The worm that turned?

Time to do something about the MTD ITSA fiasco

Didn't find your answer?

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?

Replies (436)

Please login or register to join the discussion.

Replying to Tom 7000:
By petersaxton
31st Aug 2021 12:57

Why will you not start on a quarter until it ends?
You should try to spread the work more evenly.
Get bank feeds set up. Get clients to send you documentation at least monthly or ideally get them to scan the documents and attach them to the transactions. Alternatively, get them to scan the documents and email them to you to attach them.
Some clients will be able to explain all or some of the transactions. You can explain the rest. Consider bank rules for regular suppliers.

Thanks (0)
Replying to Tom 7000:
By petersaxton
31st Aug 2021 13:05

"What will a client used to paying 250+ say when you tell them its now 750+"
Why charge them so much? See what they can do themselves. Don't just treat them all the same. The year end tax return should be less if you have done the four quarters properly.

Thanks (0)
avatar
By dmmarler
31st Aug 2021 12:26

It was perfectly clear from the outset that this was all about getting tax in quarterly in advance, it was also perfectly clear that HMRC really wants just to DD what it thinks it is due rather than deal with pesky accountants and accounting rules. (This does also mean there will be lots of small businesses with turnovers of £9,999 and others which will rely on trust and old fashioned cash and bartering.)

Thanks (1)
Replying to dmmarler:
paddle steamer
By DJKL
31st Aug 2021 13:47

So a stash of gold or gemstones might be worth acquiring before precious metals/gems etc all rise in value- good news for my other half as all my spare cash now gets invested in secondhand vintage jewelry.

Thanks (1)
Replying to DJKL:
avatar
By Hugo Fair
31st Aug 2021 14:27

Well you're just the accountant ... she's obviously a (canny) Financial Planner! :-)

Thanks (1)
Replying to Hugo Fair:
paddle steamer
By DJKL
31st Aug 2021 14:35

I did not mean that is the current position but more what I now ought to do, she's the beneficiary as can walk around wearing her savings (though if they get too expensive insurers can insist they are keptovernight in bank vaults)

Her financial black marks more come from us only having one amazon account for kindle books etc that is linked to my bank account and my taking her car for its MOT so I pay. (Also always my card for foods deliveries, she obviously is a better financial planner)

Still we were talking last night about where the house titles ought to be stored as our solicitor is getting closer to retirement and a safety deposit box got mentioned, so two birds with one stone.

Thanks (0)
avatar
By North East Accountant
31st Aug 2021 18:27

jon_griffey wrote:

Enough is enough.

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?

I was thinking of setting something up, exactly as you allude to, but it's hard to get the time...... so I'm with you Jon.

And congrats on the most responses to a post in the history of A/web... I think..

Thanks (3)
Replying to North East Accountant:
By petersaxton
31st Aug 2021 18:44

It's important that when accountants criticise the proposals that rather than come across as crazy people they come up with rational criticism and suggest how it can be improved.

My suggestion is, rather than say "we dont like it because it's too much effort and change for accountants and clients" we should suggest a more gradual change by bringing in different size clients at different times so accountants can have more time to help their clients with converting to what is needed.

Thanks (1)
Replying to petersaxton:
paddle steamer
By DJKL
31st Aug 2021 20:24

Just because one can apply a screw into timber with a hammer if you hit it hard enough does not mean you ought.

Thanks (0)
Replying to DJKL:
By petersaxton
31st Aug 2021 20:59

DJKL wrote:

Just because one can apply a screw into timber with a hammer if you hit it hard enough does not mean you ought.

Just because you can set fire to a house you can burn it down doesnt mean you should.

I'm sure everybody can come up with many statements.

Thanks (0)
Replying to North East Accountant:
avatar
By bernard michael
01st Sep 2021 09:16

North East Accountant wrote:

jon_griffey wrote:

Enough is enough.

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?

I was thinking of setting something up, exactly as you allude to, but it's hard to get the time...... so I'm with you Jon.

And congrats on the most responses to a post in the history of A/web... I think..


I think it's because of the ill feeling this MTD nonsense has created
Thanks (0)
Replying to North East Accountant:
avatar
By johnjenkins
01st Sep 2021 09:39

We really need someone of Nigel Farage standing to champion the cause. I think we all, apart from Peter, agree that the quarterly submissions with a final amendment is both ludicrous and has no foundation or purpose. I don't even see the need for clients to be digital as long as we do it for them once a year.

Thanks (1)
Replying to johnjenkins:
By petersaxton
01st Sep 2021 10:54

I dont know how a lot of you would cope in some other countries!

https://www.icaew.com/insights/viewpoints-on-the-news/2020/jan-2020/how-...

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
01st Sep 2021 11:15

Why do you think we voted to come out of the EU, Peter? We do not like being dictated to especially when we know that we are being lied to (MTD to eliminate errors). Right concepts are workable SA, CIS etc. Wrong concepts aren't EU (in its present form) IR35, OTS, WT, MTD (in its present format) etc. Just look around, Peter, it's not difficult to see what works and what doesn't.

Thanks (1)
Replying to petersaxton:
avatar
By Hugo Fair
01st Sep 2021 13:21

An interesting article (that I've seen before).
However, not particularly relevant given the disparate (and fairly marginal dipping-the-toe-in-the-water experiments being described) - with the exception of China's "All businesses must use government-certified tax software."
That could work but only in countries used to absolute control from the centre ... in western democracies it would lead to loss of political power and probable rioting.

Thanks (1)
boxfile
By spilly
01st Sep 2021 01:14

Jon, are you glad or sorry that you started this discussion?
We’ve not heard from you, so would be interested in you opinion about some of the points raised.

Thanks (2)
avatar
By bernard michael
01st Sep 2021 09:31

Another of my random thoughts
There are probably going to be a body of possible new clients floating around deriving from:-
Having been disengaged by other advisors
Not thought about needing an accountant
Ignored HMRC and MTD and now want to come clean
New to self employment
Are we going to take them on as clients when our current workload had been increased by existing clients ??
If not what brilliant idea will HMRC come up with apart from penalising them.?? Perhaps a new branch of Citizens Advice Bureau coupled with Help the Aged

Thanks (0)
Replying to bernard michael:
By petersaxton
01st Sep 2021 10:50

"Are we going to take them on as clients when our current workload had been increased by existing clients ??"

They would seem ideal for practices who want to increase their number of clients and employees.

Thanks (0)
Avatar
By I'msorryIhaven'taclue
01st Sep 2021 14:55

I've just re-read the entire thread. Phew!

There's been extensive discussion surrounding additional workload, uplifted fees, and the pros and cons of migrating clients to compliant software. However, it seems to me that a fundamental overhaul of our practices - the way we think, quote, operate, and charge - may be the common keystone. For example:

Profitability - back to basics by using timesheets to measure the wheat and identify the chaff;
Collaboration - encourage client participation in preparing books to whatever level they desire, beyond which work becomes chargeable;
Graded Labour: hire very junior clerical staff to chase up clients for their records, and match invoices to bank feeds;
Annual Contracts: issue fixed period 12 month contracts, with no auto-renewal, to avoid client dependency and facilitate fee reviews.

Thanks (0)
Replying to I'msorryIhaven'taclue:
By petersaxton
01st Sep 2021 15:13

"Profitability - back to basics by using timesheets to measure the wheat and identify the chaff;"

I've charged by time a lot more now I am in unknown territory.

"Collaboration - encourage client participation in preparing books to whatever level they desire, beyond which work becomes chargeable;"

I have had one client who you may have been doubtful about what he could do but he's been absolutely brilliant with explaining bank feeds and attaching documents.

"Graded Labour: hire very junior clerical staff to chase up clients for their records, and match invoices to bank feeds;"

I attended some seminars where medium sized accounting firms discussed how they approached cloud accounting. The key was having dedicated staff to do chasing for information and ensuring bank transactions were explained and documents attached. This left the accountants to review the data and prepare the VAT returns and year end accounts and tax returns.

Thanks (1)
Replying to I'msorryIhaven'taclue:
paddle steamer
By DJKL
01st Sep 2021 15:34

Re the chasing, when I worked full time in practices that is what the receptionists/typists did when not receptioning/typing. (they also dealt with the posting timesheet entries to our time ledger, an old twinlock before we moved on to Forbes)

I later spent a lot of time over the years training clients re entering data, I always found it saved me time, I even when I had my own P/T practice wrote them bespoke linked excel sheets which I then corrected quarterly and checked re vat (Zero rate/standard/exempt purchases plus imports did not always have purchases in the correct columns), but there was only one amongst them who would present me with books that were 95% correct re analysis and with a square bank and he was a former city foreign currency trader who was really sharp.

Maybe younger clients are better, ,maybe clients can be trained, but my experience is client work always need examined and corrected. (I have also over the years sometimes observed the same chaos with individuals holding HNCs etc and selling their skills as bookkeepers)

Thanks (2)
Replying to DJKL:
By petersaxton
01st Sep 2021 16:22

I knew an accountant who was working with Sage and once he entered the net amount from the supplier invoice he accepted whatever Sage said. This would result in Sage being wrong by a one or two pence due to VAT. Supplier invoices were paid to the penny. This accountant didn't seem to care that the supplier invoices out standing list was massive with many suppliers having a balance of a few pence!

Thanks (0)
Replying to petersaxton:
paddle steamer
By DJKL
01st Sep 2021 16:44

No annual romp through to square them? When we did more contracting and I used more purchase/sale/nominal/job costing focused software I tidied balances at least every quarter, usually more frequently

Of course these days fewer suppliers send statements but those who did got reconciled and ageing was always reviewed.

I suspect there are accountants and accountants, also being in house what comes out of here is all mine, ownership tends to breed precision.

Thanks (0)
Replying to DJKL:
By petersaxton
01st Sep 2021 17:15

His attitude was the less work the better.

Thanks (0)
avatar
By steve 12321
01st Sep 2021 22:13

spot on. They need to apply the brakes before the car crash and stop this crazy idea.

Thanks (1)
Replying to steve 12321:
RLI
By lionofludesch
01st Sep 2021 22:24

steve 12321 wrote:

spot on.

What is?

Thanks (0)
avatar
By johnjenkins
02nd Sep 2021 11:08

Jon, perhaps Aweb will give you some sort of recognition at their Excellence awards.

Thanks (1)
Tornado
By Tornado
02nd Sep 2021 11:18

Then there is the matter of deliberate or unitentional Fraud.

Which tax statement is going to be correct one to support loan applications if the figures change every quarter or even every month in some cases.

The correct tax liability will only be the from Self-Assessment Return submitted at the end of the year (still with 10 months to complete) but all other statements in between will effectively be complete nonsense. You could say that can happen at the moment but the risk is reduced as we are only talking about two payments on account calculated from a defined base.

What MTD will do is create untold confusion and destabilise the tax system so that the logical steps that Self-Assessment currently provides will be no longer be there.

MTD also stamps all over established Accounting procedures that have worked well for decades in the pursuit of some dream of making it easier to collect tax even if it is at the expense of everything else.

Thanks (0)
Replying to Tornado:
avatar
By johnjenkins
02nd Sep 2021 11:28

It won't be easier to collect tax. As we all know most clients pay what is due on time. The stragglers will still be the same regardless of system used. There is only one purpose and that is to tag all transactions, then cross check. Everything that goes before is just a preamble to the conclusion, which is a good 10 years away.

Thanks (0)
Replying to Tornado:
By petersaxton
02nd Sep 2021 11:43

They would only use the quarterly statements in a loan application if they were accurate and reflected the businesses profits and financial position.

Thanks (0)
avatar
By GHarr497688
13th Sep 2021 23:45

What about older Accountants and older clients....if you were born in an era when no computers were about and no formal education at school was available to learn computers but traditional accountancy training was available should you be forced under law to use a computer when older and nearing retirement. Government were to phase out cheque books and relented so why should computer book-keeping be forced on the ordinary working man/woman in the street not to mention older Accountants. Clearly HMRC are being ageist !

Thanks (1)
Replying to GHarr497688:
avatar
By bernard michael
14th Sep 2021 09:31

GHarr497688 wrote:

What about older Accountants and older clients....if you were born in an era when no computers were about and no formal education at school was available to learn computers but traditional accountancy training was available should you be forced under law to use a computer when older and nearing retirement. Government were to phase out cheque books and relented so why should computer book-keeping be forced on the ordinary working man/woman in the street not to mention older Accountants. Clearly HMRC are being ageist !


It's because they are too stupid to understand that there might be a problem with anything they wish for - like kids @ Christmas
Thanks (0)
Replying to bernard michael:
By petersaxton
14th Sep 2021 10:04

The solution would be for taxpayers who can't do it themselves - of which there will be many - to use an accountant who can do it and is willing to do it.

It's a pity that HMRC are not being realistic.

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
14th Sep 2021 12:22

So, of course, it's an expense that is forced upon business with no valid reason.

Thanks (1)
Replying to johnjenkins:
By petersaxton
14th Sep 2021 13:45

I've given at least one valid reason without anybody criticising it.

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
14th Sep 2021 14:34

It's not a criticism it's a fact that there is no valid reason for quarterly updates for those business not registered for VAT. Feeble excuses have been given by HMRC which have no credence.

Thanks (0)
Replying to johnjenkins:
By petersaxton
14th Sep 2021 18:36

If people keep their data up to date then HMRC can look at accounting servers to do inspections without travelling to visits.

Thanks (0)
Replying to petersaxton:
RLI
By lionofludesch
14th Sep 2021 21:47

petersaxton wrote:

If people keep their data up to date then HMRC can look at accounting servers to do inspections without travelling to visits.

But they don't come out anyway. Which is good. Why change ?

Thanks (0)
Replying to lionofludesch:
By petersaxton
14th Sep 2021 22:05

Is that a serious comment?

Surely you must know that they used to do visits and there were very good reasons for them. They were stopped because of lack of staff.

If they have access to data online they would be able to make compliance checks a lot more efficiently than previously.

Surely you must understand that?

Thanks (0)
Replying to petersaxton:
RLI
By lionofludesch
14th Sep 2021 22:24

petersaxton wrote:

Is that a serious comment?

Surely you must know that they used to do visits and there were very good reasons for them. They were stopped because of lack of staff.

If they have access to data online they would be able to make compliance checks a lot more efficiently than previously.

Surely you must understand that?

They still have a lack of staff. Likely to continue for ever.

Who wants compliance checks ? Be honest. Maybe yes for other folks' clients. Not for our own.

Thanks (0)
Replying to lionofludesch:
By petersaxton
15th Sep 2021 06:59

"They still have a lack of staff. Likely to continue for ever."

If compliance checks are done online they can be done in minutes rather than take all day when you take into account travelling.

"Who wants compliance checks ? Be honest. Maybe yes for other folks' clients. Not for our own."

I'm sure murderers dont want murder to be a criminal offence but I dont suppose that it will be changed because of their views.

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
15th Sep 2021 09:00

So why do they still have VAT visits on those that keep their data up to date?

Thanks (0)
Replying to johnjenkins:
By petersaxton
15th Sep 2021 09:07

How will they know their data is up to date if they dont visit?

Maybe VAT is better resourced than self assessment?

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
15th Sep 2021 09:20

So they don't need to visit if they have access to the server, yet they do need to visit to check the data is up to date. Yep that makes proper sense.

Thanks (0)
Replying to johnjenkins:
By petersaxton
15th Sep 2021 10:24

"So they don't need to visit if they have access to the server, yet they do need to visit to check the data is up to date. Yep that makes proper sense."

I think you are confusing the position now - where they dont have access to servers - with the best reason for MTD which is when HMRC have access to servers.

I think my comments make a lot more sense than your comments.

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
15th Sep 2021 11:15

where they dont have access to servers - with the best reason for MTD which is when HMRC have access to servers.
Yep that sounds about right.

Thanks (0)
Replying to johnjenkins:
By petersaxton
15th Sep 2021 18:25

They are not going to do everything in one go. That would send too many accountants into meltdown. Most accountants have cracked up already. It's better to change things gradually so the fragile accountants dont get too crazy.

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
16th Sep 2021 09:21

Most Accountants see the problem and I suspect many in HMRC also see the problem. HMRC don't have the time to do things gradually. The Government want money and IT have sold MTD to HMRC on that premise. Accountants aren't fragile, most of us are realist and know what works and what doesn't. It will be interesting to see how Simon Clarke performs and if he has the ability to not only listen but to take on board what is going to happen if quarterly updates for the small self-employed goes ahead.

Thanks (0)
Replying to johnjenkins:
By petersaxton
16th Sep 2021 09:42

I think MTD for ITSA will go ahead and in a few years everybody will be wondering what all the fuss was about.

Thanks (0)
Replying to petersaxton:
avatar
By johnjenkins
16th Sep 2021 10:05

PML, really? MTD for ITSA is going to take at least 10 years, yet HMRC are pushing it through because they are under pressure to get money, so wholescale mistakes are being and going to be made. Consultations with Accountants (oh yes only the bodies) and small business have not been carried out. I don't call pilot schemes consultations. HMRC are already saying they are not bothered what figures are put in for the quarterly updates. That says it all. If this does carry on then the Tories WILL get a big shock at the next election (I'm not saying any other party will change MTD but Boris will bare the brunt).

Thanks (0)

Pages