What is going on behind the scenes - first it was crew cab vans and now this?!
Maybe HMRC should start listening to us if they want some useful ideas!
We can start with:
If you think it's bad now just wait for two years time!
Give authorised agents access to allocate payments to the correct periods for CT and PAYE in particular
Give us access to our client's personal tax accounts as a default once authorised
Create an online folder which will store all letters sent by HMRC to clients/agents for those occasions when letters aren't received or are delayed causing us to then have to contact the HMRC helpline and perhaps wait 9 months for a one line reply which is probably completely irrelevant to the original question?
I'm certain that the main reason we call the Self Assessment helpline is because of HMRC errors....... or, currently, spending hours putting together responses to send HMRC to prove that we're not a firm of scam accountants applying for a refund for 2 CIS clients whom we have represented for years with a bundle of bank statements, vouchers etc...... my frustrated question is "why!?!"
With the endless delays to MTD and the continuing roll out of cloud accounting software then, in theory, surely this should be the peak period when taxpayers would be doing things themselves with an easy once a year filing window.
Combine that with an economic slowdown since Covid and then we accountants should surely be having an easing off in workload?
Don't know about the rest of you, but I'm not seeing that so what in theory is coming up for our profession with the reassurance of knowing that the pool of talent waiting to join our teams feels weaker than ever!?
AI is helping us all a lot but there's a point on every job where the AI can only do so much because our small business clients are not the most predictable of entities.
Also don't forget that after every recession comes a recovery and lots of start ups....... more clients?
Busier small businesses will result in those that had been doing it themselves probably looking to delegate more out to us..... (we're already seeing that happening)
And then MTD will arrive. A final "normal year" and rolling out a new quarterly system all at the same time.
So will that see our existing clients taking on more of the work themselves ? I doubt it... perhaps I even fear it because we all know what a nightmare it can be on occasion when clients try to be helpful....
What about the millions who file their own returns? Well apparently 98% file using the HMRC website which, of course, is as basic as can be and will not work for MTD!
Those individuals will, don't forget, be preparing the previous years 2025/26 return (file by 31 January 2027) but will have to do Q1 and Q2 for 26/27 long before then........ what can possibly go wrong?!
So they will face a choice, go from their basic submissions to full digital cloud software (with a monetary and time cost), seek help from accountants (higher monetary cost but frees up their time) or bury their heads.
Whichever way you look at it then I foresee us all being busier than ever, probably forced to put our rates up with demand swamping supply, those of us within 5-10 years of retirement tempted to rush for the door, and many many many taxpayers being absolutely lost.
Oh and there'll be more cloud accounting firms springing up giving little/no advice to their clients which normally means that, once the clients wake up, they find themselves a proper accountant.
Other than that, yes it's on track - trouble is the train has long since gone trundling past the sign that said "warning - dead end ahead!"
The hardest skill to master is learning how to say "no" to clients whether that be existing clients with their demands or even new clients when it can be hard to respond to new enquiries saying "sorry we are too busy".
Personally I think 2021 is the year to at least hope to create a bit of breathing space (will 2020-21 accounts be easier to prepare than normal?!) and then if the space is created choose what you want to fill it with.
I think for many of us after the last year we could probably benefit from NOT then filling that space with "work".
We should also remember what we learned from our economics papers in regard to the golden rule of supply and demand. If you want to find equilibrium then prices go up. Very hard to do when we are worrying about our clients but if the boot was on the other foot ask yourself what you would be advising a client to do?
Personal experience is that clients have appreciated our hard work to support them in the last year more than ever before so now is possibly the perfect time to push for change.
Having said all the above I probably need to look in a mirror and say this to myself too because we all already know it don't we!
This is not the first time this has happened with HMRC and won't be the last.
Worse one I experienced was receiving a copy of long and detailed enquiry letter, addressed to us, but relating to a well known celebrity.
Not only did it start off with "please find enclosed a copy of a letter issued to your client" e.g. it revealed their address, but it was clearly an enquiry which was only part way thereby revealing a lot of information.
We advised HMRC and posted it on to the celebrity making them aware HMRC had made the error and that they should forward it to their agent.
One rule for us it seems and another for larger bodies...........
We’re having to apply for filing extensions for company accounts to create the time to do everything.
VAT deadlines aren’t shifting nor are PAYE RTI deadlines.
New work which didn’t exist a few weeks ago
CBILS applications, CJRS claims, helping clients make applications for grants, coaching clients (I’ve become a counsellor to SO many), regular circular emails, created a YouTube channel, 23 April deadline for late 2019 return instructors
....and I had a suspected case of the virus which wiped me out for 17 days not helped because I’d been working 14 hour days the weeks before and have been since (including ‘weekends’).
On a serious note remember to look after yourselves because if you do catch it then it’s not fun! My 47 year old brother in law was in a critical condition for two weeks and had no pre existing conditions!
Let’s just hope that the self employed system is a bit more automatic - I’m not convinced though - there’s the issue of whether they’ve traded in 19/20 and 20/21 - will be boxes to tick and so many clients use accountants as they don’t want any interaction with HMRC - I sense another instructional YouTube video in a few weeks.
This is making January feel like a summer holiday (remember those?)
I am constantly surprised why PSC's don't insist on paying their own expenses and just roll it in as part of the fee. Clearly HMRC recognise it as a factor as it is in the updated CEST tool and, based on test results I have seen, clearly can be a swaying factor. Had he paid his own transport costs to outside broadcasts, hotel/subsistence etc then, whilst it might have been a small point, it would have been a clear difference between how an employee would act. Submitting expense claims over and above a fee is, in my opinion, a bad idea for any PSC. If you want to be taxed like a business make sure you act like a business.
There's one big issue for small businesses and that is whether people can actually afford to pay higher taxes.
Call it personal greed if you like but people/businesses adapt their lives to their incomes, especially when the rules have been in place for such a long period of time.
I don't see many clients with huge surplus incomes which means that higher tax rates will mean far more small businesses struggling, less investment, redundancies, small companies folding and, as a result, probably a lower tax take from the sector. At the end of the day you can give someone a big bill and, short-term, that will make your figures look good but a debtors list (whether you are in business or the government) won't pay the wages at the end of the month!
Let's face it, less money in your pocket means less money to spend, that then effects the businesses you would buy from so they then suffer and suddenly you are in a downward spiral as profits fall and so too do tax takes - albeit for many the tax bill will be the last thing they pay........
Any changes would have to be introduced very gradually - the plans of Labour and the Lib Dems are asking for trouble.
Small businesses need a carrot and not a stick - the healthiest way to higher tax income for the government is higher incomes/profits for everyone. Sure, bring in a 1% or 2% rise which can be adapted to but these proposals for dividends are atomic considering how many businesses were encouraged to incorporate under Labour.
I'm dealing with a BBC IR35 case at the moment and it's astonishing that HMRC are continuing to push.
The client operates totally independently with his own studios and circa £100k plus of equipment and employees and yet the latest communication from HMRC was a list of about 70 questions!
Seems in many cases they have just scooped everyone into one net and are just issuing blanket requests for information.
Interesting to note on the updated tool some points about expenses.
In particular regarding vehicle expenses. I had a case a few years ago where they challenged a building firm on the basis that some of their sub-contractors should be on PAYE. They had their own vehicles that they paid expenses on but HMRC argued it was only for commuting. The argument was won on the basis that they had to bring their vehicles because at times the main contractor could require them to go and get material etc (not necessarily paid for by the sub-contractor) and, if they did not have their own vehicles, then he could find his sites grinding to a halt. Even occasional business use (on the understanding that could arise on any day at any time) won.
Key seems to be for expenses overall that, no matter what the role, don't claim them back from the end client and, instead, incorporate it in the fee charged in the same way that any business does when calculating their fee. Putting in physical expense claims, separate to an invoice for fees, is a lose-lose.
I ran the CEST tool and, the funding of costs seems to win many times as working on a business to business basis such that a contractor funding work travel, subsistence themselves should also be ok. Certainly such a contract term is surely only going to help as the end client then running CEST will be ticking that, clearly highly important, box.
My answers
What is going on behind the scenes - first it was crew cab vans and now this?!
Maybe HMRC should start listening to us if they want some useful ideas!
We can start with:
If you think it's bad now just wait for two years time!
Give authorised agents access to allocate payments to the correct periods for CT and PAYE in particular
Give us access to our client's personal tax accounts as a default once authorised
Create an online folder which will store all letters sent by HMRC to clients/agents for those occasions when letters aren't received or are delayed causing us to then have to contact the HMRC helpline and perhaps wait 9 months for a one line reply which is probably completely irrelevant to the original question?
I'm certain that the main reason we call the Self Assessment helpline is because of HMRC errors....... or, currently, spending hours putting together responses to send HMRC to prove that we're not a firm of scam accountants applying for a refund for 2 CIS clients whom we have represented for years with a bundle of bank statements, vouchers etc...... my frustrated question is "why!?!"
Wait for the rush of incorporations to avoid this inevitable car crash............
With the endless delays to MTD and the continuing roll out of cloud accounting software then, in theory, surely this should be the peak period when taxpayers would be doing things themselves with an easy once a year filing window.
Combine that with an economic slowdown since Covid and then we accountants should surely be having an easing off in workload?
Don't know about the rest of you, but I'm not seeing that so what in theory is coming up for our profession with the reassurance of knowing that the pool of talent waiting to join our teams feels weaker than ever!?
AI is helping us all a lot but there's a point on every job where the AI can only do so much because our small business clients are not the most predictable of entities.
Also don't forget that after every recession comes a recovery and lots of start ups....... more clients?
Busier small businesses will result in those that had been doing it themselves probably looking to delegate more out to us..... (we're already seeing that happening)
And then MTD will arrive. A final "normal year" and rolling out a new quarterly system all at the same time.
So will that see our existing clients taking on more of the work themselves ? I doubt it... perhaps I even fear it because we all know what a nightmare it can be on occasion when clients try to be helpful....
What about the millions who file their own returns? Well apparently 98% file using the HMRC website which, of course, is as basic as can be and will not work for MTD!
Those individuals will, don't forget, be preparing the previous years 2025/26 return (file by 31 January 2027) but will have to do Q1 and Q2 for 26/27 long before then........ what can possibly go wrong?!
So they will face a choice, go from their basic submissions to full digital cloud software (with a monetary and time cost), seek help from accountants (higher monetary cost but frees up their time) or bury their heads.
Whichever way you look at it then I foresee us all being busier than ever, probably forced to put our rates up with demand swamping supply, those of us within 5-10 years of retirement tempted to rush for the door, and many many many taxpayers being absolutely lost.
Oh and there'll be more cloud accounting firms springing up giving little/no advice to their clients which normally means that, once the clients wake up, they find themselves a proper accountant.
Other than that, yes it's on track - trouble is the train has long since gone trundling past the sign that said "warning - dead end ahead!"
The hardest skill to master is learning how to say "no" to clients whether that be existing clients with their demands or even new clients when it can be hard to respond to new enquiries saying "sorry we are too busy".
Personally I think 2021 is the year to at least hope to create a bit of breathing space (will 2020-21 accounts be easier to prepare than normal?!) and then if the space is created choose what you want to fill it with.
I think for many of us after the last year we could probably benefit from NOT then filling that space with "work".
We should also remember what we learned from our economics papers in regard to the golden rule of supply and demand. If you want to find equilibrium then prices go up. Very hard to do when we are worrying about our clients but if the boot was on the other foot ask yourself what you would be advising a client to do?
Personal experience is that clients have appreciated our hard work to support them in the last year more than ever before so now is possibly the perfect time to push for change.
Having said all the above I probably need to look in a mirror and say this to myself too because we all already know it don't we!
This is not the first time this has happened with HMRC and won't be the last.
Worse one I experienced was receiving a copy of long and detailed enquiry letter, addressed to us, but relating to a well known celebrity.
Not only did it start off with "please find enclosed a copy of a letter issued to your client" e.g. it revealed their address, but it was clearly an enquiry which was only part way thereby revealing a lot of information.
We advised HMRC and posted it on to the celebrity making them aware HMRC had made the error and that they should forward it to their agent.
One rule for us it seems and another for larger bodies...........
We’re having to apply for filing extensions for company accounts to create the time to do everything.
VAT deadlines aren’t shifting nor are PAYE RTI deadlines.
New work which didn’t exist a few weeks ago
CBILS applications, CJRS claims, helping clients make applications for grants, coaching clients (I’ve become a counsellor to SO many), regular circular emails, created a YouTube channel, 23 April deadline for late 2019 return instructors
....and I had a suspected case of the virus which wiped me out for 17 days not helped because I’d been working 14 hour days the weeks before and have been since (including ‘weekends’).
On a serious note remember to look after yourselves because if you do catch it then it’s not fun! My 47 year old brother in law was in a critical condition for two weeks and had no pre existing conditions!
Let’s just hope that the self employed system is a bit more automatic - I’m not convinced though - there’s the issue of whether they’ve traded in 19/20 and 20/21 - will be boxes to tick and so many clients use accountants as they don’t want any interaction with HMRC - I sense another instructional YouTube video in a few weeks.
This is making January feel like a summer holiday (remember those?)
I am constantly surprised why PSC's don't insist on paying their own expenses and just roll it in as part of the fee. Clearly HMRC recognise it as a factor as it is in the updated CEST tool and, based on test results I have seen, clearly can be a swaying factor. Had he paid his own transport costs to outside broadcasts, hotel/subsistence etc then, whilst it might have been a small point, it would have been a clear difference between how an employee would act. Submitting expense claims over and above a fee is, in my opinion, a bad idea for any PSC. If you want to be taxed like a business make sure you act like a business.
There's one big issue for small businesses and that is whether people can actually afford to pay higher taxes.
Call it personal greed if you like but people/businesses adapt their lives to their incomes, especially when the rules have been in place for such a long period of time.
I don't see many clients with huge surplus incomes which means that higher tax rates will mean far more small businesses struggling, less investment, redundancies, small companies folding and, as a result, probably a lower tax take from the sector. At the end of the day you can give someone a big bill and, short-term, that will make your figures look good but a debtors list (whether you are in business or the government) won't pay the wages at the end of the month!
Let's face it, less money in your pocket means less money to spend, that then effects the businesses you would buy from so they then suffer and suddenly you are in a downward spiral as profits fall and so too do tax takes - albeit for many the tax bill will be the last thing they pay........
Any changes would have to be introduced very gradually - the plans of Labour and the Lib Dems are asking for trouble.
Small businesses need a carrot and not a stick - the healthiest way to higher tax income for the government is higher incomes/profits for everyone. Sure, bring in a 1% or 2% rise which can be adapted to but these proposals for dividends are atomic considering how many businesses were encouraged to incorporate under Labour.
The cracks are perhaps beginning to show?
I'm dealing with a BBC IR35 case at the moment and it's astonishing that HMRC are continuing to push.
The client operates totally independently with his own studios and circa £100k plus of equipment and employees and yet the latest communication from HMRC was a list of about 70 questions!
Seems in many cases they have just scooped everyone into one net and are just issuing blanket requests for information.
Interesting to note on the updated tool some points about expenses.
In particular regarding vehicle expenses. I had a case a few years ago where they challenged a building firm on the basis that some of their sub-contractors should be on PAYE. They had their own vehicles that they paid expenses on but HMRC argued it was only for commuting. The argument was won on the basis that they had to bring their vehicles because at times the main contractor could require them to go and get material etc (not necessarily paid for by the sub-contractor) and, if they did not have their own vehicles, then he could find his sites grinding to a halt. Even occasional business use (on the understanding that could arise on any day at any time) won.
Key seems to be for expenses overall that, no matter what the role, don't claim them back from the end client and, instead, incorporate it in the fee charged in the same way that any business does when calculating their fee. Putting in physical expense claims, separate to an invoice for fees, is a lose-lose.
I ran the CEST tool and, the funding of costs seems to win many times as working on a business to business basis such that a contractor funding work travel, subsistence themselves should also be ok. Certainly such a contract term is surely only going to help as the end client then running CEST will be ticking that, clearly highly important, box.