Member Since: 31st Oct 2016
6th Feb 2017
Here are our issues:
This year we produced 320 tax returns in the window
Of those perhaps 20% maintain their own records and perhaps 25% of those I would describe as complete. Accurate - not so sure
We have a handful of cloud clients but the records in the main were appalling - one classic example where the client has his own bookkeeper and uses Xero has errors of around £10k - too much reliance on auto bank feed and auto analysis with errors galore and accounts not even balancing
Most clients deliver us all records to process in house most not last minute but the volume takes time to deal with
So, what will we do? Let the clients loose and let them prepare quarterly rubbish (if anything) and then we use the ten month window to resolve?
Or do we consider dealing with the quarterly reporting somehow
Complete and accurate in a 30 day window four times a year is impossible - and with clients just not up to the task then is our up to now highly successful firm doomed? I represented to Hmrc that a 90 day window for submissions was the solution here but that seems to have been ignored. They clearly want clients submitting quarterly and us using the ten month window to correct the nonsense - but why? The very fact there is a ten month window is contradictory
There seems no obvious solution to this right now
But I recall reading that Hmrc were only going to be treating the annual year end submission as being the submission by which they would judge
What to do?!?!?
Certainly clients leaving the nest I do not anticipate. We will forewarn them of the potential spikes in fees if we were to have to deal with everything for them but where would they go? Alternatively if they do the quarterly submission themselves then we are probably going to end up re-working everything (almost as we do now) for the year end update..... what a waste of time.
I foresee more work not less - but we are all working close to capacity already aren't we?
Depending on the level of penalties -v- extra cost you do wonder whether paying the penalties and submitting the year end accurate submission would be cheaper for them? Alternatively if quarterly updates went in with, at least, the right turnover and a reliable estimate of expenses then what's the difference compared to the client entering figures we'll change at the end of year anyway!?
I am truly in a complete quandary but aware that 2017 returns (and don't forget 2018 returns) need to be hit early - really early!
16th Dec 2016
A lot of businesses are not prepared because they rely on their accountants to deal with their accounts and tax returns.
By suggesting a one month window for filing each quarter though, and reducing the VAT time period by 7 days, HMRC are making it impossible for accountants to make proper, accurate, useful submissions based on current practices and in my opinion that's where much of the problem then lies.
I personally believe a three month filing window for quarterly submissions would make the whole thing far more useful and workable.
I spoke to two clients about the proposals face to face yesterday. Both of them are intelligent individuals who currently prepare basic summaries of data for us but the look of horror on their faces was, to be honest, rather shocking.
I've come to the conclusion that bank feeds and possibly, for high volume clients, a service such as Receipt Bank will become essential but that comes at great cost. Not all will be able to afford our fee hike and I will have to let them go - but then what happens to them?
If it's sink or swim then we have no choice but to swim but, as a lot of commentators have said, this will come at a substantial cost to businesses whether it be in money (software/accountants/bookkeepers/staff) or in time of their own which is something that people don't have enough of already, especially many of us.
And the most common question from clients so far about quarterly submissions................ "Why?" and that is something I cannot give them a proper answer to other than to say that HMRC thinks businesses want to have more insight and certainty to which the client's answer was "I'm fine as we are thank you."
My main view though is that, with such a short window, HMRC are going to have a lot of businesses filing unchecked rubbish every quarter which will only be tidied up when year end comes. Our builder clients have no desire to become bookkeepers and they will make as good a job at it as I would building a wall e.g. easier to fix it by knocking it down and starting again.....
11th Dec 2016
I'm sure I'm not the only person getting worn down by all the talk of MTD and visualising the reality of it.
I think for practices with clients who are businesses of "a certain size" and competence then this is something very do-able particularly if clients already maintain much of their own accounting records already.
However, when you have clients who can just about manage to bring in a shoe box once a year full of receipts running their business via a combination of bank/cash then this is a whole different prospect.
I've watched the panel debates on AccountingWeb with interest and hearing the larger, or already online, firms talking about their experience is interesting but this is perhaps chalk and cheese for smaller practitioners.
Personally, I'm waiting on TaxCalc's product with high expectation and hope (because I have always found that TaxCalc "get" how we work) but, alas, at this stage we still do not know what it is going to bring so how on earth are we supposed to get any of this moving forward unless we commit to an alternative cloud based system which, ultimately, may not prove the best fit for us and our clients?
In the meantime we're stuck with nothing to do other than try and abate the panic that hangs quietly over us if April 2018 is the date.....
9th Dec 2016
"It’s much, much easier to make that transition on a gradual basis."
Let's hope that message gets through to HMRC then Rebecca because April 2018 does not give that luxury.
All HMRC need to do is turn this on it's head and go with largest businesses first, then medium, then VAT registered and then, if it is all going brilliantly, the smallest.
That eases everyone in and gets the systems working. It then gives us all time to ease our clients in, the most organised first, then the potentially could get organised and then the clients who are a danger to themselves.
Surely somebody in HMRC has stopped to question whether doing things in the order they originally proposed makes no sense whatsoever?
When many of us have clients completely incompetent of even keeping the most basic of records then the danger is that our clients present us with a catastrophic mess every quarter, or when doing the annual final submission, which needs complete reprocessing.
The quarterly submission will be a meaningless farce for a large % of small businesses doing things themselves with the tidy up happening post-year end (unless they decide to go it alone in which case good luck HMRC).
7th Dec 2016
Says it all that a tax designed to discourage people from putting their home into a limited company is also designed to catch out companies (and probably many are very small companies) who are property developers or landlords and not aware of the rules (and HMRC probably do not make them aware....) and with a 30 day window end up paying fortunes in fines.
How ethical is that?
I would hope that a first time offender may be able to have the penalty suspended on the condition that future returns are filed on time - particularly if they voluntarily filed perhaps after seeing this article (when others may not file and get away with it because HMRC aren't efficient enough to find them.....)
1st Nov 2016
Thank you all for your comments - whilst my mind still is weighing heavy today it was a positive to an otherwise pretty bleak feeling day to read your words. So rest assured those few minutes you spent reading and responding were worthwhile and appreciated.