What you need to do now to survive MTD

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Making Tax Digital (MTD) has come as a shock to many practitioners, but there are some practical things you can do now to prepare for the change.

Speaking at the Practice Evolution conference in Manchester, Tony Margaritelli of the Institute of Certified Practising Accountants (ICPA) said now was the time to act.

“The die was cast from December 2015 and people hoped it [MTD] wouldn’t happen,” Margaritelli said, “but MTD is a done deal, we’ve got to make it work”.

To help overcome MTD, Margaritelli said the first step was to look at your clients and assess whether they’re digitally ready. A recent ICAEW survey revealed that up to 80% of practitioners’ clients were not.

“Check your client base for clients who don’t use a computer, or if they use spreadsheets. If they do then you could be in trouble”.

The MTD consultation documents do mention an exemption from the scheme for those with poor or inadequate internet, but in his keynote speech Margaritelli questioned what ‘poor or inadequate internet’ actually meant.

Accountants should then check for clients that use their own paid-for software and examine whether it is fully supported and up to date.

“Think of the time involved in relation to the MTD journey for each client – contact them and explain their new found dilemma. Then demo your proposed solution to their digital future,” he added.

“Set up the client on the new system tailored to them, explain and help reduce errors going forward.

“Review extensively the client’s early efforts - it’s a new system and you’re going to get a lot of questions.”

Margaritelli also warned about the potential dangers: “Pushing the send button will become very attractive for clients – why would clients send you anything and guarantee a bill. Are they going to ask you to check it?

“It’s about managing your clients – even the smallest client can be kept up to date,” he added.

Embracing bookkeeping is also important: “It’s all about bookkeeping, it’s predicated on it. If we don’t embrace bookkeeping and place it at the heart of what we do we are going to find it harder to get new clients and hold onto existing ones.”

The discussion we should be having, according to Margaritelli, is how much is this going to cost? Try and work out how much it is going to cost each client and your practice as a whole.

Steve Checkley of TaxCalc was also at the conference and gave a technical overview of Making Tax Digital.

Checkley ran through what every practitioner needs to know about MTD and explained what action accountants should be taking now.

His advice was:

  • Prepare your clients as best you can for 2018
  • Respond to the consultation documents
  • Attend a consultation event
  • Write to your professional bodies to voice your views


How are you preparing your practice and clients for the transition to Making Tax Digital?

About Robert Lovell

Business and finance journalist


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    23rd Sep 2016 18:04

    How can we prepare? HMRC still haven't given us full details of the software available

    Thanks (15)
    By RobertD
    23rd Sep 2016 19:46

    Top tip. Pay off your mortgage, retire except for a few choice clients, put your feet up and watch the ensuing carnage.

    Thanks (22)
    25th Sep 2016 09:23

    Could Tony Margaritelli please elaborate on the reasoning behind his statement that "It’s all about bookkeeping, it’s predicated on it. If we don’t embrace bookkeeping and place it at the heart of what we do we are going to find it harder ..."?

    Thanks (1)
    to Adrian Pearson
    02nd Oct 2016 10:49

    Hello Adrian
    I agree with you.
    At the moment HMRC hasn't mentioned who is meant to operating what.
    Plenty of how it expects the end results.
    But no mention of who is actually doing the data prepping, data checking, inputting of data, scrutiny of I putted data, or, as it's all electronic, actually pressing the keys?
    You? Me? Who!!
    Usual thing of people living in ivory towers?
    But let us not lose sight of the quarterly submission points based penalty system!!
    Henry Hobbs
    [email protected]
    PS I entered book keeping and accountancy in 1961!!!

    Thanks (1)
    By NLB
    25th Sep 2016 12:17

    @Adrian I think what the bookkeeping comment means is client can reconcile and process "stuff" in real time. Their ability to get it right without support or the provision of cheap bookkeeping services may be limited in a lot of cases. Our practice is 100% cloud and our real challenges have been in both these areas. Once this is running smoothly everything else flows pretty well in our experience.

    @ Everyone, don't underestimate the time it will take to transition, train and implement everything needed. Start early is my best advice!

    Thanks (4)
    to NLB
    29th Sep 2016 23:20

    What do you do with your subcontract blue collar clients who replace roadside kerbstones, or Tarmac the roads, etc.,?
    How do they get on with IT, Cloud etc.,?
    Yes, they may use mobiles, you should try and read their texts.
    And no doubt someone in the family can get on eBay to buy stuff.
    Book keeping software, uploads, downloads?
    Mine won't have a clue!!
    They're good hardworking boys grossing about £40K pa. So no exemptions there!!
    What's your advice on these clients?
    Grateful for any input?
    Sincere regards
    Henry Hobbs

    Thanks (0)
    By NH
    25th Sep 2016 12:19

    I can go along with the first couple of steps, I am sure most of us have already looked through the client list and identified potential issues.

    However with regards to contacting clients and showing them a solution - what exactly can we tell them, only that some form of digital reporting has been proposed, we still have no details at all as to exactly what that means, who will be effected and when.

    Surely while this is still in the consulation process anything could change.

    I have alot of respect for Tony but please let us at least know what we have to deal with before investing in solutions.

    Thanks (2)
    26th Sep 2016 07:58

    A comment from my blog: 'MP's tried their best...'
    "Meanwhile – do I have enough information to tell clients? Will telling them worry them? Most don’t even know they have their 'own' digital account and an 'information sheet' is too much at this stage I think.

    It has been confirmed that as well as a full consultation there will be practical testing so overall it's best to wait until that has been done before saying too much. It is also for that same reason that any response to the consultation needs to be submitted as late as possible (so long as the actual submission date is not missed).

    So I will be tentatively mentioning MTD to my clients - trying not to frighten them too much. See how much they know so far. I can't see what else can be done at the moment."

    Thanks (6)
    26th Sep 2016 08:52

    Due to the consultation and then testing, I don't see how they think a major change to the accounting/tax system can be introduced in (by then) barely 12 months.

    Thanks (1)
    26th Sep 2016 09:54

    All you can tell clients is "dont worry, we will sort it out once we know what is actually happening"

    There is no practical way HMRC can actively dictate how bookeeping is done. All they can measure is input their end of what we are told is 2 or 3 line items of data per Q.

    ie we can pluck some figures from the air and key it in. Its not as if the clients are being taxed on it.

    Thanks (5)
    to ireallyshouldknowthisbut
    26th Sep 2016 10:01

    ireallyshouldknowthisbut wrote:

    ie we can pluck some figures from the air and key it in. Its not as if the clients are being taxed on it.

    Well, we 'can' but whether we should, or whether it's best practice is another thing.

    There's lots of areas in practice work where you 'can' shortcut, but I don't think as professionals we should advocate not following guidelines and rules as they are intended.

    Thanks (0)
    By RobertD
    26th Sep 2016 10:17

    Asked my hairdresser if he knew about MTD on Saturday and was met with a blank expression. Surely you must have read the HMRC press releases I asked! His answer was very typical. He used to do his own payroll but gave up when workplace pensions started. It was too complicated so he asked his accountant to do it. He has a manual bookkeeping system which will not be fit for purpose. He will have to ask his accountant to take on the bookkeeping too! He asked why HMRC and the Government are trying to make it so difficult and costly for him.

    Thanks (6)
    26th Sep 2016 13:12

    Can only agree with above comments.

    We can't prepare (either our practices or our clients) for MTD because we have no idea what we are preparing for.

    I've actually mentioned MTD to a fair few of my clients. Without exception, none had even heard about it and none could get their heads around it. This really needs a lot more education from HMG before they launch it on the unsuspecting public as I'm certainly not doing their (HMG's) work for them on an unpaid basis.

    As for the quarterly updates, I'm rapidly coming to the conclusion, as mentioned above, that the way ahead is to feed any old rubbish in. If HMG want garbage out, then they might as well have garbage in.

    Thanks (6)
    26th Sep 2016 16:44

    The raw data filed will be utter tosh, so why get excited about it?

    HMRC cant possibly expect several million tax payers to do this from a standing start,

    They have tried to check business records before and they simply don't have the staff or the expertise to do it. This is a government "god" project being imposed on HMRC. There is no actual justification for it at the sharp end - we all know that, urgo HMRC will put scant resources on checking up on how the data is created. Its almost impossible to write that in law anyway. The issue is simply "is it right by the time of the final submission?" not "what tool did you use to create it?", or "was it any good each quarter?"

    Even the very dim minds of government will work it out eventually, and we will be left with a white elephant system at vast cost and an active hindrance to tax payers.

    Remember iXBRL? No-one gives a toss about it, so long as you file something.

    Thanks (6)
    26th Sep 2016 17:23

    I wonder whether anyone (Tony perhaps) could find out what HMRC intends to do about advertising this new fantastic 'it will be easy - dont worry' scheme?
    Their You tube etc has been a bit basic and worrying at the same time.

    Thanks (4)
    to Jennifer Adams
    27th Sep 2016 11:36

    Let's hope it's not inline with the blue fluffy monster thing they had for auto-enrolment too...

    Thanks (1)
    26th Sep 2016 18:18

    My approach is two-fold. As per other posts, I am putting together a detailed analysis of various clients and how this will impact them. I am going to send this to Andrew Tyrie as HMRC are a total waste of time.

    If it goes live, I am with ireallyshouldknowthis. In my view, the risk of moving clients against their will to dodgy cloud software far outweighs any possible benefits.

    95% of my clients currently have very robust systems in place. Some of these are on Excel. All clients not on compliant software will be offered a fixed price quote with 2 options:

    1. Full Monty transfer to compliant software whenever HMRC can be bothered to define what this is. I guess the typical cost for a Lake District hotel will be £2,000 one-off plus an additional £2,000 per year on top of current fees.

    2. Take their Excel stuff, key into software and press submit. I guess the typical quote here will be a little less than doing quarterly VAT - say £120 per year with no one-off.

    Which quote do folks think most clients will accept? All answers on a postcard to:

    Mr. Utter Numpty (Senior High-flying Inspector of Trash)
    HMRC Towers
    Cloud Cuckoo Land

    Note that I expect Mr. Numpty to shorten his job title to a suitable acronym in due course.

    Thanks (4)
    27th Sep 2016 10:20

    "demo your proposed solution to their digital future"

    Good idea - if we had one!

    Thanks (0)
    27th Sep 2016 10:26

    No software been released yet so how can we even advise clients exactly what to expect or how long it will take them to become proficient - if at all.
    Then, we are told that HMRC won't be checking the interim submissions be they daily/weekly/quarterly. They will instead be checking the End of Year Declaration.
    Complete waste of everyone's time (apart from software developers and salesmen).
    Seeing what utter tosh some ex-clients have filed and got away with I sincerely doubt anybody is checking anything!

    Thanks (1)
    By Ammie
    27th Sep 2016 10:48

    MTD is a software suppliers fest frenzy. A bit like AE becoming a financial advisers lottery win.

    Calmness and rationality is the first step, no jumping in, in a blind panic. Much more information is required from HMRC who are just testing the water at the moment before rubber stamping the deal as drafted.

    MTD will change and change again and continue to be adapted well into 2020+

    One step at a time, just keep a eye on developments.

    Thanks (2)
    27th Sep 2016 10:54

    Alanpryan -I feel your comment that HMRC wont check interim data is bang on and I dont believe it either.
    The current feeling is that it will take 2 x as much time as at present to manage each client. Quite scary, particularly as this is double the fee area. It leads on that accountants will have to increase staff or ditch clients. If the later then HMRC can be sure to have increasing amounts of rubbish data.

    Thanks (2)
    27th Sep 2016 10:54

    Clients shouldn't be forced to try and do their own book keeping- they want to get on with their micro businesses not spend hours trying to learn what goes where.
    I foresee inputting quarterly estimates and then doing a final set of actual figures for the 9 months after deadline for a lot of my clients.

    Thanks (4)
    By Ammie
    to Ian McTernan CTA
    27th Sep 2016 12:43

    Ian McTernan CTA wrote:

    I foresee inputting quarterly estimates and then doing a final set of actual figures for the 9 months after deadline for a lot of my clients.

    That is exactly where all this is heading, certainly for the smaller practice, even if just on the basis of fee stability, as it will become very difficult to hike fees up to the levels this work will demand.
    As it stands, with SA, provisonal returns are common place anyway.
    One other issue I forsee, however MTD is tackled, is that the deadline bottle neck will still exist as a vast number of cleints have March or 5 April year ends anyway, originally set up that way to fit in with SA. Pre SA clients will probably not have as many March year ends, many then had April year ends. Unless of course year ends are changed.

    Thanks (1)
    By RobertD
    27th Sep 2016 11:34

    My MP just replied and says that I should wait until the con docs are done. The "devil is in the detail" he says. Well he's just got a reply.. the whole plan is fundamentally flawed. Digital cannot be forced on taxpayers. I have clients who have used Sage for years and still can't do it properly. Write to your MP's and Andrew Tyrie. Let them know THEY are accountable for this lunacy.

    Thanks (2)
    27th Sep 2016 11:20

    Like many small practises many of my clients still work on the 'plastic bag' accounting system. Getting them to use even spreadsheets is difficult. Have advised them all about the oncoming MTD system but stressing nothing to worry about pro tem. At the moment don't want to take any further action until we have absolute guidelines from HMRC rather than continual consultation documents and dire warnings on penalties.

    I will tackle this early next year when - hopefully - concrete guidance is given.

    As the great book said - Don't Panic!

    Thanks (3)
    By DMBAcc
    27th Sep 2016 11:54

    A bit like the West preparing wars against perceived threats in the East and then find out they actually need a defence system for small terror cells instead. So lots of money wasted. So my reply to our eminent Mr Margaritelli is send me a letter I will be able to pass on to each of my clients informing them what it is they need to do. Because I am not going to tell them to waste money on products only to find they will need something else when HMRC suddenly and without warning change their mind on something significant (because we all know this is EXACTLY what will happen) leaving us with redundant kit and software. The phrase lunatics and asylum come to mind.

    Thanks (3)
    By RobertD
    27th Sep 2016 12:51

    We have a new Parliament Petition.

    Thanks (2)
    27th Sep 2016 13:44

    Incorporate - MTD is for unincorporated businesses and landlords. And sign my petition at https://petition.parliament.uk/petitions/167738.

    Thanks (2)
    to kevinringer
    27th Sep 2016 16:10

    kevinringer wrote:

    Incorporate - MTD is for unincorporated businesses and landlords. And sign my petition at https://petition.parliament.uk/petitions/167738.

    Signed this a few days ago and just received an email saying the petition has been published.
    I have forwarded the email onto all my clients asking them to participate.
    Thanks (1)
    By tax91
    27th Sep 2016 14:24

    Best thing is to sign the petition to Parliament as posted on this site. See Robert D's comment - petition details

    I agree with most of the comments. Realistically, what can we do? We are still awaiting details from HMRC. At present, naturally, there are no programmes produced by software providers which can be purchased by our clients - or ourselves.
    Yes, try and be prepared as best we can be with the moveable feast that MTD will prove to be.
    We all know which of our clients are more prepared than others so we can make them aware of MTD - as far as we are able.
    The only advice we can give to the remaining clients who are digitally compromised is to say that HMRC are currently looking for ideas on Making Tax Digital, no software currently exists but they should be aware this is Government policy (George Osbourne rides again!) and it is planned to roll MTD out from 6/4/18. When we know more then we can advice. We hope to have software in place and should be able to deal with book keeping services for them - systems allowing.
    Any further detail they need can be had by contacting their MP and in turn Government minister to ask him/her to pass on precise details as to how MDT will work and work for them, mindful that there is 18 months remaining.
    For those who reply on excel but most importantly, plastic bags or boxes accounting method, the advic should be that these systems are on their way out, ask them to check on how good their internet connection is. This is yet another 'good idea' from Georgie Osbourne - he who had more budget adjustments than any Chancellor in recent history.

    Thanks (1)
    27th Sep 2016 17:35

    The 'X' Factor will be if a software company can come up with a product that can take an Excel spreadsheet and convert it into a quarterly cloud submission.

    If this turns out to be the "free" software HMRC are telling us they're asking software companies to develop then life will be so much better. Sadly, I don't think this will be the case.

    Thanks (0)
    28th Sep 2016 10:13
    Thanks (1)
    to Tom 7000
    28th Sep 2016 11:16

    MTD con docs talk about aligning basis periods with UC periods for ease of filing etc, but only 1 software supplier has a UC product. So anyone claiming UC will have to use that one supplier so will have to accept their charges and quality.

    Thanks (0)
    29th Sep 2016 08:08

    In my view MTD will suceed eventually. The problems that I see are the short implemation time, HMRC changing the dates causing loss of interest. If too many small businesses decide not to comply on time.

    I dont belive that free software will be necessary. Software costs about the same as bank charges x 2.

    The problems for accountants and other professionals are changing the data collection process, persuading businesses to do his or her own input and for this to be relatively up to date and accurate (these problems are already raising their heads). Additional time needed per client and the extra fee.

    The problem for HMRC is that is too many become unrepresented that the data quality will fall dramatically and it does not have sufficient staff to poice this properly. What I mean is that data will be submitted but it will be rubbish data. A fair number of these will be small businesses exceeding the £10k turnover but not sufficient profit to exceed the personal allowance. The number of cash only businesses that submit nothing will increase.

    All this is really sad because if HMRC had dealt with it another ie setting the task and asking the practioners to come up with the solutions much less waste all round.

    Thanks (0)
    29th Sep 2016 09:06

    If the consensus is the work is 2x and the fee should match there will be millions of businesses going it on their own each quarter with an annual tidy up by us.

    As said by others quarterly data will be rubbish, and the annual process a nightmare correcting all the client entered rubbish.

    If HMRC had been honest about the reasons for MTD, consulted properly, not a PR exercise, then perhaps a decent system could be implemented. At the minute it will be a shambles.

    Thanks (0)
    28th Oct 2016 09:03

    Good Morning Everyone,

    I have a query re subcontractor clients and MTD.

    Under MTD their tax accounts will be prepopulated with their income.

    Will this mean they don't have to do quarterly submissions of expenditure, but deal with expenses after their year end?

    Or will they have to complete quarterly submissions?

    I ask as having just submitted a subcontractor client's SATR, I realise how little there was in the way of expense documents.
    There were hardly any items of expense, pretty much in line with my other subbies clients.

    So far, I appear to have missed any comments on this subject.

    Looking forward to any answers.

    Henry Hobbs

    Thanks (0)
    By NH
    to Henry Hobbs
    28th Oct 2016 09:27

    well we dont know yet do we? But as they are Sole Traders why would they be treated any differently

    Thanks (0)