Enough is enough.
As a profession we have put up with all the stupid initiatives heaped on us over the years, but really MTD ITSA is the final straw.
A firm can have hundreds or thousands of tax returns to file annually and currently has between April and January to get them all done, which is barely manageable, but we are used to it and the system works.
Now we are expected to file them quarterly. They are not simply 'updates', they are tax returns. Don't be fooled into thinking any initial concessions to allow estimates, or rubbish to be filed will last.
This is just not feasible. It will be January every few months.
What are we supposed to do? Quadruple our fees? Quadruple our staff? (can any firms even manage to recruit anyone at this time?) Sack 75% of our clients? Who else would even have capacity to take them on?
This is going to take a wrecking ball to the entire profession and the taxpaying public. We are sleepwalking into an almighty mess and nobody is doing anything about it.
We have heard this week that the professional bodies have written to the Government expressing their 'support' for the proposals but merely urging 'delay'. Support? Delay? This thing needs strangling at birth.
I am loathe to say trade union, but is it now time that some sort of professional accountants association was formed that takes a more confrontational approach and loudly and rudely calls out this BS?
Thoughts?
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Replies (436)
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The filing of the VAT return only takes a few seconds. The important part is getting the data correct.
Let me expand:
We file half our tax returns in week 5 of the 5(Ed) week deadline as it takes about 4 weeks for the clients to give us complete information.
Let me expand:
We file half our tax returns in week 5 of the 5(Ed) week deadline as it takes about 4 weeks for the clients to give us complete information.
This is the crux of the matter for me - if you wait until the end of the quarter to start work on that quarter, especially given how late we know clients always are, you will have no chance. Which is why I go back to what I said in my first reply (which now feels like a very long time ago) - If like us you have such a number of clients that you will not have the resource to do all the work for the previous quarter during that 4/5 week period, then the alternative is to change your working practices so that you start the work from day one of the quarter (in other words, software, bank feeds, receipt capture) - then when you get to the end of the quarter most of the work is done.
Exactly! It's much better to chase clients for a document in early April than wait until July.
This is where you have to work at more. Training clients to immediately put documents in an "Accountant's" drawer as soon as they get a document (or two accountant's drawers - paid and unpaid).
Erm, quite busy doing all the other proper stuff then. MTD will be extra work and although it will go some way towards year-end work, will not save enough time to make it viable when it comes to doing the annual accounts unless we charge the extra time out to the clients. Oh, and take on and train extra staff to manage the bottle-necks every quarter.
I don't think people think you're ridiculous. I don't think you have grasped the point that the difference between the "high techies" and "low techies" will be manifested in MTDfITSA. HMRC have not taken account of the fact that there are just as many business not capable of complying as there are business that won't have a problem. There is no need for quarterly updates. Keep records digitally, yes, but no more is needed. To get rid of the annual tax return is a big poh fah. I do not think HMRC are capable of handling a project like this and it will flat around their feet and that won't be for the want of Accountants making an effort.
It is not just a case of keeping things moving every month/quarter - it is scaling that process up by however many clients need to submit MTD for ITSA returns, juggling it with other work in the practice all of which is already deadline driven, bringing clients on board with the quarterly reporting that have never had to deal with their accounts more than once a year previously and dealing with their questions and issues as they grapple with the software. Clients are people with their own busy lives, many leave things to the last minute and it is what is going to happen in the 30 days prior to submission of the quarterly reports that worries me the most - the final month/few weeks of the quarter will need processing in addition to the review and check procedures for the quarterly submissions, as there surely must be some. How are you going to deal with obtaining approval to the figures to be submitted in such a short space of time? There must be some form of process otherwise the cost of PI will simply go through the roof. The experience we have encountered over the last year or so with furlough claims is more than enough of a taste of what lies ahead. However MTD for ITSA affects more than a few handfuls of employer clients struggling through a crisis, which for many practitioners has been extremely challenging. For the small practitioner MTD for ITSA is going to affect a very high proportion of their clients every quarter. That is in addition to other deadline driven work such as company accounts and returns, payroll, VAT returns and anything else that gets thrown at them. When you are working such tight schedules the unexpected cannot be managed and we become nothing more than just robotic processors. I don't know about anyone else, but as a practitioner of many years standing, I can honestly say that HMRC have never undervalued the skills and experience of practitioners so much as they are doing now. MTD for ITSA will drive knowledge and skills out of the profession and HMRC will need to find a way to fill that gap if MTD for ITSA is to succeed as they want it to.
"How are you going to deal with obtaining approval to the figures to be submitted in such a short space of time? "
Why do you need approval of the figures for quarterly updates?
If we are submitting figures to HMRC or other organisations on behalf of clients approval is required beforehand - PI underwriters require it and it is how I was trained to do things as a matter of good practice. It doesn't matter whether figures are interim or final - if they are going to a third party on behalf of a client, they need to approve the information and be aware of what you are sending on their behalf.
You can ask the client if they are happy with the bookkeeping data being used to submit the return before each submission. Say, all bookkeeping is done by the first few days after the return period end you have got plenty of time to get their ok before submission deadline.
But how can you possibly deal with all your clients within a few days of the period end. I don’t think you are being realistic, Peter
We would be lucky to get all the bookkeeping paperwork in within the first few days of the quarter end, never mind get it all done.
We would be lucky to get all the bookkeeping paperwork in within the first few days of the quarter end, never mind get it all done.
What is stopping clients from attaching documents to the transactions or at the very least sending you the documentation at the end of each month? Why do you want to wait until the end of the quarter?
Even if they did as you suggest - we have other work to do in addition to looking after MTD for ITSA clients, if we spend our time entering transactions piecemeal as they come in nothing else would get done - it is much more time and cost effective to process transactions as a bulk entry when you know that you have everything for the period it is much more organised and does not feel like there is such a scattergun approach to client work.
Even if they did as you suggest - we have other work to do in addition to looking after MTD for ITSA clients, if we spend our time entering transactions piecemeal as they come in nothing else would get done - it is much more time and cost effective to process transactions as a bulk entry when you know that you have everything for the period it is much more organised and does not feel like there is such a scattergun approach to client work.
Once again (and then I will never post on this thread again! please someone make it all stop!) I can tell you how we make this work - each month we do the previous month, its not a case of manually posting transactions each day, its a very quick exercise to go through a bank feed or whatever and to clear up any issues for the previous month - leave it until the end of a quarter and its three times the work!
But it's not three times the work is it? It's either (best case) exactly the same amount of work or (worst case) more work because you have to log in three times instead of once, get your head round that particular client and their circumstances etc.
If you are using the same software for each client you only have to log in once for all clients. You could decide to do the work when there is a certain number of transactions outstanding. If you are looking at clients regularly your head is around all clients.
The bank feed is only one part of the bookkeeping - if the clients are maintaining purchase and sales ledgers your task will be so much more onerous, as it would be for businesses whose income is daily takings - not on an invoiced basis. Bank feeds are not the be all and end all panacea to the bookkeeping problem. If that is all you are using you are working half blind.
Nobody is suggesting that bank feeds are all of bookkeeping. If you disagree can you point out who said bank feeds is all that is needed?
Choose a sensible period of time depending on the usual number of the client's transactions. This could be daily, weekly or monthly, but waiting for three months and then trying to do three months of work in one month is just asking for trouble.
That does of course depend on the number of clients transactions, if there are a large number of transactions I would probably agree with you, but I can post up a fair amount of transactions - sales invoices, purchase invoices, bank entries etc on VT in not too many hours. If the client uses a decent spreadsheet or VT cashbook it is even better as it is a matter of checking the entries for obvious errors, importing the data, coding up and making any adjustments. I can get everything done at once and job done until the next quarter and I can get on with something else. However, that is just a handful of clients that I regularly do VAT returns for and that work is not all in the same VAT stagger period. Multiply that work up by how ever many clients come on to MTD for ITSA in the same quarterly period and you soon have a problem. Entering transactions as you go along is not going to help as there is always other work that needs doing and it is simply down to the mathematics of the number of man hours each day/week/month that you have available. I understand and appreciate that there may be other ways of doing things, and if they work for you - then that's great, but it is not a workable solution for my practice or for many of my clients affected by MTD for ITSA.
It'll certainly deter people from starting small businesses as we come out of lockdown.
It seems the only practical course for a micro-business start-up is to incorporate.
I had wondered about the practicalities of sole traders adding a corporate partner, say 1% ownership, as such partnerships are presently set to avoid the 2023 MTD deadline.
Trouble is my gardener on about £12k Income and no email would find the company rules just as bad
MTD works for VAT regd businesses
Not the rest
Trouble is my gardener on about £12k Income...
Maybe he should do what mine does and pocket the cash jobs ;)
Totally agree with you Jon. Sadly, I think that now the only thing that would actually make HMRC listen would be an accountants' strike (say on 31st January) or if enough small practitioners refused to do quarterly filing for MTD. Ironically, it will probably be the failure / refusal of a high number of sole traders to comply in 2023 that makes HMRC start paying attention (maybe a raising of the MTD exemption threshold, or delay of penalties for a couple of years?).
They can just introduce penalties and that wouldnt work, they would quite like the extra income. Especially now that their IT system thinks that £100 is £10,000 because their 'figures are being presented in pence rather than pounds'.
But until then and there are no penalties, and as I said above, it is going to be impossible for us to do them, then there's going to be a huge proportion that don't file anyway, with or without a strike. And I doubt that HMRC will even get their act together to tell people what they have to do. They can't even answer the phone or open letters at the moment.
Delaying paying the payments on account on 31 January 2022 and 31 July 2022 would only cost everybody a small amount of interest and might make them sit up and notice. Unfortunately a lot of my clients affected by it don't have payments on account to make.
If you want to get the attention of those in power (politicians or civil servants like HMRC) then you have to withdraw what sustains them - votes and tax respectively.
But learn from the Unions ... who moved from straightforward strikes (and threats thereof), to using the system against itself. So, for instance, if everyone submits an inaccurate return (say 10%'s worth) on time but immediately starts the process of 'correcting' it then the system will grind to a halt. If in addition they fail to make any payment (or only initially pay based on the 10%), the system will likely implode.
I'm not recommending any of the above, but you've only got to see the impact of direct action by small groups of Extinction Rebellion to see what widescale refusal to play ball can do. I'm glad to be out of it before 2023!
There's not "widescale refusal to play ball" by Extinction Rebellion.
There's approval by Sadiq Khan and Cressida Dick.
Given that there are taxpayers without professional advice that are already (in very small numbers) handling MTD ITSA I think this is a difficult argument to make with any success.
There will, however, be some churn both between professional advisors and also between software providers as a result of MTD (ITSA and VAT).
Some accountants will see it as an opportunity rather than a threat.
Some accountants will see it as an opportunity rather than a threat.
I'm sure they will. I've always said that there'll be a lot of work for bookkeepers.
But low level stuff like that certainly wasn't what I wanted to do.
The opportunity has always been there to do low-level book-keeping but it is very tedious and low profit work. Trying to get clients to digitise this type of work is just not worth the effort.
Since 1981, when my firm started producing accounts on a computer system, I have tried many times to get clients to use Accounting Software but in most cases this failed and in the end I introduced a policy of charging three times the usual fee for clients who thought they had done it all on their computer to allow for sorting out the mess they had created.
The situation now seems to be that many clients are going to pay three times the usual amount for the same but unnecessary reasons.
Given that there are taxpayers without professional advice that are already (in very small numbers) handling MTD ITSA I think this is a difficult argument to make with any success.
I would assume that anyone in MTD voluntarily would automatically be someone who was comfortable with computers and basic record keeping.
I'm personally more concerned with avoiding cloud providers (particularly if/when I have to deal with MTD too) for financial record keeping than the mechanical difficulties of complying with MTD. I won't be caught by MTD initially but I'm sure I will be one day.
Avoiding cloud providers probably means an inevitable paid solution unless I can find the time to write my own which is galling. I may choose to use a paid solution because it's more convenient and saves me time but I object to HMRC forcing me to pay to meet my obligations (unless they make the cost 100% tax deductible). It doesn't help that I'm a microsoft free zone and any solution needs to have a linux client.
(I was also told that getting accounting advice when you're PAYE only isn't tax deductible even when you're stuck on filing in your tax return. I'm sort of expecting that they'll claim the same for the costs of complying with MTD)
With time to do on the agenda, a port of call would be to interact with the 40+ answers and put out some meaningful plan of action.
Certainly wouldn't see things in the context of the worm that turned?
Another thing bothering me about this MTD garbage.
When are HMRC going to send a fact sheet or start a PR campaign to inform the millions of self employed people who will be effected??
My bet is they will not and expect us to do it for them
https://www.ft.com/content/d8ce73a3-2585-4af1-a91b-d0278a2ea40b
"From April 2023 landlords and the self-employed with property or business income of more than £10,000 a year will be drawn in and made to keep digital records and report their income every quarter."
https://www.ft.com/content/d8ce73a3-2585-4af1-a91b-d0278a2ea40b
"From April 2023 landlords and the self-employed with property or business income of more than £10,000 a year will be drawn in and made to keep digital records and report their income every quarter."
John - I know you've dealt in the highest Government circles in the past but surely you're not suggesting that all landlords and the self employed read the Financial Times ?
Yes, that popped up the other day on Twitter. It's about the first decent article in a national newspaper to mention the point. But as you say, not normally read by the samll self employed businessman
Here's a story in The Express
https://www.express.co.uk/finance/personalfinance/1465726/Digital-tax-re...
Only a personal letter to the taxpayers will be anything like enough.
The timing will be crucial.
