:
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By NewACA
27th Aug 2021 15:02

Hi John, you wrote: "...but you will only really want to use the bridging process for quarterly returns. The sheer faff of doing bridging for annual figures will make typing it into some MTD software or other (that may also do bridging) easier."

I thought the annual end of period submission, was just to say you have entered data for the year and its now all complete and correct, I wasn't aware you had to re-submit data again at the end, but this time for the full year.

I understood that you file:

- 4 x quarterly data submissions (and you can send in amendments to each quarter if necessary). And like VAT, its just the summary totals that go to HMRC, but these totals need to be digitally linked to the underlying data;

- You effectively just click on a button on the bridging software website to confirm the data for the year is correct and complete.

I don't see anywhere about re-sending again the full data for the year in the End of Period Statement documentation.

Therefore, in terms of Excel, don't you just upload 4 x spreadsheet totals to bridging software website, then on the bridging software website click a button to say the period of data is complete and correct?

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Replying to NewACA:
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By johnhemming
27th Aug 2021 17:33

ITSA replaces all the SA1nn forms.

Hence things like AIA etc need to be submitted as well, but without an audit trail.

Also CGT submissions.

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Replying to johnhemming:
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By NewACA
27th Aug 2021 18:33

Yes, that is what I understood as well- glad to know I haven't missed something.

That means all those other accountants talking about submitting rubbish and then just getting corrected annual figures submitted won't be able to submit data like that, as the business income and expenses are only submitted (or amended) by submitting quarterly figures. There is no option to file annual income and expenses in one go, only additional items such as CGT and Capital allowances etc as you say. The only thing they could do is perhaps submit rubbish for 4 quarters to meet the monthly deadline, then have until the following January to go back into the software and re-submit those quarters again once the year has passed, which would mean submitting income and expense data 8 times, instead of 4 times!!

Additionally, as you say, digital links aren't required for the likes of entering CGT, Capital allowances, NI Voluntary Contributions etc so I don't see a problem with using Excel to list capital allowances say and then the user enters a single answer for total capital allowances in the bridging software. Is that allowed?

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Replying to NewACA:
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By johnhemming
27th Aug 2021 18:51

I am not quite sure what I am doing. I have discovered an interesting mixture of Rum, Pomegranate Juice and Red Leicester cheese (not all in the same container) and yet strangely I am dragged back to a conversation about MTD ITSA.

However, and my son (9) thinks I am drunk. He is probably right.

Still, I do not think there is not a law against discussing tax and accounting software whilst drunk. Hence I have started so I will continue.

There is an annual adjustments option. I don't think that as it stands has a requirement for digital links although probably for consistency it does, but the SI is not published yet.

For those people who want to do cash based submissions on a quarterly basis with accruals on an annual basis that should be OK.

That would not require adjustments for each quarter just an adjustment for accruals on an annual basis.

It is not a problem just putting in a single figure for capital allowances, but on a pedantic basis that would not be bridging it would be just putting a figure in.

There is an important point about ITSA that does not apply to VAT that you can change the figures.

The cat is now trying to steal my cheese. I am not quite sure why the cat likes the cheese. We have recently had to put a sign outside our house to ask people not to feed one of our cats because it is too fat. However, I need to now concentrate on cheese protection.

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Replying to johnhemming:
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By lionofludesch
27th Aug 2021 19:13

I don't understand cheese.

It's just half rotted milk.

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Replying to lionofludesch:
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By johnhemming
27th Aug 2021 19:39

Cheese is a nice tasting source of long chain menaquinones. These also known as Vitamin K2 are a good way of handling calcium getting it out of your soft tissues and putting it nicely (particularly MK-4) into your bones.

Thats a good place for it to be.

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Replying to johnhemming:
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By lionofludesch
27th Aug 2021 19:59

johnhemming wrote:

Cheese is nice tasting .....

I would dispute that.

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Replying to NewACA:
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By lionofludesch
27th Aug 2021 19:31

NewACA wrote:

Yes, that is what I understood as well- glad to know I haven't missed something.

That means all those other accountants talking about submitting rubbish and then just getting corrected annual figures submitted won't be able to submit data like that, as the business income and expenses are only submitted (or amended) by submitting quarterly figures.

I do agree that those proponents of what has become known as MTU probably need to get real.

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Replying to richardbishop:
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By lionofludesch
26th Aug 2021 19:32

richardbishop wrote:

The majority of our clients use Excel and so we have designed a spreadsheet for them to use with the aid of bridging software (assuming this will be available!).

A spreadsheet for our "rental" clients has also been designed - catering for up to 35 properties & 6 taxpayers - again, bridging software should do the trick.

A bit of a marathon task but helps me sleep at night now!

I'm not seeing how a spreadsheet is going to do the job for MTD. It's just a list of transactions at the end of the day, is it not?

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Replying to lionofludesch:
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By johnhemming
27th Aug 2021 09:42

You can do it through a spreadsheet, but it is more complicated than VAT. Things like private usage elements will need to be separately analysed.

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Replying to johnhemming:
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By Hugo Fair
27th Aug 2021 11:49

If we forget for a minute about anything to do with efficiency (let alone software elegance), could a spreadsheet be used in the following 'dumb' way?

* Spreadsheet has multiple worksheets (none linked, just held in the one 'folder').
* Some worksheets (such as bank a/c) happen to be populated from external sources - maybe directly or maybe via import - but may've been typed-in/corrected.
* Other worksheets are definitely created by human intervention - some from scratch, but others as analysis of another worksheet (as per private usage).
* All these worksheets are irrelevant to MTD as they are in reality no more than scratch-pads (or 'workings-out' as they used to be called at school or in exams).
* Except for a single worksheet (Tax return) into which relevant figures, after referring to the working-out sheets, are then keyed in by a human (Agent).
* In order to comply with MTD, that worksheet is saved and used as the source for officially recognised 'bridging' software that submits the return to HMRC.

If that works, then nothing much has changed apart from the frequency of submissions (subject to the apparent lack of responsibility for any accuracy in the quarterly ones) ... but if it doesn't then, as others keep saying, GIGO.

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Replying to Hugo Fair:
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By johnhemming
27th Aug 2021 13:04

Its the digital links issue again.

You need digital links for the figures in the quarterly submissions, but not for the other figures.

It may be in the long term that a digital audit trail is required for other figures, but for now it is just the quarterly submissions. I have no reason to say this will happen or won't happen, but it is a possibility.

If you want me to explain more about Digital Links and Digital records I am happy to so do, but the principle is the same as VAT. I don't know whether or not they have published the secondary legislation relating to this as yet.

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Replying to johnhemming:
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By Hugo Fair
27th Aug 2021 13:37

It is indeed the digital links issue again (as you say, if only for qtrly subs for now)!

Although the principle may be the same as VAT, there's a rather greater need for human intervention prior to having suitable figures for filing.

Hence my checking that so long as figures being submitted are obtained from A source via a digital link, then it doesn't matter that this is not THE (original) source ... merely a worked set of figures readied for submission (but still having to go through one more rather pointless step to do so)?

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Replying to Hugo Fair:
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By johnhemming
27th Aug 2021 15:05

I am expecting essentially the same digital audit trail rules as VAT hence things like daily cash totals for a shop. I have one client who has been doing monthly vat returns and also doing monthly ITSA returns. The data is entered and two submissions done from that data. HMRC's ITSA system then adds up the figures for the quarter.

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By NewACA
28th Aug 2021 13:43

I am sure that is fine, that is how it already works for vat mtd.

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Replying to lionofludesch:
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By NewACA
27th Aug 2021 15:19

All spreadsheets allow you to calculate a total of a column's transactions in another cell, so it would be that total that is then picked up by the bridging software and sent to HMRC. This is how it already works for bridging software for VAT for example, it is conceptually no different. So spreadsheets are not just a list of transactions. The totals are uploaded to the bridging software typically by going to the bridging software website, selecting the Excel file and uploading it to the bridging software website, ready for it to pick out the totals and send to HMRC.

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Replying to NewACA:
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By Hugo Fair
27th Aug 2021 15:42

Yes, but all spreadsheets allow you to do more than merely "calculate a total of a column's transactions in another cell" ... they allow you to create another column of filtered values for instance, which will have a different 'total' value.
And maybe then that 'total' is adjusted via manual intervention (as say deferred income because of a delay in starting the project) ... and so on, until a final 'total' is available (probably on a separate worksheet in the spreadsheet) ready to be picked up by the bridging software.

So there is actually no digital trail that directly links source data (however you define that - given for instance bank data may originate on paper statements) all the way through to the bridging software and the submitted values. Which appears to undermine the whole point of the exercise?

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