How and when shall we advise clients about MTD?
The eagerly awaited HMRC response to the most important change in tax filing has been published and note the date - 31 Jan when all accountants had their heads to the grindstone.
As I said in my comment to the article 'MTD Software race is on' I had hoped that the press would pick this up and appreciate the problems that many taxpayers will face with MTD and the cost for all affected including the economy but apart from a few lines in The Times I've not seen anything. And those few paragraphs were all quoting HMRC's stance of how great it will be etc etc.
We are not privy to the contents of the submissions although some contributors have loaded theirs online. However their comments are bound to be along the lines as already made by accweb members about not working/clients can't use computers etc but they have been ignored by HMRC. That is in the past – we all know that whatever we want MTD will be a reality.
HMRC have deferred confirming the level of turnover.... why? The impression is that they are deferring to take further advice, to consider submission dates and the turnover question. This can't be. If we start from the premise that this is going to happen anyway then the only possible reason for the deferment is that the software providers are arguing about the free software and the timeline.
The problem is - what to tell clients and when. As I said at the beginning of this blog I had hoped that the press would do it for me. The ideal time to advise many clients would have been last month (for those who left it to the last minute) as you probably won't see them again for another year. However the approach needs to be planned very carefully and in detail. You will need to investigate who has what software and if they don't have software already then which software you need to suggest to link in with yours. Consider who will need to have receipt software.
A possible basic approach might be as below. I'm keeping in mind those who might leave thinking that they can do it themselves.
1. Obviously first thing to do is to make a list of those clients who will be affected (most of mine although not companies - leave telling them for the moment and this will reduce the pain a bit)
2. Split them into landlords, VAT registered and non VAT registered sole traders/partnerships. Tell the VAT registered ones first as they will be the easiest ones to deal with and you will be able to gauge other client's possible reactions by using those who already comply with strict submissions as a guide.
3. Go through those remaining and mark all those who already use software. Again they will be easier to advise and they are more likely not leave you.
4. List those who use excel spreadsheet. These clients will need to be treated with care as if they can use excel then they will be able to use software on their own (or believe they can) and not want you. Make a note of those who have smartphones as they will be more likely to be computer literate.
5. List all those whom you know could cope with a computerised system but don't currently use themselves (plus those who you think have friend/family who will be able to do it for them). These clients will be the ones more likely to leave so they will have to be treated with extra care. You can also indicate those whom you think will try to use the free software and again are more likely to leave. You should be left with those who won't be able to cope.
6. Go through each list and indicate when you should tell, when and how detailed you need to be. Best will be face to face as you may well have to discuss new software or for those whom you think won't be able to cope then you will need to stress that you are there to help and to take over the burden etc etc.
The problem will be how to tell those dealt with remotely. Those in the UK I will ring and tell, probably as an aside when I am ringing about something else so as not to make too much if it, (hopefully) giving the impression that I'm on top of things. I won't just send round an email. I will produce a 1 page (1/2 page?) sheet of the basic facts in bullet point form stressing that I know what I'm doing and that I have been involved in the discussions with HMRC (which I have). When I ring I'll say that I will be sending this page to give additional information. There will need to be more than one type of sheet to facilitate the different types of client including new clients.
As with many other accountants I'm intending to attend the Accountex event in May when more will be learnt. I need to find out the best software including see whether I need to change my own. I might be able to get discounts for clients who use the software I recommend.
Would you please add additional points to my list or comment if you think my approach is wrong in any way?
And its worth listening to BBC Moneybox of 1 Feb