I hope that the changes to the IR35 rules for big organisations are deferred by a couple of years.
This will kill small business in the UK. All the contractors that go on to set up their own businesses will now be forced into Employment and the jump to setting up your own business is so much greater.
Thatcher's Enterprise nation is well and truly coming to an end. So sad and by a Conservative government!
I have at least 10 companies where the initial contact was as a contractor, and then from there the contractor has started a business employing people.
Thanks for the email, send me a pm if you want to talk more, although it is January so maybe February!
Big questions, the answer could be an essay. I will try to keep it brief.
Don’t let me put you off moving your clients to the cloud, because for some there are huge benefits.
If you look at the bigger picture, the problem is that a lot of these systems move the bookkeeping from a desktop to online. I think the online providers were hoping that your clients would engage with the bookkeeping process (and some do). But for the most part, you clients are carpenters, healthcare workers, retailers, engineers, IT consultants, what they are not is bookkeepers. How interested are you in gardening or healthcare or how to cut a dovetail joint in a piece of wood?
The people I would avoid moving are:
- Contractors – Can’t really justify the extra cost.
- Those who don’t seem comfortable with new computer software or have a way they like to do things.
- Individuals who run businesses and have very little interest in the accounting process.
The clients that benefit most are those who have a handful of staff and quarterly accounts just aren’t enough anymore.
In direct answer to your questions:
1. A little, but your clients are not bookkeepers and when something goes wrong you will have to sort it out, and that can take a lot longer than if you were just doing the accounts yourselves.
2. There is no right or wrong answer, for some it just works and for some it doesn’t.
3. Make sure that you use two or three cloud providers, I would be inclined not to look at just the big two because there is a lot of scope in the software market. Post an any answers question and you will be surprised at the responses. It is quite possible Sage, Freeagent, Iris etc have all made innovations that have gone under the radar. For example, next year I will be looking at banks like counting up to see what they offer because for sole traders this could make things easier.
There is always innovation going on and good on those who create that innovation, but replacing accountants with IT systems that bubble for me has now popped, I don't think this happening anytime soon.
HMRC have tried to use systems to reduce their headcount and they can argue the benefits, but the truth is their service has being getting steadily worse with every so called improvement. Yes we like the online accounts and not having to contact HMRC, but nothing got matters resolved quicker than going to the local tax office and resolving disputes face to face with the Inspector.
Having predicted the demise of accountancy a number of years ago on the basis of watching the early offerings of Intuit, I am now very confident that my practice is secure for the next decade and beyond.
The truth is that the online systems and automation can only take you so far, and even with the new banks that offer an integrated accounts coding system, these are at best a work in progress. How would they integrate with payroll?
On some of my clients I have ditched the online platforms back to VT because this system remains by far the best bookkeeping system on the market. Xero and QB take far too long if you want to move a batch of transactions from one code to another, and they don’t handle volume very well. The final point is that these systems are also expensive when compared to a desktop.
If I rolled back the years when I was advising clients to get online, although there are clear benefits, and for some it has been a good move, for others it’s been both expensive and a complete waste of time.
My thoughts exactly. I don't even know why we bother having to produce statutory accounts for Micro's because they are meaningless. Anyone with any reasons?
Either insist on full accounts (my preference) so there is transparency on what companies and LLPs are doing, or don't bother at all because its a paper exercise which has no value.
I would also look at quarterly payments just for CT, to stop non-uk nationals using a company for a couple of years and disappearing leaving unpaid tax, but I don't want to detract from your answer.
When a person on £15k gets fined £1.3k for not filing a tax return on time, even though they may be due a repayment or no tax is due and then there is this.
If I overclaimed benefits of £10k I would be facing a custodial sentence.
This is fraud and for the amounts involved this person should be in prison.
You under tax long term wealth and over tax income (a form of short term wealth) you create disincentives in the wider economy. I am staggered that people don't think that £54.5k Tax and Employees NIC is not enough on £150k salary. Its an eye watering sum of tax. Like you said you forego years of your life and then end up subsidising all and sundry. This creates disincentives in the wider economy.
Good to speak with you unfortunately the VAT deadline waits for no person.
Thanks for the reply. You won’t hear any arguments from me against the corrupt nature of the tax system, or the absolute stupidity of the IR35 system.
Give the limited parameter’s in which we operate, I was just pointing out the stupidities within the tax system, and this is just about the most idiotic.
You cannot run a tax system based on feelings. So, you and I can take the same person you can judge them to be outside IR35 and I judge them to be inside IR35 and there are tax differences running into the 10’s of thousands based on how we feel. This is stuff of the 3rd World.
I should point and I was hammered on the website the last I mentioned this, but the entire tax system is a construct for wealthy people to avoid paying their fair share of taxes.
I think everyone would agree that a fair system is one where everyone pays the same percentage of tax. Let’s call it 30%. You could argue the state is useless and so it be 20%. A lefty would argue it is 40%. Either way the same percentage.
The problem is that if I sell a painting then as a wealty person I wasn’t happy paying 30% on the profit so we introduced CGT. If Daddy gives me a billion then I wasn’t happy paying 30% to HMRC so we introduced Inheritance tax. The whole tax system is simply a construct of smoke and mirrors for wealthy people to avoid paying a fair share of tax.
You could rip the complexity out of the tax system by having a flat rate payable on all your income other than say an amount for a personal allowance and small gifts exemptions.
It will never happen because wealthy people don’t want fairness. You hear the same tired arguments you are taxing Christmas presents, this is money that has already been taxed blah blah blah.
No, its because Eddie doesn’t want to be taxed 30% on his billion pound inheritance. And please don’t shout inheritance tax we all know it’s voluntary, in that to get around it you need an F in media studies. So, while someone on £15k pays £1.5k in taxes lardy [***] Eddie pays nil.
The real issue is that the very wealthy have got the income rich middle classes convinced that a flat rate system taxing everything is detrimental to them. What about your £1m house in Barnet blah blah blah, but what about the taxes you would save on £80k over the course of the life, more than make up for the tax on sale.
But we have deluded middle classes supporting the ultra-wealthy and there is nothing more to add.
My answers
I hope that the changes to the IR35 rules for big organisations are deferred by a couple of years.
This will kill small business in the UK. All the contractors that go on to set up their own businesses will now be forced into Employment and the jump to setting up your own business is so much greater.
Thatcher's Enterprise nation is well and truly coming to an end. So sad and by a Conservative government!
I have at least 10 companies where the initial contact was as a contractor, and then from there the contractor has started a business employing people.
Hi C Bod,
Thanks for the email, send me a pm if you want to talk more, although it is January so maybe February!
Big questions, the answer could be an essay. I will try to keep it brief.
Don’t let me put you off moving your clients to the cloud, because for some there are huge benefits.
If you look at the bigger picture, the problem is that a lot of these systems move the bookkeeping from a desktop to online. I think the online providers were hoping that your clients would engage with the bookkeeping process (and some do). But for the most part, you clients are carpenters, healthcare workers, retailers, engineers, IT consultants, what they are not is bookkeepers. How interested are you in gardening or healthcare or how to cut a dovetail joint in a piece of wood?
The people I would avoid moving are:
- Contractors – Can’t really justify the extra cost.
- Those who don’t seem comfortable with new computer software or have a way they like to do things.
- Individuals who run businesses and have very little interest in the accounting process.
The clients that benefit most are those who have a handful of staff and quarterly accounts just aren’t enough anymore.
In direct answer to your questions:
1. A little, but your clients are not bookkeepers and when something goes wrong you will have to sort it out, and that can take a lot longer than if you were just doing the accounts yourselves.
2. There is no right or wrong answer, for some it just works and for some it doesn’t.
3. Make sure that you use two or three cloud providers, I would be inclined not to look at just the big two because there is a lot of scope in the software market. Post an any answers question and you will be surprised at the responses. It is quite possible Sage, Freeagent, Iris etc have all made innovations that have gone under the radar. For example, next year I will be looking at banks like counting up to see what they offer because for sole traders this could make things easier.
There is always innovation going on and good on those who create that innovation, but replacing accountants with IT systems that bubble for me has now popped, I don't think this happening anytime soon.
HMRC have tried to use systems to reduce their headcount and they can argue the benefits, but the truth is their service has being getting steadily worse with every so called improvement. Yes we like the online accounts and not having to contact HMRC, but nothing got matters resolved quicker than going to the local tax office and resolving disputes face to face with the Inspector.
Having predicted the demise of accountancy a number of years ago on the basis of watching the early offerings of Intuit, I am now very confident that my practice is secure for the next decade and beyond.
The truth is that the online systems and automation can only take you so far, and even with the new banks that offer an integrated accounts coding system, these are at best a work in progress. How would they integrate with payroll?
On some of my clients I have ditched the online platforms back to VT because this system remains by far the best bookkeeping system on the market. Xero and QB take far too long if you want to move a batch of transactions from one code to another, and they don’t handle volume very well. The final point is that these systems are also expensive when compared to a desktop.
If I rolled back the years when I was advising clients to get online, although there are clear benefits, and for some it has been a good move, for others it’s been both expensive and a complete waste of time.
My thoughts exactly. I don't even know why we bother having to produce statutory accounts for Micro's because they are meaningless. Anyone with any reasons?
Either insist on full accounts (my preference) so there is transparency on what companies and LLPs are doing, or don't bother at all because its a paper exercise which has no value.
There we go. Perfect answer.
I would also look at quarterly payments just for CT, to stop non-uk nationals using a company for a couple of years and disappearing leaving unpaid tax, but I don't want to detract from your answer.
When a person on £15k gets fined £1.3k for not filing a tax return on time, even though they may be due a repayment or no tax is due and then there is this.
If I overclaimed benefits of £10k I would be facing a custodial sentence.
This is fraud and for the amounts involved this person should be in prison.
Read this:
https://www.bucksfreepress.co.uk/news/16400657.stoke-poges-builder-malco...
Its worth a go £250K and you get a slap over wrist.
This government is about taxing the poor. It is a head shaking disgrace. How can any rational person think the tax system is fit for purpose.
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That's my thoughts.
You under tax long term wealth and over tax income (a form of short term wealth) you create disincentives in the wider economy. I am staggered that people don't think that £54.5k Tax and Employees NIC is not enough on £150k salary. Its an eye watering sum of tax. Like you said you forego years of your life and then end up subsidising all and sundry. This creates disincentives in the wider economy.
Good to speak with you unfortunately the VAT deadline waits for no person.
Hi John,
Thanks for the reply. You won’t hear any arguments from me against the corrupt nature of the tax system, or the absolute stupidity of the IR35 system.
Give the limited parameter’s in which we operate, I was just pointing out the stupidities within the tax system, and this is just about the most idiotic.
You cannot run a tax system based on feelings. So, you and I can take the same person you can judge them to be outside IR35 and I judge them to be inside IR35 and there are tax differences running into the 10’s of thousands based on how we feel. This is stuff of the 3rd World.
I should point and I was hammered on the website the last I mentioned this, but the entire tax system is a construct for wealthy people to avoid paying their fair share of taxes.
I think everyone would agree that a fair system is one where everyone pays the same percentage of tax. Let’s call it 30%. You could argue the state is useless and so it be 20%. A lefty would argue it is 40%. Either way the same percentage.
The problem is that if I sell a painting then as a wealty person I wasn’t happy paying 30% on the profit so we introduced CGT. If Daddy gives me a billion then I wasn’t happy paying 30% to HMRC so we introduced Inheritance tax. The whole tax system is simply a construct of smoke and mirrors for wealthy people to avoid paying a fair share of tax.
You could rip the complexity out of the tax system by having a flat rate payable on all your income other than say an amount for a personal allowance and small gifts exemptions.
It will never happen because wealthy people don’t want fairness. You hear the same tired arguments you are taxing Christmas presents, this is money that has already been taxed blah blah blah.
No, its because Eddie doesn’t want to be taxed 30% on his billion pound inheritance. And please don’t shout inheritance tax we all know it’s voluntary, in that to get around it you need an F in media studies. So, while someone on £15k pays £1.5k in taxes lardy [***] Eddie pays nil.
The real issue is that the very wealthy have got the income rich middle classes convinced that a flat rate system taxing everything is detrimental to them. What about your £1m house in Barnet blah blah blah, but what about the taxes you would save on £80k over the course of the life, more than make up for the tax on sale.
But we have deluded middle classes supporting the ultra-wealthy and there is nothing more to add.