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How and when shall we advise clients about MTD?

5th Feb 2017
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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

Replies (19)

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FirstTab
By FirstTab
05th Feb 2017 11:41

I think MTD is a good move forward. I want it sooner. There are bound to be teething problems. This can be sorted.

I will not be as gentle as you are with our clients. It will be a simple and a clear message. it is an HMRC requirement, it needs to be done and we will support you. There is no pont going softly softly with this.

Thankfully a large number (at least 85%) of our clients are using cloud software, that means for us MTD will not be such an issue that AW's community has made such a huge deal out of. Of course, it is a major change, it is a good change.

AE, again a complete meal was made out of this. Same goes for RTI. For us, since we had to work with it, we adapted and we have not had any major problems. I prefer RTI to annual HMRC reporting.

There is something in the British psyche that is so resistant to change. We still use imperial measurement!

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Replying to FirstTab:
PJ
By paulgrca.net
06th Feb 2017 12:54

How the hell do you cope if 90% of client list use spread sheets or manual records!

Thanks (8)
Replying to paulgrca.net:
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By Eileen Searle
19th Feb 2017 11:44

I have no idea, none of my 50 clients use spreadsheets or accounts programs, therefore I am the only one to do their bookkeeping and accounts and at the age of 66 find it almost impossible to understand what is happening anyway.

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Replying to Eileen Searle:
FirstTab
By FirstTab
19th Feb 2017 12:08

Age should not be a barrier to go digital or learn what is happening.

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Replying to paulgrca.net:
RLI
By lionofludesch
10th Mar 2017 11:54

paulgrca.net wrote:

How the hell do you cope if 90% of client list use spread sheets or manual records!

What if 100% do ?

I don't have ANY clients who use accounting software - other than me doing it for them, obviously.

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Replying to FirstTab:
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By adam.arca
06th Feb 2017 13:17

FirstTab wrote:

There is something in the British psyche that is so resistant to change. We still use imperial measurement!

That comes across as rather condescending which, I hope, wasn't your intention. There are plenty of people (admittedly now of a certain age) who still use Imperial, myself included, and there are plenty of people who regard the British resistance to change as a generally good thing, again myself included.

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Replying to adam.arca:
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By Eileen Searle
20th Feb 2017 13:22

Thank you I was begining to think I was losing the plot, maybe I am, but as we get older it is more & more difficult to keep up or find somebody who will explain it in terms we understand.

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Replying to adam.arca:
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By raju m
11th Mar 2017 17:09

Very good point. Very few accountants have over 50% of clients using computerised accounting.

Raju Mehta

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Replying to FirstTab:
Jonathan@Aiteo
By [email protected]
07th Feb 2017 11:33

It's good for you if the majority of your clients are using cloud software. However, across the 5.5m private businesses in the UK, I estimate (June 2016) around 0.5m are using cloud software, with perhaps 1.5m on desktop software and 3.0m to 3.5m using no accounting software or Excel.

It is the latter group that will be materially affected by MTD, and I imagine that it's because your own customer base is skewed towards the first tranche that MTD seems to be relatively straightforward.

Thanks (1)
Replying to FirstTab:
RLI
By lionofludesch
10th Mar 2017 11:58

FirstTab wrote:

There is something in the British psyche that is so resistant to change. We still use imperial measurement!

So do the Irish - in conversation. No one tells you how many kilometres it is to somewhere. It's always miles.

There's no NinePointSixMileBridge or EightMileTown.

More seriously - sure - people can be educated. But not in the timescale allowed. There aren't enough accountancy/bookkeeping staff available to make this work as HMRC expect.

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By Cloudcounter
05th Feb 2017 11:57

MTD is going to happen, so there is no point in whinging about it. It's like other changes introduced like self assessment and compulsory online filing.

It might be too rushed, but that's outside our control. The big issue is that we still don't know which clients are going to be affected, and frankly I think that it's disgraceful that HMRC haven't made their mind up on this. If clients have to change their record keeping, I want them to do it in April this year, so that we can iron out errors and training issues before the system goes live from 2018. I don't want to be scaring small clients and then find that HRMC actually makes a decision that they are excluded.

I've already identified those clients affected by the original proposals (unincorporated >£10K) and categorised them, using the same categories. I'll get in touch with anybody over the VAT threshold first, and consider the smaller ones in descending order of turnover.

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By adam.arca
06th Feb 2017 13:29

Personally, Jennifer, I think you're over-thinking this one and over-worrying too.

We need to tell clients and, where it's important to individual accountants that they're in there first for whatever reason, then they need to be getting the message out sooner rather than later because, contrary to what you're thinking, my experience of the last couple of weeks is that the issue of quarterly reporting is starting to penetrate a few skulls in the self employed world.

That said, I'm going to be keeping it vague, perhaps on the basis that, as HMRC are employing the mushroom policy on accountants, then I'm going to employ it on my clients and (of course) place the blame for that squarely at HMRC's doorstep.

Personally, I'm not one for over-planning anything. We know MTD is coming, it's looking very like HMRC are going to get everything they want with little to no compromise but, nevertheless, there's still the hope that a little sense will be seen and there will be decent modifications around the edges; there's also still the hope, although I admit it's looking a little forlorn, that implementation will be delayed. People who launch in now with both size nines are going to look pretty silly if the goalposts shift. Or to put it another way and using that staple of my auditing days, it's better to be approximately right rather than precisely wrong.

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Replying to adam.arca:
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By Eric T
06th Feb 2017 15:52

That's been my approach. I've already discussed MTD in general terms with the vast bulk of my clients although it is now time to start getting a bit more specific with them.

The problem is that is still very difficult because HMRC haven't come up with their final set of criteria.

It's all very frustrating.

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By Jim100
07th Feb 2017 15:05

The majority of our clients use cloud accounting software

Some don't use it but we have no idea when to move them when we don't know how the pricing of software is going to work. Someone is going to pay for the "free" software. Who the client or the accountant.

Will clients move. If they could cope with MTD then they also clever enough to file their self assessment return now unless I am missing something.

Its far far too early to discuss software etc with clients when nearly everything is still up in the air and HMRC may change the goalposts which will then mean contacting clients again. I agree you should email clients in very general terms- MTD is coming so beware or be doomed.

Contact clients later when there is certainty as clients will come back with lots of questions which cannot be answered at this stage

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By Jim100
07th Feb 2017 15:06

Should it be moneybox on 11th Feb not 1st Feb ?

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Jennifer Adams
By Jennifer Adams
07th Feb 2017 16:26

I listened to this on 1 Feb
http://www.bbc.co.uk/programmes/b08c0rfv

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Jennifer Adams
By Jennifer Adams
08th Feb 2017 09:31

I've listened to the full Sub committee event and am very glad I've not told clients yet. Maybe at least the threshold will increase. Its worth listening and admiring Richard Murphy for standing up for his/our beliefs. As I said under John's article I was not impressed and was disappointed by John Whiting's stance- a former CIOT director.
Did you see our John Stokdyk sitting in the background?

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Jonathan@Aiteo
By [email protected]
08th Feb 2017 09:54

Further testimony today: watch live on Parliament TV....

3.30pm Finance Bill Sub-Committee
Subject: Draft Finance Bill 2017
Witness(es): (at 3:45 PM) Ms Tina Riches, National Tax Partner , Smith and Williamson Mr Michael Steed, Co-chair of ATT’s Technical Steering Group, Kaplan Leadership and Professional Development Ms Rebecca Bennyworth, Council member, Institute Of Chartered Accountants In England and Wales (ICAEW) Mr David Lyford-Smith, Technical Manager, Institute Of Chartered Accountants In England and Wales (ICAEW)
Location: Room 2, Palace of Westminster

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Chris M
By mr. mischief
08th Feb 2017 19:11

I will wait on legislation being pretty much a done deal before telling clients. So right now I am about to brief all FRS VAT clients their 4 options from 1 April.

I am pretty relaxed about MTD because it looks as if my plan to go for MTU where necessary will make the cut in the proposed law. MTU = Making Tax Up - see earlier posts of mine for details.

I won't be imposing major system changes on any clients but will offer system changes. This thing is going to fall flat on its face, further down the line lots of people are going to look silly because the Cloud systems are not up to the job. See my earlier posts on the major flaws in Cloud software which most book-keepers can't detect, and if they detect them they can't fix them.

So relax. A shambles it will be. Keep high quality records and you will start to stand out from the crowd who've plunged over the cliff with flawed software.

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