The only way your scenario would ever come about is if tax law was massively simplified.
Yes, I think it will be massively simplified for the small family businesses.
Whilst ,for us accountants , it may seem a recipe for disaster when we see those adverts where small business owners are encouraged to "click" on a mobile app and "tax is done", it could work in the context of a simpler tax system.
The main concern regarding quarterly filing by a small business owner (with no accounting knowledge) would be a lack of understanding of accruals, prepayments, deferred income, etc. They could end up massively over or understating income. However, it all comes out in the wash in the end. Over-stated income in one year leads to smaller income in the following year. In any case , they will all catch on and understand the "matching" concept in the end.
Only the bigger businesses ,or the ones with tax complexity, will still require tax experts .Hence, It is the accountancy practice with the smaller clients that is most at risk from cloud software that are hmrc-friendly.
you have clearly had very little interaction with Sage or QBO support staff. Granted, Freeagent sort of do some things like payroll but even that is a basic product very limited in scope. If there is one thing MTD has clearly shown so far, without the agents taking the time to learn how to file correctly, HMRC would have had no chance of getting this off the ground.
Perhaps you are not aware that Freeagent have their qualified accountant on board who sends regular notifications to the users to read their blurb on various aspects of tax. Very detailed and advanced stuff , I would say.
As for Sage and the others. They need not worry. They just have to put links on their software. Links likely to go to HMRC's own detailed tax guidances which they will have ready soon. They already have all the information a small Landlord would need without ever having to consult an accountant. I know this as I get hundreds of emails from HMRC (in my landlord capacity) pointing me to their webminars and guides to tax on properties. If I was not a accountant myself , I would find all information there and more.
Don't get me wrong, I am only trying to protect my profession and open the eyes of practioners who cannot see what is coming.
Yep agree with Glenzy and John, there is just no possible way that our clients would be able to manage to do VAT, Payroll, accounts and for probably 75% of them the book-keeping either. Even the ones that are technically savvy and do their own book-keeping they still rely on us to answer all kinds of questions related to tax and accounting and for business advice.
And for those that have suggested that software companies will takeover the accountants role you have clearly had very little interaction with Sage or QBO support staff. Granted, Freeagent sort of do some things like payroll but even that is a basic product very limited in scope. If there is one thing MTD has clearly shown so far, without the agents taking the time to learn how to file correctly, HMRC would have had no chance of getting this off the ground.
I need to quote your full post. The flaw in your argument is that you assume that the business does not have a competent inhouse bookkeeper or accountant.
That is the basic assumption that too many people are making.
It is the tax agent and external accountant that is being targeted and pushed out. The internal accountant is still a requirement.
Most people on Aweb that have praised cloud software companies are firms that have small clients where there is no inhouse accountant. Just employees with no accountancy background trying to do the books on QBO or Xero or Freeagent and requiring the help of the external accountant. That gives the false impression that external accountant have more work thanks to MTD and cloud software.
Quarterly updates is no problem for existing technology; just a couple of dozens of figures (mainly nominal a/c balances). For example iXRBL already exists.
Ledgers ? Impossible. Joe blogs my run a small family business on Quickbooks or xero and with two dozen transactions but XYZ ltd may run non-mtd ERP systems with 200k transaction a month. If HMRC tries to force the larger companies including household names to move to Quickbooks or Xero, it would be the joke of the century.
The way HMRC will get into the ledger is through a big brother approach; simply requesting businesses to send a copy of their ledgers (pdf, excel or whatever) and enshrining it into law.
I still think that MTD is about getting rid of the tax advisers. Cloud companies will be providing more advanced tax informatuion through links in their software. Soon the taxpayer will know more about things such as loss reliefs than the tax semi-senior.
The tax system is changing. There will be three role players : the taxpayer, HMRC, the cloud software company. The accountant is outside the circle and left behind.
I agree with John in that we will be needed more and not less in the future.
Simple things like changes for landlords who previously filed themselves now come to me as they don't understand the new interest rules.
As a landlord myself, I have received approximately 300 emails from HMRC offering webminars, guidance notes and all practical knowledge about what I can claim etc.
The move is towards making the taxpayer knowledgeable about tax. No need for tax advisers. Laws will also be changing to "simplify" tax which will make the interaction between HMRC and taxpayer more direct.
The tax system in OZ and NZ are not comparable. There is a tradition in OZ where everyone has a tax adviser ( a bit like americans having a shrink)
What they would like to do is very different from what technology allows.
There is a misconception that accounting software only means Xero, Quickbooks , Sage ,etc. From that misconception comes the idea that HMRC can pull ledgers and go beyond the nine figures.
APIs cannot pull ledgers or large amounts of transactions. In fact there is no way that ledgers and underlying transactions can be "automatically" uploaded to HMRC, unless the whole country uses basic, amateurish software as those cloud ones and HMRC reached a deal with them.
The truth is that there are hundreds of different accounting software being used. Recently I help larger clients who use non MTD-compatible software that handle large volumes of data and are extremely complex but essential for their business. One of them generated over 200,000 lines of sale transactions for the quarter and similar amount of purchases. Bridging software worked fine. How would HMRC be able to get so many software companies to build an intergration in order to pull ledgers. Many of them are foreign software companies and without them the business cannot survive since the software is the only one that works for them.
The truth of about MTD is very different to what people think. Yes, they want to get their nose into your ledger but it will not be how you think.
It will start like Italy and Brazil where a sales invoice must be approved by the tax authority before going out.
MTD is only to get software companies to push the accountant out. Already some of these "cloud" companies have their permanent tax adviser on board. HMRC expects them to put links in the software to educate the taxpayer and teach tax and accounting .
Quote from article wrote:
when the 'real' MTD happens (if it does, of course)
It won't happen; at least not the way people expect.
I find it hard to believe that tens of thousands of people out there still think that HMRC will upgrade the MTD-VAT to pull ledgers .
Two clients I spoke to were shocked when I said to them that sending 9 figures through bridging software was all they were required to do. They asked : "What about the ledger ?". Then, the next predictable question from them was : "So, what is the point of MTD ?"
There has been so much disinformation spread about by software companies that nobody understands where MTD is going.
I do understand where it is going. Sadly, most accountants have still not caught on to the fact that HMRC is in the process of building a strong relationship with software companies; the latter being progressively engaged in educating the taxpayer and replacing the accountant as tax adviser.
I totally agree with that Australian accountant. He is saying exactly what I have always been thinking and saying.
He also correctly states that the government is unlikely to spend it wisely. A brave man. The tax authorities will probably descend on him.
One of the hundreds of wasteful project is HS2 (£56 billion and rising) all to reduce travel time between London to Manchseter and Leeds by 15 minutes.
Colleagues are often shocked when I say tax is evil. There are better ways of getting us to contribute to society.
I have been using the word: "conveyor-belt accounting" for many years now when criticising the way work is being organised at my workplace.
It is very sad when there are managers who are incompetent and yet bullies. You then get juniors who get burnt out very quickly.
As for partners, they don't care . They lost touch a long time ago.
This one is quite a sad case. After all , he had passed 13 exams already. If only he could have been honest then his life would not have taken such a bad turn.
I very much doubt that he would lose his job. His sole practitioner boss must know him pretty well by now and only feel pity for him and his weakness.
The ACCA system does not give much credibility to anyone who has completed all exams but not applied for membership yet. Being an "Affiliate" means nothing . It is only when you become a member that you count . Not surprisingly, there are many people out there who use the word "affiliate" loosely.
I have seen hundreds of CVs where applicants claim to be qualified or part-qualified ACCA. In their minds, passing a few exams is a form of qualification.