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Benneyworth: A small practitioner’s journey into MTD

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Rebecca Benneyworth responds to AccountingWEB members’ negative views of MTD with observations drawn from her own expierence working digitally with very small client businesses.

22nd Oct 2021
Partner Rebecca Benneyworth Training Consultants
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I have been following the comments on AccountingWEB regarding the MTD announcements for years. Many of you will know that I have been interested in and involved in MTD since before it was announced to the public in December 2015. I first heard of the project (which was called something else at first) in August 2015 at a presentation for the Administrative Burdens Advisory Board which I have been a member of for around eight years.

Not for me – initially

I found the presentation about the future of tax in a digital world fascinating, although I could not see how my motley collection of clients would ever join in. At the time there was no suggestion that the new ideas would become compulsory, and they looked like an interesting idea – but not for me!

Things were getting more and more difficult for me in my practice at the time. My lecturing commitments were huge and my clients were as uncooperative with their records as ever. My story about asking clients to bring their books in early in the year that I underwent chemotherapy, surgery and radiotherapy for advanced breast cancer – with the result that absolutely none did – still provokes laughter, but unfortunately it was true.

I could not persuade my clients to part with their attempt at records early and I was beginning to hate my practice. Unlike other practitioners, I don’t have the luxury of running latecomers into February – my lecturing business starts up again in early February and there is minimal time for client work until Easter.

The crunch point

I had reached crunch point: either I had to radically change my practice or give up. I literally couldn’t go on any longer. But a number of things had conspired to offer me a way out. I had worked with AccountingWEB with a company called BankStream – and gained insight into what a bank feed could do – way before open banking.

I read the ICAEW Tomorrow’s Practice, which also referred to bank feeds and how artificial intelligence could recognise regular transactions and allocate them appropriately within accounting records to reduce processing time.

My way out seemed to be to go digital – go digital or die if you will. But what about my bloke with an exercise book, a pencil and a duplicate book for his invoices? Well, he was a good place to start.

I charged a fairly hefty fee because his records were so dreadful – hours spent trying to separate out a tangle of bank, credit card and cash payments so I could do a bank reconciliation. The fee was large enough to pay for a software licence and for me (joined by my daughter) to bring the bookkeeping in house. In fact, the move produced a better recovery on the time spent, as there was no mess to sort out and no waiting for records.

That spurred me on, and I started to move clients very slowly onto digital records.

The threshold issue

Like many of those commenting on Giles McCallum’s article last week, I was horrified at the thought of my clients being mandated into MTD, and at the £10,000 income threshold. But the last 4-5 years have taught me a lot. I am amazed at how many clients adapted to digital tools.

Of course, some have not – and we have had to be imaginative sometimes to come up with solutions for those who don’t “do” mobile phones or digital in any shape or form. The huge benefit for me is my own experience of being in practice.

I made this shift at first because it was do or die. I continued because I thought if MTD was coming I wanted to be ready for it. Now I cannot ever imagine going back to the drudgery of incomplete records work and the increasingly desperate pleas for paperwork.

Happy bookkeeping in house

I’m happy bringing the bookkeeping in house because I don’t have to spend time (much of which is not chargeable) sorting out the mess after the client has mucked it up. That little lesson was a favourite comment by Frank Woods at BankStream: don’t let them muck it up and then spend hours sorting it out. Why not cut out the middle man and get it right from the start? He is right – it is quicker and easier, and therefore more profitable.

So I’m responding to your comments and your worries – and please don’t accuse me of being out of touch. I have been in practice for 35 years, mainly dealing with mobile hairdressers, fencers, joiners, childminders and the like. I was six months pregnant for the first self assessment season and thought it couldn’t get any worse – how wrong I was!

But I’m now enjoying my practice and welcoming comments from very small businesses who feel more in control of their finances and are gaining confidence with digital technology as time goes on.

The absolute key to MTD is digital records. Get that right and everything else will follow with minimal effort. The technology has developed quickly and there is more to come – we just need to take those first steps. For me – I’m enjoying practice sufficiently that when I stop lecturing this will be my “retirement” – something I could not have imagined six years ago.

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Hear what Rebecca Benneyworth, Steve Cox (IRIS) and HMRC have to say about preparing for MTD at Rebecca's 11:15am "bootcamp" session at the AccountingWEB Live Expo in Coventry on 1 December. Details and links below:

Replies (236)

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By Paul Crowley
22nd Oct 2021 16:46

But you chose the actions for your benefit
And you are doing the bookkeeping, again for your benefit

Are you really telling us that you would choose MTD for landlords using a letting agent?

You have what is really a hobby trade, not a livelihood

Tax law to date has been simple
Keep records sufficient for the purpose of preparing a tax return once a year

Companies have company law and the record keeping is at a greater level
If HMRC want to play the game of "we know better than you" they should start with companies that tend to have more resources available

MTD is forced on the smallest of clients, requiring unread quarterly reports, despite these people having a system that works for them and their agents.

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Replying to Paul Crowley:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 14:25

Paul, I refute your comment that I have a hobby trade. That is insulting and I take issue with it. I am a professional with a focus on very small business. My purpose in writing the article was to explain that I have seen real benefits in moving clients to digital records. Those benefits are to my practice, but also to my clients. I am trying to put an alternative view to those expressed on Giles' article - from the coal face.

The bottom line is that if you decide not to come on board you won't have a business in five years time - your decision!

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Replying to RebeccaBenneyworth:
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By johnjenkins
27th Oct 2021 14:41

I'm sure Paul will reply to you, however I would like to say that I agree there are a lot of benefits to some but for others it will be a nightmare and for HMRC to force this onto all is totally unacceptable. It should be voluntary for, at least, the next 5 years, then re-appraised. I still do not think quarterly updates will benefit small business.

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Replying to johnjenkins:
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By Rebecca Benneyworth
27th Oct 2021 19:47

John, you will see in the article that I thought mandation was wrong. I said so at every opportunity both on here and in public.

I have now come to the point where I accept that battle (and the battle over the limit of £10,000) is lost.

You, and maybe many on this post don't, and maybe time will prove me wrong. I still don't agree with mandation, nor with the limit of £10,000, but my opinion on these issues is of no relevance to anyone - except possibly to those on here who have accused me of various degrees of complicity / corruption / sponsorship by HMRC / the software sector & / or AccountingWeb. Oh, and stupidity , lack of credibility, being a part timer (whatever that means) and more.

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Replying to RebeccaBenneyworth:
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By johnjenkins
28th Oct 2021 09:56

Rebecca, do you remember going to the first seminar in London on agent strategy and the euphoria we felt that HMRC actually wanted a report with us. That fell by the wayside due to their doing. MTD for the under £85k will fall by the wayside due to our and the smaller business doing.

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By Hugo Fair
22nd Oct 2021 17:18

Whilst I wouldn't wish the cause of your 'road to Damascus' moment on anyone - and am happy for you that it has worked out so well - everything you say is predicated on the benefits for you ... not for your clients, and especially not for those who "have not adapted to digital tools".

Like so many proponents of MTD, you appear to take any criticism of the Treasury/HMRC plan as being driven by a fear for the criticiser's practice or as an example of luddites at work.

Without re-hashing all the points in other threads, those are not the concerns of most of us - ranging as they do across:
* Why mandate it if it delivers no benefit to a particular taxpayer who could've opted to 'go digital' but chose not to (and is happily complying with tax legislation and paying on time)?
* What do you propose should happen to all the unrepresented taxpayers (including those who find themselves in that position because their current agent drops them)?
* Do you honestly believe that there are no taxpayers due to be affected by the 'entry level' income threshold who need anything beyond cash basis accounting?
* Where is the route plan from HMRC that sets out what needs to be recorded digitally / when and how it needs to be submitted / how omissions & errors are to be corrected / where the various EOPS & Declarations fit into the workflow process / how to bring together records for a single taxpayer that emanate from a variety of sources & businesses (probably using different software) / etc?
* And how does this lead to any of the avowed intentions of HMRC ... reduced administration for taxpayers / increased accuracy of data records & submissions / improved forecasting of the tax position (for taxpayer and, frankly laughably, for central government planning)?

It may surprise you to know, although I doubt it, that an idea with laudable intentions that happens to work for a small subset of the population ... does not automatically make it fit for purpose across the whole population - especially if minds are closed to criticisms and suggestions.

So, good luck to you personally and those of your clients whom you are happy to retain, but please don't think that emulating the HMRC culture (where any form of dissent is seen as irrelevant if not malevolent) will help the current problem.

If HMRC had listened properly then all the issues in RTI identified by professional users would have been fixed quicker and less expensively than has happened over the last 7+ years ... and HMRC would still have the 'trusted partner' status that it seems so determined to lose.

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Replying to Hugo Fair:
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By Jo Nokes
24th Oct 2021 17:21

Hats off to you, Hugo, for once again setting out the reasons why this project in its current format, is so ill thought out

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Replying to Hugo Fair:
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By Ian McTernan CTA
25th Oct 2021 10:17

Rather than post my own response, I'll just +1 this one.

Just because YOU (Rebecca) decided to go digital for your benefit and then only took on clients willing and able to do so doesn't mean the vast majority of clients are either willing or able to do so.

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Replying to Hugo Fair:
By tonyaustin
25th Oct 2021 12:13

If the business is small enough for cash basis reporting, which is also the default for property income, what is the difficulty in a client keeping receipts and payments digitally and analysing them into about 5 simple headings? What we need is for HMRC to spell out exactly what records need to be kept and sent to them each quarter. Will taxpayers HAVE to keep and report to HMRC bought and sales ledger transactions, quarterly stock sheets, quarterly accruals and prepayments? Or can they just digitally record and report receipts and payments and adjust for the rest, if needed, at the year end?

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Replying to tonyaustin:
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By Hugo Fair
25th Oct 2021 12:21

Agree ... which is what I was getting at in one of my many points in the lengthier response above:
" Where is the route plan from HMRC that sets out what needs to be recorded digitally / when and how it needs to be submitted ..."

But, whilst that (rather core) unknown would help your example 'small cash basis reporting' client, it's by no means all that is still missing - nor a justification for mandation on those who will reap no discernible benefit from their compliance.

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Replying to Hugo Fair:
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By Rebecca Benneyworth
27th Oct 2021 14:38

It's all in the Regulations. Transactions - date, amount, analysis (headings to follow SA categories to be confirmed shortly). Record at least quarterly in tax quarters. Submit transaction totals quarterly through software. Timing - first quarter from 6 April 2024 to 5 July (or 30 June) by 5 August and quarterly thereafter.

End of year - you will do what you do now on SA return by the same date.

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Replying to tonyaustin:
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By Rebecca Benneyworth
27th Oct 2021 14:33

Tony, the records need only to be receipts and payments, and we expect the analysis to be as per the current tax return headings - so for land and property just 5 headings. Cash basis, yes, and all that needs to be submitted is the total of the transactions each quarter (nothing else). I agree with you. As soon as there is free software suitable for my landlords they will all be on too. At the moment the only clients who are not on software are those who would see a significant increase in fees due to the cost of the licence. I don't want to handle jobs with 'no records' and my clients understand that. I'm not sure I understand the resistance to this. Surely having good records makes our like easier?

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Replying to RebeccaBenneyworth:
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By johnjenkins
27th Oct 2021 14:50

If a client brings a carrier bag of goodies in to me once a year that contains all the information to enable me to work out their tax liability then in my view that is good record keeping. The client hasn't got a clue where to start and would rather be out earning money and be with their family than try and deal with software. That is what an Accountant's job is all about. Now for the small business there is no need to do this more than once a year. For those that are VAT registered they are already doing quarterly figures of some description. HMRC will have to learn that admin is very different for the small business and Landlords.

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Replying to Hugo Fair:
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By Brian2611
25th Oct 2021 14:01

I hold Rebecca Benneyworth in very high regard. However, I cannot agree with her on this matter. Hugo makes a very good argument with which I agree, and can add very little. I am 69 years old and have continued in practice because I enjoy my work and get on well with my clients (and the money is handy). However, I am retiring on 31 Jan 2022 mainly due to MTD for ITSA. I have converted just over 50% of my clients to digital recording, I am still trying to get a few more converted. There are some who will not be able to cope with MTD without a great deal of input from me, for which I would not be able to charge. These are good business people who comply with tax law and pay their tax on time. Why are they being punished.

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Replying to Hugo Fair:
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By Rebecca Benneyworth
27th Oct 2021 18:01

I'm wondering when tax changes were only introduced if they were of benefit to the taxpayer? That certainly was not true in the late 1990's when self assessment came in. A huge amount of extra work, a completely new and shorter deadline than anything we had been used to and penalties to boot.

The Regulations set out very clearly what is to be recorded - each transaction, (1)date (2)amount and (3)category (along the lines of the SA return).
Quarterly submissions are cumulative totals of the data (recorded up to the end of the quarter) for each category submitted within a month of the end of the quarter (option for calendar quarters with same 5th of month submission date).
End of period statement is stand alone SA103 / SA105 for each business (we do these already) with a declaration.
Correct errors when found. No separate submission.
Finalisation = the rest of the tax return. By 31 January after the tax year (we do already).
Income limit - agreed £10,000 is too low in my view but as far as I can see it won't move.
As to the rest of your questions - much of that depends on what software you choose and how you use it.
The unrepresented - there will be practices which focus on the smallest businesses and use free software I'm sure. We shall see.

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Replying to RebeccaBenneyworth:
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By lionofludesch
27th Oct 2021 18:19

RebeccaBenneyworth wrote:

I'm wondering when tax changes were only introduced if they were of benefit to the taxpayer?

They weren't.

But, on this occasion, HMRC and their minions in Government have repeatedly said - and continue to say -that MTD will be a massive boon to taxpayers. It'll make their lives much easier. They'll be better able to collect their debts, know how much tax they owe, have their profits available at the touch of a button, be able to take a photo of their receipts on their smartphones and upload them to their accounting software using the mythical free app.

All nonsense, of course.

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Replying to lionofludesch:
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By Rebecca Benneyworth
27th Oct 2021 19:59

Which is where I came into the picture in 2016. The (South East) based assumption that 'everyone has a smartphone' and 'everyone is online' made me fume. My builder with a (very) smart phone suggested by his grandson, and a bit of paper in his back pocket with his phone numbers on was trotted out regularly to anyone who happened to get in the way of me in the early days. I genuinely believed that we (the combined might of the profession) could turn the tanker, persuade HMRC away from mandation and the ridiculous £10,000 limit. I don't believe that any more.

I believe that HMRC should not be advertising the 'benefits' of MTD or digital - it's just something that has to be done to comply. Whether that would make views better or worse is a good question.

But hence the need for accountants who are prepared to be flexible and creative to get their clients to where they need to be. And I want to be one of those accountants.

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Replying to RebeccaBenneyworth:
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By Hugo Fair
28th Oct 2021 00:26

Hi Rebecca

Whilst I have no time for those who cast aspersions on an individual's motivation (especially without any evidential basis), I'm not convinced you've grasped the core issues raised repeatedly throughout this thread ... and, without claiming anything special about my contribution, in particular seem to have avoided the list of specific questions that I raised in my original response at22nd Oct 2021 17:18

I appreciate that you're not a mouthpiece for HMRC - and don't agree with every aspect of the current position (particularly with regard to mandation and the £10k entry point).
I have been on the same uncomfortable journey with HMRC when the concept of Centralised Deductions morphed into RTI - but at least in those days they had whole teams with a remit to reach out (and LISTEN) to all groups of stakeholders. Over the course of several years there were countless meetings (often all day) around the country, where specifications were hammered out in the light of operational issues brought to the table (no Zoom meetings then!)
I wasn't a popular figure (and was even threatened with physical violence on one occasion) but, along with a small cadre of like-minded individuals, RTI was forced into a vaguely deliverable 'solution'.
My wife never understood why I'd do all that for zero pay (not even expenses) but, at the risk of sounding pompous, I saw it as my public duty to save HMRC (and all employers) from the absolute car-crash that was otherwise heading their way.
Not every battle was won (and some have only belatedly been acknowledged 8 years later - like the removal of the EYU) ... but a system resulted that at least is logically consistent and can be processed rigorously by many software packages.
The shame of course is that we never got the power to convince those with the Treasury's purse-strings that HMRC's own systems needed a root-and-branch re-design ... so we are still living with the issues caused by data corruption and/or mis-posted/processed submissions once they enter HMRC's 'back office'.

Why am I wittering on about RTI and the past? Because it provides an exemplar for those who sail too close to the sun that is HMRC. You may get a little kudos from those in the know and, in my case, a large dollop of (self-)satisfaction of a job largely done to a high standard ... but you won't be thanked by most people and certainly not by HMRC or the Institutes, as soon as the power players have moved on.

All of which is an inordinately long introduction to saying:
* I think MTD for ITSA is in it's current incarnation a complete mistake - that will either be watered down or have an immensely high non-compliance rate;
* It will of course 'work' for a %age of its target population - but, a bit like the 42% of adults in my London Borough who haven't had even one Covid vaccine jab, that's not of much comfort (either to the rest or indeed to HMRC);
* The communications strategy for it is an absolute shambles (even by the poor standards of this govt) - and needs to be re-tuned to tell the truth (closer to your view of it than all the claptrap about 'benefits' to the taxpayer);
* Despite your reliance on the Legislation so far, I can assure you that there is nothing (at least in the public domain - but I suspect anywhere) that provides a cohesive end-to-end detailed description of the whole process - just ask the software developers;

Based on my natural level of cynicism I'd say that HMRC's ineptness with it's own systems virtually guarantees that the project will fail even if all relevant taxpayers & agents see the light and are fully compliant on day one (fat chance) ... because HMRC will themselves make a mess of it at their end.

But, if you've read this far, I'd be delighted to read your answers to my original 5 questions.

And to repeat my earlier sign-off ... good luck to you personally and those of your clients whom you are happy to retain, but please don't think that emulating the HMRC culture (where any form of dissent is seen as irrelevant if not malevolent) will help the current problem.

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By ireallyshouldknowthisbut
22nd Oct 2021 19:00

it sounds like you just got to grip with your client base. We have spent a lot of time getting the right clients to the right methods, and would simply not tolerate anyone turning up with a grubby bag of receipts unless they had literally a handful of transactions and it was easier to just do it from that.

The majority of my clients for SA are professionals. The average client income is probably £100k. All of them deliver their records on time. Most of them in excel. We mainly file landlords tax returns which take - on average - 2 hours to prepare. I also do a number of PAYE clients with "on the side" income which tends to be small volume but high value. Eg 20 invoices, but £30,000 income.

The main issue I have is what we do now is quick, simple and efficient. It will not be helped by digital methods. We have tried, and failed many times on this. sometimes we get a small win. I had an excel client with a small company (under 100 transactions per annum) who struggled with our template in excel but loves using a digital suite which I would say was overkill, but they like it, but this is the exception.

The issue I have with MTD is the compulsion and the quarterly filing which with the best will in the world will mean we have to spend about twice the time per client doing the same job. I know how long quarterly fling takes as we already file a lot of VAT - my only hope is to get the client to do that bit for us and not look at it until the year end.

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By adam.arca
23rd Oct 2021 08:30

Completely agree with all the previous responses.

Rebecca, I’ve been on your courses and I know you’re highly intelligent and passionate about helping accountants cope with the ever-shifting sands but, in all seriousness, I am starting to wonder whether you aren’t suffering from some form of Stockholm syndrome. Everything you write and say about MTD sounds like advertising copy rather than a professional with the best interests of his/her clients at heart.

Why does it not occur to the Revenue that accountants have already digitalised the vast majority of businesses which would benefit from digitalisation (or they’ve done it themselves)? Yes, there are always exceptions but not enough to make a real difference.

So, if it ain’t already digitalised, that’s because there’s no business case.

Some businesses are so small as not to require records, just paperwork (cough, landlords).

Some businesses keep paper records which vary from excellent to just about good enough (some are worse and fall into the next category).

Some “businesses” still follow the classic plastic bag but these jobs are so messy that accountants find workarounds in order to remain cost-effective and any doubts inevitably work against the taxpayer: uncertain income is included and uncertain expenses excluded. If MTD were to actually work for these clients (it won’t but let’s dream), HMRC would receive a reduced tax take.

There are very few aspects of modern life (or even, I would hazard a guess, of ancient life) where one size fits all is the right approach or actually the moral approach for that matter. How accounting records are maintained by individual businesses to suit their individual circumstances is not one of those few aspects IMO.

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Replying to adam.arca:
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By BIGWAL
23rd Oct 2021 10:16

Fully concur with adam.arca.
We're in serious danger of the MTD tail wagging the dog.
Before accountancy my background was the small family business sector. Obviously record keeping is vital to monitor the health of any business, but the major efforts were - quite rightly - concentrated on achieving a level of income in excess of costs.
It seems HMRC are intent forcing business owners to focus on submitting quarterly MTD records that may suit them, but are a major and disruptive distraction from the rest of the essential business activities.

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Replying to BIGWAL:
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By silverghost
25th Oct 2021 10:08

Easy. Just send in, quarterly, one figure for turnover. Then do the annual accounts and adjust accordingly. Are HMRC really going to take the time to bellyache that they weren't told what the quarter's phone bill was?

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Replying to silverghost:
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By lionofludesch
25th Oct 2021 10:14

silverghost wrote:

Easy. Just send in, quarterly, one figure for turnover. Then do the annual accounts and adjust accordingly. Are HMRC really going to take the time to bellyache that they weren't told what the quarter's phone bill was?

It might come to that.

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Replying to silverghost:
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By john hextall
25th Oct 2021 13:42

I have been rung 3 times in he last 6 months by the Health & Safety Executive 'advising' me on how frequently to clean the toilets. Never underestimate the desire for bureaucratic expansion.

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Replying to john hextall:
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By Paul Crowley
25th Oct 2021 17:59

We only had one such call
Which got shut down after the admin lady had been on the phone for over 30 minutes.

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Replying to silverghost:
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By Rebecca Benneyworth
27th Oct 2021 18:05

I wouldn't admit in public that I would encourage my clients to break the law.
Brave post.

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Replying to RebeccaBenneyworth:
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By johnjenkins
28th Oct 2021 09:33

As HMRC are saying, as you and Giles are, that the accuracy doesn't matter then how is it breaking the law. If it is the law that the submissions have to be accurate then HMRC are giving out misleading information aren't they.

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Replying to johnjenkins:
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By Rebecca Benneyworth
28th Oct 2021 23:07

The law requires (or will require) businesses to keep records of their transactions by the end of each quarter and submit the total of those to HMRC by the due date.

Are you arguing that if nobody catches you breaking the speed limit then you aren't? The transactions exist, the business is required to (a) record them and (b) report them. If they make a mistake that's not an issue. But it does not alter the requirement.

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Replying to RebeccaBenneyworth:
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By lionofludesch
29th Oct 2021 07:40

Everyone makes mistakes.

And mistakes will be more common under MTD if the whole business community has the same four deadlines.

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By Crouchy
23rd Oct 2021 10:36

Great that you feel its working for you, but what about those business owners who don't want to pay for bookkeeping and software, or have a monthly / quarterly update of their finances??

There are lots of people out there who simply go on whats in the bank, and for them thats the only gauge that they need, they keep adequate records and are happy to do things once a year. could they benefit from more regular info, yes of course, but they are only going to use it if they actually want it

this is the problem with MTD, its telling people what they want and need

Obviously our own businesses should work for us, but we should still be serving clients in the way that benefits them first and foremost and not us

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Replying to Crouchy:
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By sammerchant
27th Oct 2021 11:05

Most, if not all, clients see Tax Returns as a compliance matter, and not at all productive in any way. The information is always historic, and in the case of small businesses, they have either already taken remedial action if such was needed or have shut shop.

MTD is never, I repeat never, going to be seen as of value by the people it most affects - the small businesses and the small landlords in this country.

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Replying to Crouchy:
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By Rebecca Benneyworth
27th Oct 2021 18:07

Crouchy wrote:
<

There are lots of people out there who simply go on whats in the bank, and for them thats the only gauge that they need, they keep adequate records and are happy to do things once a year.

That's the point - mine didn't keep adequate records. I was spending hours trying to put together figures for the return. And I'm not doing that any more.

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By ireallyshouldknowthisbut
23rd Oct 2021 11:54

I should also add the key thing about your business is you went from "in an mess" to "decent systems" because you as an accounting professional chose to do that.

What you didn't have is the whip hand of government forcing bookkeeping methods onto you and your client, and forcing you to file 5 times a year.

Digitisation is happening across the economy completely independent of MTD, just as it has for your practice. Clients or businesses are using the best tools available. Yes its slow, yes its patchy, but its happening, and in 15 years I imagine the 'carrier bag job' clients will have all retired anyhow along the the accountants happy to accommodate them.

We have slowly upped out digital methods over the 20 years but its been a slow and deliberate policy. I remember the uproar I had when I started emailing company accounts over and had to revert to paper for half our client base, who I have then gradually switched over. It took I think 6 years in total, and I still have 2 clients who print them off and sign them and post them back. Its up to them, no business of mine.

The main nub of the objection is compulsion in inappropriate areas (such as landlords and other low volume transaction business), and the huge extra burden of quarterly figures for nano incomes which might be a handful of transactions a year for some of our clients. For clients who are already on appropriate software the only issue is quarterly reporting which seems like completely unnecessary red tape.

Fundamentally, what business is it of HMRC if agents and the public are perceived as wasting time on record keeping? It is quite frankly irrelevant so long as by the end of the year good quality records are kept. All the evidence from all the now abandoned business records checks confirms decent records are kept by the vast majority of business. Indeed if better records are kept, its likely that lower tax will be taken so I don't even really understand why HMRC would even encourage better records in the first place given their job is tax collection, not nannying the tax payer into claiming more deductions.

On one other point, from my practice point of view, a lot of my client base in recent years comes from a local large practice who forced all clients to use cloud software no matter how inappropriate. They worked on a "my way or the highway" basis which commercially I am sure is efficient if you are looking at accountancy just "as a business" as they do, but I am more interested in my clients as real people not profit centres. I therefore have a disproportionate amount of clients who chose the highway to my office as I love a decent excel spreadsheet or in some cases there is so little to it they just supply the dozen receipts and invoices which make up their annual accounts. If I enforce cloud software on these clients, where are they going to go next?

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Replying to ireallyshouldknowthisbut:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 18:13

Just a couple of observations on your very considered response.
First - quarterly submissions for those on software will be just a click to submit, so should not be a problem once you are used to the idea. No accuracy requirement, but will need records up to date once a quarter.
Second - spreadsheets - you will be able to use these. It will be a bit slower as you will need to link to bridging software but there is no need to use software if you prefer spreadsheets. The main issue will be in bringing the information in regularly.
And I agree regarding the income limit, but as a realist I'm not expecting it to change. Free software will help a bit.

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Replying to RebeccaBenneyworth:
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By lionofludesch
27th Oct 2021 18:26

RebeccaBenneyworth wrote:
No accuracy requirement, but will need records up to date once a quarter.

Will I need them up to date ?

Or just need to submit once a quarter ?

Who's checking ? And even if they do check, how will they know there are a few transactions missing ?

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By Catherine Newman
23rd Oct 2021 11:58

Remember the failure of business record checks? HMRC were not able to prescribe how records should be kept. It was only their interpretation of what they required and they targeted the conscientious, which got contested by accountants.

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By bluebaron
23rd Oct 2021 12:27

I genuinely found Rebecca's MTD journey interesting. But, for me personally, I have no desire to get involved in writing up clients' records every 3 months, with just a month to do so. It is totally ridiculous for the smallest of clients.

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By North East Accountant
23rd Oct 2021 13:20

It is really interesting to hear about your journey and I do hope that your health issues are firmly behind you.

I agree with you that either the client does it competently or bring the bookkeeping inhouse, otherwise you just spend needless time sorting out the mess.

The thing is what about the clients journey, what about his personal situation, what about his family, what about him having to make a living.

You did what was right for you in your situation. Can the client not do what is right for him too?

HMRC have spent billions on MTD and they still don't seem to have grasped the carnage that they are about to unleash.

Many accountants are insisting on one type of software, one way of doing it etc and I understand that but one size does not fit all. Also, many accountants will be stopping dealing with sole traders etc.

Poor John the Plumber might well struggle to get anyone to help him in his hour of need, when MTDfIT hits, and as a profession with a public interest mandate, ICAEW should hang their heads in shame that they have done nothing to stop this and the effect it will have on the small business man or landlord.

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Replying to North East Accountant:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 16:00

I'm wondering when you think ICAEW or indeed any other professional body got put in charge of HMRC? If you look at their responses to the consultation papers, and what I wrote at the time, and physically toured the country (including your part of the world) presenting free sessions encouraging firms to respond to the consultations you will see that they and I argued in the strongest possible terms for the limit to be much higher.

But I accept that the decision has been made and that is not going to change. Far from hanging heads in shame, what is now needed is to support both us and our clients with what is happening. And that is what I was trying to do in this article.

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Replying to RebeccaBenneyworth:
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By lionofludesch
27th Oct 2021 16:19

[quote=RebeccaBenneyworth

But I accept that the decision has been made and that is not going to change.

[/quote]

I wouldn't bet on that either.

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By memyself-eye
23rd Oct 2021 16:49

Glad I quit.

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Replying to memyself-eye:
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By lionofludesch
23rd Oct 2021 17:08

memyself-eye wrote:

Glad I quit.

Me too.

I don't need all these slightly iffy, poorly thought out HMRC systems that don't work as well as intended.

Residential Capital Gains is a great example - folk are reporting on paper because they can't work out how to register online. Don't they test this stuff out before it goes live ?

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Replying to lionofludesch:
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By Rebecca Benneyworth
27th Oct 2021 16:02

CGT reporting - worst, absolutely the worst thing ever. Since RTI anyway.

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By AdamMurphy
23rd Oct 2021 17:10

With respect, if you've got a very small practice, no doubt you or your staff have the spare time to do the extra work, bookkeeping for clients. You can let HMRC dictate how you do things.
For most of us, we have tried and tested methods adapted for each individual client. Record keeping and accounts production is NOT a one-size fits all system and we shouldn't be told it is.

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Replying to AdamMurphy:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 18:25

Didn't advocate one size fits all. Doesn't work for me.

Part time doesn't equal time to spare. I have two main businesses - one is my practice. My client & payroll manager has four employments, my bookkeeper has her own business (not bookkeeping) and my other employee has another job making him full time +.

We have a couple of basic rules for those on software (those for whom the old fee can bear the cost and new clients quoted accordingly).

Rule 1 connect your bank to the software. We will help (every time if necessary - some need it) to reconnect every 90 days.

Rule 2 No photo no claim (using Dext provided by us free of charge). Actually rule 2 isn't hard and fast as I have several who can't do photos on a phone, so rule 2 becomes, put in box file for us to collect monthly / quarterly. If it's not in the box it's drawings. Almost all of my clients are within a 5 mile radius so the bookkeeper going out to collect is not too much of a pain.

Everything is fixed price for new clients. Win on some, lose on some.

As I said in the article, we have had to be imaginative where clients struggle but I regard that as part of the cost of adapting to a new way of working.

All I was trying to do with this article is offer some encouragement. It doesn't seem to have gone well, but at least I tried.

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By GHarr497688
23rd Oct 2021 17:52

I think I might be leaving AWEB after reading this ridiculous article. I would think that Rebecca is well in with Software Houses and also has links to HMRC to read what I consider to be pure propaganda. I also have been in Accountancy for 40 years and was one of the first Accountants to go digital. In fact both firm I worked at were the first to use computers. I have also used SAGE and Xero ( and still do) . I was involved in the switch to Self-Assessment working with HMRC for many years. I deal with clients ranging from a funeral parlour to wedding hire retailer , cleaners to solicitor ages 18 to 90's.
So my MTD journey : sounded wonderful as you import your data from bank statements , re programme with IT to allocate payments bang in a few other items press a button and taxes done - Wonderful - their is a heaven. I wrote to all the clients in 2015 and stated digital was the way forward , I did my home work , joined Sage and Xero. I got awards from Sage and Xero as I completed the revolutionary exams.( I started to get worried when I noticed that Xero's exam was easy to pass and you could only tick the right answers) Suspicion set in. Most client signed up for Xero and I spent hours training them - bank feeds - taking pics of invoices - auto reognition - auto allocation etc. I kept chasing the clients explaining the MTD was the way forward - what did they do "nothing" they were not interested at all. I spoke with HMRC , Xero , Sage other Accountants all of them agreed it might work for some but not for all. At the same time the Head of MTD at HMRC kept promoting SAGE in promo's for MTD. The Accountant I met all said it's a crazy idea and they would just put the same nine boxes in as they did now through an API. I managed to get exemption as I am not a believer in doing things wrong. The client books were rubbish - comment on Xero or SAGE unmentionable. I was worried as costs increased/errors increased and stress level went through the roof. Then all of a sudden bank feeds started to have interruptions and the bank wasn't balancing , the photo recognition was out of sync , error with nominal , errors with auto- allocation. Good Accounts were now garbage. I hear you say - your too old - not up to it with the modern world - not training your clients - don't understand tax etc etc. Well I would say read 90% or what Accountants say , read the House of Lords report ,look at the lies about Covid and most of all why mandate something that's so good why would you not want to use it. The recent comments of why MTD is even more interesting - clients bringing books in late , making people pay tax in real time , remote checking not to mention forcing seasonal business to have uniform year end and changing year ends that have been the same for half a century . So Rebecca similar ages , different view , different experiences. I feel very soon if you don't come on board with the masses you won't have many Aweb followers. It won't be long now until I no longer have interest in such drivel . Sorry to be rude to you however you had the bravery to write the article maybe as encouraged by HMRC ( I noted they had indicated you should be more positive about MTD) plus your site adverts are paid for by the bods from Software Houses so I am sure your payments will cover any conscience you might have.

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Replying to GHarr497688:
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By lionofludesch
23rd Oct 2021 18:05

GHarr497688 wrote:
I kept chasing the clients explaining the MTD was the way forward - what did they do "nothing" they were not interested at all. I spoke with HMRC , Xero , Sage other Accountants all of them agreed it might work for some but not for all. At the same time the Head of MTD at HMRC kept promoting SAGE in promo's for MTD. The Accountant I met all said it's a crazy idea and they would just put the same nine boxes in as they did now through an API. I managed to get exemption as I am not a believer in doing things wrong. The client books were rubbish - comment on Xero or SAGE unmentionable.

Well, one thing Rebecca and I agree upon is you're better off preparing the records yourself from the bank feeds. Hopeless clients will produce hopeless records.

If I'm preparing acounts from paper records, I have to transfer every payment from the client's records to my working papers so I'm not sure there's a great deal more work. Certainly less than correcting a client's carp digital records.

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Replying to GHarr497688:
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By AdamMurphy
23rd Oct 2021 18:29

You won’t find any articles on here about the problems with MTD. Just ones saying everything is awesome as Sift want to keep the advertisers happy,

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Replying to AdamMurphy:
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By Paul Crowley
23rd Oct 2021 21:36

It is almost as if they had a vested interest

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Replying to Paul Crowley:
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By Open all hours
24th Oct 2021 09:57

Perish the thought.

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