That's my train of thought - incorporate who you can - dump those you can't. The increase in fees you can charge for the Ltd Co (which would probably still be less than the costs of MTD it they stayed as a sole trader) would cover those you lose. Much simpler life. Doesn't work for rentals but could defer a big chunk of the pain, hopefully until after retirement &/or death.
"But as inflation is expected to peak at 11% this October, Phelan realised that it’s time accountants addressed their own business"
So lets just add more fuel to that particular fire, shall we ?
I might be slow on the uptake, but it has just dawned on me that in 2023/24 we will still have to do all the regular accounts and tax returns for 2022/23 as well as setting up and managing everybody on MTD for ITSA.
Doom ! (said with a Scottish accent)
I'm liking the idea of lorry driving more and more - they will soon be earning more per hour than we could ever charge !
I'm not sure if this is commonly known, but MTD for ITSA requires just 3 line accounts. Business Income, Business Expenses, Profit.
So that's all that needs recording. What's going to happen when a mortgage co or bank want to see someones accounts ? Are they going to accept 3-liners ? Are we going to have to retrospectively then do their accounts again to come up with the detail ?
I think the tax gap will increase as those who decide to do this themselves will not be splitting up fuel receipts between diesel and lager and cigarettes and chocolate bars - and we won't have the time, inclination nor the receipts to look at to do it any differently anyway - it will all just go down as "Business Expense".
I have many clients who will be incapable of operating any software and who flatly refuse to have online banking (and especially won't wish to connect their bank to some strange software they've never heard of) and, even if they do, do all the business transactions go through the bank ? No, of course not. Market traders, window cleaners, gardeners, all who get paid in cash aren't about to trot off to the bank every day to bank all their takings. Then there are people with deductions from their income before it hits the bank, especially CIS. And the software can't assume this is 20% (or 30%) as there may be materials, so how is the CIS figure getting into the system ? that would be manual entry. Will they get that right ? Don't be silly.
And don't forget the bank feeds need re-authenticating every 90 days - how many clients will be capable of doing that and will actually remember to do so ? We will come do look at their transactions in the one month we have to do this, will discover the bank feeds have expired and will then have to get the client to renew them which will take them days to get around to.
It will be carnage.
You might have thought that the various professional bodies, considering the vast sums we pay them, might be out there representing their members views !
And who are the only ones to profit from all this ? The software companies. And you can bet they are lobbying way harder for MTD than the professional bodies are against it. Bet there's some backhanders floating around out there.
So what about VAT-registered unincorporated businesses already doing MTD for VAT (i.e. already on software) who have a non-5th April year end ?
Will they have to change too ?
Does any software cope with year end changes ?
Surely someone here better qualified than me could put up an online petition for both accountants and clients alike with all the great points being raised here.
100,000 votes and they have to properly debate it.
My answers
So what does this mean for the Basis Period Reform ?
That's my train of thought - incorporate who you can - dump those you can't. The increase in fees you can charge for the Ltd Co (which would probably still be less than the costs of MTD it they stayed as a sole trader) would cover those you lose. Much simpler life. Doesn't work for rentals but could defer a big chunk of the pain, hopefully until after retirement &/or death.
"But as inflation is expected to peak at 11% this October, Phelan realised that it’s time accountants addressed their own business"
So lets just add more fuel to that particular fire, shall we ?
What about transitional overlap relief from 96/97 ?
Will HMRC be giving us those figures ?
.. as clients who have come to me in the last couple of decades surely won't have their accounts for those years !
I might be slow on the uptake, but it has just dawned on me that in 2023/24 we will still have to do all the regular accounts and tax returns for 2022/23 as well as setting up and managing everybody on MTD for ITSA.
Doom ! (said with a Scottish accent)
I'm liking the idea of lorry driving more and more - they will soon be earning more per hour than we could ever charge !
I'm not sure if this is commonly known, but MTD for ITSA requires just 3 line accounts. Business Income, Business Expenses, Profit.
So that's all that needs recording. What's going to happen when a mortgage co or bank want to see someones accounts ? Are they going to accept 3-liners ? Are we going to have to retrospectively then do their accounts again to come up with the detail ?
I think the tax gap will increase as those who decide to do this themselves will not be splitting up fuel receipts between diesel and lager and cigarettes and chocolate bars - and we won't have the time, inclination nor the receipts to look at to do it any differently anyway - it will all just go down as "Business Expense".
I have many clients who will be incapable of operating any software and who flatly refuse to have online banking (and especially won't wish to connect their bank to some strange software they've never heard of) and, even if they do, do all the business transactions go through the bank ? No, of course not. Market traders, window cleaners, gardeners, all who get paid in cash aren't about to trot off to the bank every day to bank all their takings. Then there are people with deductions from their income before it hits the bank, especially CIS. And the software can't assume this is 20% (or 30%) as there may be materials, so how is the CIS figure getting into the system ? that would be manual entry. Will they get that right ? Don't be silly.
And don't forget the bank feeds need re-authenticating every 90 days - how many clients will be capable of doing that and will actually remember to do so ? We will come do look at their transactions in the one month we have to do this, will discover the bank feeds have expired and will then have to get the client to renew them which will take them days to get around to.
It will be carnage.
Then we must bombard HMRC with requests for the overlap relief figures for all our clients ! Make sure you send a separate letter for each client.
You might have thought that the various professional bodies, considering the vast sums we pay them, might be out there representing their members views !
And who are the only ones to profit from all this ? The software companies. And you can bet they are lobbying way harder for MTD than the professional bodies are against it. Bet there's some backhanders floating around out there.
So what about VAT-registered unincorporated businesses already doing MTD for VAT (i.e. already on software) who have a non-5th April year end ?
Will they have to change too ?
Does any software cope with year end changes ?
Surely someone here better qualified than me could put up an online petition for both accountants and clients alike with all the great points being raised here.
100,000 votes and they have to properly debate it.