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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
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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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Replying to GHarr497688:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 15:00

Can I make clear that I received no payment whatsoever for this article - and indeed given the comments above have probably damaged my own profile by doing so. That is a great pity because I was trying to help and support readers, rather than expose myself to unkind criticism.

I was not asked or prompted by HMRC to write the article in any respect.

I wrote it because as a small practitioner with three part time staff I considered that I have something to add to the picture. And my experience, not with 'special clients' but with ordinary very small businesses (many who don't use digital themselves) is a positive one. We as a firm have adapted our services and are alongside clients day to day. We can do accounts for mortgage as soon as the period ends - everything we do is client focussed, we have just removed the need for clients to do their record keeping based on the use of digital tools within the practice. They find it easier and simpler even if they don't want or need more up to date information as the need to 'do their books' has gone. And who is there when the plumber needs help - we are, no different to any other practice.

I understand that many don't agree with me - but this is a Government decision and we have to get with the programme if we want to have a business in the future. Since 2016 this was never NOT going to happen. I was just trying to offer an alternative view and some hope for readers.

Some of the personal criticism on this article is extremely hurtful, and those who know me well will understand that I only ever try to help and support everyone I come into contact with. I don't expect readers to agree with me but I am disappointed by the personal comments here about me and my practice.

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Replying to RebeccaBenneyworth:
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By North East Accountant
27th Oct 2021 17:22

I highly respect Rebecca and hold her in very high regard within the accounting profession.

I believe that she has given up mountains of her own time, over the last few years, to represent accountants to HMRC in connection with MTD, so I thank you for doing so.....in a thankless task.

Whilst I might disagree with what she says regarding MTDfIT I am in total agreement with her regarding personal criticism made against her. It's not on.

Hey fellow accountants.........play the ball not the woman.

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Replying to RebeccaBenneyworth:
By cfield
27th Oct 2021 19:11

I'm not surprised you're hurt by the personal criticism Rebecca. Some of these accusations of personal gain have been little short of scurrilous.When you stick your head above the parapet, whether on this site or life in general, you will always be shot at, especially on a divisive issue like this. I've had my own fair share of stick on this site so I know what it feels like. In my case, some was fair comment but others were just trolling. I learnt to ignore them. Water off a duck's back to me.

You're probably right that MTDfIT in more or less its current shape is inevitable, so to that extent, railing against it is ineffectual. It's a case of either adapt or get out. You were brave to point this out and were bound to be fired at for it.

As I said in my post, the key is to keep the work down so it impacts on both our clients and our own time as little as possible. If the free software does that, then happy days, but it will mean clients using it regularly/properly, and as we all know, many of them won't. Our job will be to save low-earning clients being hit with these iniquitous £200 fines, which will mean a) chasing them and/or b) doing the quarterly submissions ourselves.

As an Excel addict, I will probably use bridging software for smaller clients, but I absolutely refuse to do quarterly book-keeping for clients who don't need or want it, so inevitably, their submissions will be robust estimates agreed in advance. It's the only way it can work without my fees going up massively. A good example are landlords. We know what the rent is. We have a fair idea what the outgoings will be. Any variances can be adjusted at the end of the tax year.

I think much of the storm of criticism has come from the perception that you were somehow swayed hook line and sinker in support of MTDfIT, rather than just sighing and getting on with it. I'm glad you now agree there will be no added value at all for most clients. I know it wouldn't have done any good, but as you had the ear of the the HMRC team rolling this out, you could at least have made it crystal clear that mandating it for pretty much everyone was both very wrong and utterly useless.

It feels a bit like a runaway steamroller which nobody can stop. Gauke and Osborne started the engine and released the handbrake a few years ago and got out of the cab just as the black tarry stuff started to fly. Policy often develops like that in this country though. It takes on a life of its own and becomes an end in itself. A bit like the First World War starting because nobody could cancel the train timetables (or at least that's the myth).

The really worrying bit is the way they're forcing it on to us and the sheer stubborn refusal to listen to the very people it's going to affect. They've ignored the profession. They've ignored the petitions. The only people they listen to are the media, who have been strangely silent. Any resistance just seems to make them double-down rather than pause for thought. It just isn't the sort of thing that should be happening in a liberal democracy.

It's a funny old country we live in now. In a way, we don't really have democracy. MPs are selected by a tiny clique of party members who are 75% guaranteed to win their constituency. Even in the swing seats, there is only a choice of 2, both selected by those tiny cliques. In Parliament, they can't even vote they way they want, for fear of being blocked for ministerial jobs, having the whip withdrawn or even de-selected. That's the main reason bad policy decisions like MTD are allowed to trundle on until they eventually self-destruct, like the poll tax did.

Freedom of speech is becoming a thing of the past. Two clients have said that to me recently. It's happening in a very sinister way too. Look at the hounding of JK Rowling, just for saying what she thought on trans issues. She's too strong for them to bring down, but plenty of other people are sacked, non-platformed, kicked out of sports teams, banned from the stage or excoriated on social media for expressing personal views or making inadvisable jokes/remarks, often years before. Plenty of ways to skin a cat. No need to make it illegal, not yet anyway. It's a very worrying trend fuelled by the advent of social media, its use by highly vocal extremists as a megaphone and its pernicious influence on the people who control the world we live in.

Yet at the same time, we have to flaunt our credentials as a liberal society by allowing all sorts of nutters to make our lives a misery with their increasingly erratic protests and outrageous demands. Those protesters blocking the roads should be in prison by now, but the Government are so fearful of images going round the world of them being roughly dealt with on such an emotive subject that the police have to stand around guarding them from the public and then let them go again after arresting them. One of the more insidious effects of that is autocrats like Putin and Xi Jinping being able to laugh and say to their people, "This is what a liberal democracy looks like!". Thatcher had no such qualms when Scargill tried to overturn the rule of law. She used the police against them with full force. It might have been a bit excessive back then, but we should not be afraid to do that now if need be. It's time to take off the kid gloves, IMHO, before these jokers with their stupid antics cause laws to be passed limiting the right to protest.

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Replying to cfield:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 20:23

Thanks for your comments. I'm going to do some real work in a minute, but I thought I would just respond to your theory about these types of proposals.

My experience is that these ideas are developed and floated - 'BIG ideas' like the 'end of the tax return' and if backed by someone senior take on a life of their own. Once that has happened it is a devil of a job to turn the tide, however clearly and eloquently you express the problems. I'm afraid that my view of basis period reform falls into the same category - exchanging the complexity of overlap profit for the complexity of apportioning two sets of accounts (with estimates for some businesses) is not simplification. But is claimed as such.

I expressed very strong opposition to mandation (both privately and publicly) and to the £10,000 limit for a long time, but my feeling is that the ship has sailed. I hope I'm wrong, but as you have said, my view is not that I support the whole project but that if we have to do it then I want to take control and get the best out of it for my practice and my clients.

And on the client benefit point - I do genuinely have clients saying, completely unprompted, that they are so glad to be on QuickBooks and that they feel so much more in control of their businesses. Obviously this is not a universal view, but one client tells me this every time I speak to him - he is a convert from pretty poor manual records and believes that his business is more profitable and collects debts quicker because he has everything at his fingertips. I pass it on, because he is one of the least I would have predicted to take to it - I expected constant moaning, so it is a pleasant surprise. Many small clients will not benefit, except to the extent that it relieves them of the bookkeeping burden - which one of mine is very happy to relinquish - at least his wife is. He gets bookkeeping, VAT returns and the rest at the same price as before when he had to do his own bookkeeping and VAT as I didn't have the resources to do it for him- his books were awful and VAT returns always wrong. Long list of corrections every year.

So signing off for the night - I hope I have answered everyone's questions on here. Maybe we need a factual article on (exactly) what the Regulations say - but maybe I'm no longer the one to write it. Ah well.

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Replying to RebeccaBenneyworth:
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By GHarr497688
28th Oct 2021 09:05

Rebecca if you look back at thread I too have faced hurtful criticism so I understand how you feel. What I said was not meant to cause hurt. Looking at my article you can see I have tried and failed. The fact is that with so much negativity about MTD from almost all commentators should HMRC not alter the current programme rather than push ahead regardless creating a mess and awful PR disaster. You seem to be alone in your findings. I notice your reply to my article has created sympathy simply because people feel sorry for you. Anyway I shall be out of Accountancy by the time this farce comes in and I can't wait.

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Replying to GHarr497688:
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By lh3f9764bg1g
29th Oct 2021 09:25

I’m sure the comments “I would think that Rebecca is well in with Software Houses and also has links to HMRC” and “I am sure your payments will cover any conscience you might have” were made when the writer was emotional and in the heat of the moment, and we can all say things we don’t really mean and things we regret upon reflection. However, I think all comments of this nature should be withdrawn as they are unnecessarily unkind, pejorative and (in my view) totally unfair.

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Replying to RebeccaBenneyworth:
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By lh3f9764bg1g
28th Oct 2021 15:19

I strongly believe that we should not be turning on each other, making unfair accusations and jumping to conclusions about people's motivations. To my eye Rebecca has simply told us about her thoughts about this issue and her experiences in practice. It's not a case of don't-shoot-the-messenger for she is nobodies messenger (not HMRC's nor HMG's). We should all be careful that we are civil to each other - or this may become a case of us becoming divided and subsequently conquered. As for Rebecca - I earnestly hope that she doesn't allow this faff to discourage her from making (her always intelligent, accurate and considered) contributions in the future.

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Replying to lh3f9764bg1g:
By cfield
29th Oct 2021 09:45

lh3f9764bg1g wrote:

We should all be careful that we are civil to each other - or this may become a case of us becoming divided and subsequently conquered.

Made me laugh, this comment. I don't think they'd even notice us, let alone bother to conquer us. It's like a swarm of ants on the floor shouting "Stand together" as the kettle of boiling water hoves into view. That's about as much influence we've got over them.

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Replying to cfield:
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By lh3f9764bg1g
30th Oct 2021 10:14

I don't, in honesty, think we should take the Lord Halifax approach. We should be agitating within the professional bodies and making clear that they have failed to represent our views. We should be writing to our M.P.'s. We should be rejecting the software houses rather than rolling over for them. We should cooperate with nobody who favours this ludicrous proposal and - ultimately - we should consider protesting in a more public way. It seems to work for everybody else!

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Replying to lh3f9764bg1g:
By cfield
30th Oct 2021 11:15

lh3f9764bg1g wrote:

ultimately - we should consider protesting in a more public way. It seems to work for everybody else!

Maybe we should glue ourselves to the roads!

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Replying to cfield:
RLI
By lionofludesch
30th Oct 2021 11:23

cfield wrote:

Maybe we should glue ourselves to the roads!

How old hat !!

Strolling along the motorway is much more relaxing.

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Replying to lionofludesch:
By cfield
30th Oct 2021 11:40

lionofludesch wrote:

How old hat !!

Strolling along the motorway is much more relaxing.


Strolling along railway lines would be even better. Or gluing themselves to the tracks!
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Replying to lh3f9764bg1g:
By cfield
30th Oct 2021 11:41

lh3f9764bg1g wrote:

We should be writing to our M.P.'s.


There's a very easy way to do this. When you sign that petition to increase the threshold to £85,000 (it's still running but only has 690 signatures so far) you get the chance to email your MP. I did but I haven't had a response yet.

https://petition.parliament.uk/petitions/589102

I think the main problem here is that the public still aren't aware of this. Very few of my clients knew about it. The media have been very silent. I haven't heard it mentioned on the News at all. Maybe what we need is a media campaign. Perhaps we could get the Federation of Small Businesses to do a Press Release. Or maybe we could get the new kid on the block, GB News, to take up the cause. Trouble is, their viewing figures seem to be declining. The other challenger, News UK, might be a better bet, even though it's run by Rupert Murdoch.

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Replying to cfield:
RLI
By lionofludesch
30th Oct 2021 12:16

cfield wrote:

lh3f9764bg1g wrote:

We should be writing to our M.P.'s.

There's a very easy way to do this. When you sign that petition to increase the threshold to £85,000 (it's still running but only has 690 signatures so far) you get the chance to email your MP. I did but I haven't had a response yet.

Only 690 folk are bothered ?

No wonder HMRC can do what they want.

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Replying to lionofludesch:
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By johnjenkins
03rd Nov 2021 12:43

We did a petition right at the start - just got same old MTD jargon so now nobody bothers.

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Replying to johnjenkins:
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By lionofludesch
03rd Nov 2021 12:59

johnjenkins wrote:

We did a petition right at the start - just got same old MTD jargon so now nobody bothers.

How many signed that one ?

If not enough people care, best carry on with your MTD plans. Even if those consist of retirement.

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Replying to lionofludesch:
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By johnjenkins
03rd Nov 2021 13:25

114,504 signed the petition to do away with the quarterly updates. It was debated in Parliament 25/1/16 and David Gauke read out the now famous MTD jargon of it will decrease errors, it will make life easier for small business, it will allow business to know exactly what their tax liability will be etc. etc. We knew then "there may be trouble ahead" so "let's face the music and dance".

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Replying to johnjenkins:
By cfield
03rd Nov 2021 14:56

As suggested in my blog this week, we need to come up with a better solution. My idea is for us to become a bit like MOT testing stations. Instead of imposing MTD on the whole small business community, it should be restricted to those who don't keep proper accounting records, either digitally or on paper. The smallest ones, like landlords, would be exempt if their paper records are adequate. Firms already using software would be exempt from the quarterly submissions provided they are using it properly and are up-to-date. Larger, more complex businesses would have to meet higher standards. Agents can apply to be testers and flag clients who pass on their agent services portal. HMRC would then send them a certificate of exemption for the next 3-5 years. That way, MTD would be targeted on the firms that really need it rather than wasting everyone else's time.

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Replying to cfield:
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By johnjenkins
03rd Nov 2021 15:15

Only problem with that is that HMRC are primarily targeting those small business whether or not they keep adequate paper records. The idea is for them to eventually see all the transactions on a quarterly basis (RTI). They already know what the big boys are doing.

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Replying to johnjenkins:
By cfield
03rd Nov 2021 15:33

Yes of course. I keep on thinking that it's to improve accounting records and avoid errors, like they said.

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Replying to cfield:
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By johnjenkins
03rd Nov 2021 15:57

Every reason HMRC has put forward for quarterly updates has been proved to be wrong so eventually they will have to come out with the truth. However I suspect the IT staff aren't available due to IR35 so we are probably looking at 2026 (to allow for the general election and time for business to get used to it) if at all.

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Replying to GHarr497688:
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By Moo
03rd Nov 2021 10:28

Bravo, totally agree.

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By Matrix
24th Oct 2021 09:49

If digital records for sole traders and landlords are so beneficial to taxpayers then they would start using them now and not wait for mandation. The postponement of MTD would have no impact.

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By Open all hours
24th Oct 2021 14:14

It’s all there at the end of paragraph 1. Eight years on The Administrative Burdens Advisory Board.
Thick end of a decade and no one thought to seek out any administrative solutions

Six years+ and £2Billion blown on MTD the main purpose of which seems to be to cause division between HMRC, software suppliers and those of us who actually know the needs of our clients.

Same blinkered (lack of) thought process. No imagination, no inspiration, no customer focus.

I may well attend Rebecca’s lecture but I certainly won’t be taking any lectures from her. I’ve heard enough and as far as our clients are concerned MTD in its present form is dangerous nonsense.

As for HMRC - a return to the civil service core values of integrity, honesty, objectivity and impartiality would be welcome and beneficial to all.

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Replying to Open all hours:
RLI
By lionofludesch
24th Oct 2021 17:42

Open all hours wrote:

It’s all there at the end of paragraph 1. Eight years on The Administrative Burdens Advisory Board.
Thick end of a decade and no one thought to seek out any administrative solutions

Was the Administrative Burdens Advisory Board established to create administrative burdens or relieve them ?

To be fair, they've done a cracking job of relieving HMRC's administrative burdens.

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By mkowl
25th Oct 2021 09:53

It is an interesting debate. I started in this world in 1989 when paper records were prevalent and any computer systems usually a dogs dinner that took hours to sort. All done usually several months after the year end and just before the deadline.

We have embraced the technology, can see the continued benefits of it and undoubtedly given the pace of change will embrace a lot more. How we do work and when is changed beyond recognition.

But perhaps those early days resonate, the old SISO principle of rubbish in equals rubbish out. It is the mandation thereof and you have to be blind to not realise the fundamental reason for HMRC pushing through with this. It becomes almost a civil liberty issue

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By Michael Beaver
25th Oct 2021 10:00

The two issues I have in following your methods are pricing and resources. We have about 300 clients who are due to be caught by MTD for ITSA. Ordinarily we have 9 to 10 months to complete their annual self assessments, and despite a lump in January we're pretty busy all through the year.

In theory we could take on the bookkeeping, but the pricing for most of these clients isn't included in their fees. Also, doing the bookkeeping for 300 clients all in one month, every three months would be an absolute nightmare to resource - and that's if you can manage to recruit even one member of staff in this environment.

This does make me feel that there will be clients who will be jettisoned by firms who will struggle to get advice anywhere.

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Replying to michaelbeaver:
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By lionofludesch
25th Oct 2021 10:09

michaelbeaver wrote:

This does make me feel that there will be clients who will be jettisoned by firms who will struggle to get advice anywhere.

Yup.

Clients will have to change too. And that's their problem. Not the accountant's.

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Replying to michaelbeaver:
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By GHarr497688
25th Oct 2021 10:12

Exactly. I feel Rebecca is influenced by HMRC and Software Companies . If she doesn’t get on board with the Accountants that read Aweb then I fear more and more will not partake of the dialogue. Aweb should put the points and views over to the software houses to protects its own advertising income . Accountants - Software Houses - Aweb - professional bodies should explain a united view to Hmrc , this would be to the good of all and prevent an Hmrc PR disaster…

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Replying to GHarr497688:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 15:05

Correcting your assumptions

I, like some of you, part with a huge amount of money every month for software. My own tax software company will cease trading when MTD comes in. The last thing I am influenced by is software companies - I have written a couple of technical articles for them for considerably less in fees that I could have earned by doing client work.

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Replying to michaelbeaver:
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By Homeworker
25th Oct 2021 10:53

Exactly, and as a small family business (just the two of us) I have no wish to take on staff to cope with the extra bookkeeping work involved, especially in the first year when we will be trying to deal with the returns for the previous year as well as the quarterly reporting for the current year.
We already plan our holidays around payroll time and MTD will mean four months of the year unavailable for holidays, so I am retiring. 250 predominantly small businesses and landlords will now be forced to go elsewhere.

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By lh3f9764bg1g
25th Oct 2021 10:18

Wasn't Bankstream bought by Quicken? We probably need a bog standard bank feeds service that doesn't cost an arm and a leg. By the way . . . . . . even a cheapish option (such as Streem Connect) is going to put a big hole in the £6 per submission HMRC expects us to charge. In fact - we would be losing money at that rate.

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By colinstewart
25th Oct 2021 10:18

O Heck! You've got the wrong stick Rebecca - its the beating one you need and not the carrot one! MTD is going to happen to every client and every practice in this land, and beyond. Just take that as a given. I am not interested in HMRC propaganda because it does not change what is going to happen. The comments made here, however well made, and however true are not going to stop the roll out of MTD. So, what we need to do is to plan how we cope with this new and developing world. The brutal fact of life is that practice development is about being a bit (quite a bit in my case!) of a bully: you set the standards and get rid of the clients that do not work to them - there are plenty of 'fee orientated' practices out there to mop up the dross. Aim for compliant clients and that way you develop a quality practice - one worth selling when you retire. The profession is going through a massive problem with regard to credibilty due to the shortcomings of the big firms, we have to do better than that, and the vast majority of us do, but client record keeping standards have to be driven up, and MTD is ONE tool that helps in part only - the rest comes from us. That is why the HMRC need us and insult us at their peril. So, let us see a little more respect from the mouthpeices of Government and the Profession, because without me, Paul, Hugo, Openallhours, Tornado and everyone else here - You Ain't Got a Chance!

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Replying to colinstewart:
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By User deleted
25th Oct 2021 15:07

Several delays already suggest this is far from definitely happening.

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By Mr J Andrews
25th Oct 2021 10:37

The fact remains . MTD , with or without thresholds , is a forced imposition which creates unnecessary administration and serves only to benefit HMRC's inadequacy and software developers.
This point should have been made. The article could also have been better balanced by providing more help to small practitioners and their non tech savvy clients by referring to the HMRC's ''Guidance'' for applications for an Exemption from MTD for income tax.

I too deal with childminders, hairdressers , joiners and fencers. But these are intelligent people and can see the real reasons for MTD. They are not lemmings who just accept injustices.

As for the inference that MTD will do away with incomplete records , this is nothing short of complete fabrication.

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By JD
25th Oct 2021 10:37

Thank you Rebecca,

.....But do or die (because it is being imposed) really is not an acceptable basis on why MTD should be introduced.

The simple reality is that imposing digital record keeping is a 1984 style unacceptable extension of government powers, led by outrageous missing selling and profiteering from the IT companies and deliberately doctored impact assessments of the costs and benefits.

Our job is to act in the best interest of our small business clients (not HMRC and IT companies) who if maintaining good paper records should be left to do so. For those that struggle with record keeping (of which there are many) keeping records digitally will NOT suddenly provide them with the gift of clerical skills they never had and will only lead to an increase in error rate. Having received yet another incorrectly adjusted assessment from HM Revenue and Customs this morning, is is clear and obvious that automation does NOT lead to improved accuracy. The information generated during the year (as it will not contain any of the normal accounting adjustments) will NOT provide the client with a better idea of their tax position and is potentially dangerously misleading for them. I could go on.

Digital of anything can be used positively to support people who choose to use it, but should never be imposed or used as a means of control.

If the Government wish to go in this direction and if they wish for a grown up discussion and adoption, then as a minimum, its introduction should voluntary, they need to take measures to control the IT company's mis-selling of automation across the board along with their profiteering through subscription pricing, be grown up about the impact on clients, the real costs, error rates and effect on the tax gap and most importantly of all start to show some respect for the accountancy profession and the work we do helping our clients. Once that is done then perhaps there is a reasonable basis on which things can move forward.

I am afraid do or die really does not cut it

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Replying to JD:
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By Hugo Fair
25th Oct 2021 11:08

"Having received yet another incorrectly adjusted assessment from HM Revenue and Customs this morning, is is clear and obvious that automation does NOT lead to improved accuracy."

Quite ... as a news piece on the BBC explained yesterday, when a taxpayer received an unsolicited rebate for overpayment of Student Loan made in 2010-11!

In a statement HMRC said: "Following a routine scan of our records earlier this year, we identified a small number of cases where repayment information had not been passed onto SLC. We corrected these cases as soon as they became known and notified SLC so that they could update their records."

Hmmm ... 'a routine scan' (of 10+ year old records) is not the sort of activity in which HMRC typically indulges. Methinks I see a smokescreen.

And the proverbial (but unquantified) 'small number of cases' is rolled out once again ... ignoring the impact of this incompetence on individual taxpayers.
Failing to notify SLC that HMRC, acting as agent, is holding funds extracted from someone who owes money to SLC - means that deductions from pay will have continued even when not required to be taken (which would be an offence if perpetrated by the employer).

Finally the typical format of an HMRC statement where the wording ("notified SLC so that they could update their records") is intended to suggest HMRC are being helpful despite the failings of others ... whereas the opposite is true!

BUT no worries ... all the data is digital, so everything must be perfect.

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Replying to JD:
RLI
By lionofludesch
25th Oct 2021 12:14

JD wrote:

Thank you Rebecca,

.....But do or die (because it is being imposed) really is not an acceptable basis on why MTD should be introduced.

I am afraid do or die really does not cut it

No. Because we're already short of folk who "do".

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By Self-Employed and Happy
25th Oct 2021 10:47

Lets be honest.

MTD is horrific from many perspectives, HMRC basically dictating what they need with no thought of the practicalities and cost, the benefits for Accountants with their business heads screwed on are vast if they correctly train staff and clients.

What do clients actually get out of MTD? From what I can see nothing.

What do I get out of MTD? More consistent records in a more timely manner which makes my job easier when it comes to putting the accounts together but takes more time, a cost which is passed on to the client.

What do HMRC get out of it? Well on the basis the latest report has showed MTD has done absolutely nothing to close the Tax Gap.........NOTHING. They just expect everyone to comply and for Agents to pick up the pieces to be honest.

MTD for Self Assessment is an absolute travesty, there is no real benefit to anyone whatsoever, how much can an accountant REALLY charge extra for their time for a small sole trade?

Its an ill-conceived idea, pushed through by idiots who have no concept of how practice accounting works, backed up by HMRC's huge inadequacies in computer system planning and staff training.

It is a vanity project for the blind.

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By sammerchant
25th Oct 2021 10:50

But does this get away from the fact that the figures will be simply a reflection of the cash transactions and not the ones that will constitute the year-end accounts/tax return. How does Rebecca account for accruals, prepayments, stock-in-hand, debtors and creditors, capital allowances (to claim or not to claim?), bad debts, etc. The bank feed provides just the ins and outs of the bank account, enabling one to do a receipts and payments account, but not the financial accounts.

I am happy to fall in line, if I see a valid reason behind the demand. But what does having the MTD information for a landlord with rents of say, £12,000 p.a. (or a trader with income well below the VAT threshold, and one who is at present permitted to submit a short self-employment tax return) NOT smack of Big Brother? And what benefit does it produce for the taxpayer? Giles McCallum failed to offer a satisfactory explanation and I doubt if Rebecca or any of the aficionados of MTD will be able to do so.

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Replying to sammerchant:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 16:11

I agree Sam. The quarterly updates will just be from the bank feed, which gets the basic record keeping right. Then accruals and prepayments, capital allowances at the end of the year on the new EOPS which effectively is the same as SA103 / SA105. I plan to do the quarterly submissions through accounting software (free stuff when it is available for my smaller clients) and then finish off in tax software with the capital allowances etc. I'm not buying new tax software for a bit until I see what is available. I know that there will be (very) cheap bridging software for those who like spreadsheets - they are not my choice as my clients can't use them anyway and a bank feed into software is quicker.

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Replying to RebeccaBenneyworth:
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By sammerchant
28th Oct 2021 12:52

Thank you for your reply, Rebecca.

Now tell me what benefit the taxpayer (our client) and HMRC derive from this folderol. I am particularly talking about the small business client or landlord, who, when the Tax Return is submitted, may have little or no tax payable. Why on earth should they be put through this process, purely, it seems, on a whim of someone at HMRC who may not be challenged.

The only ones to benefit, as far as I can see, will be the software companies.

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Replying to RebeccaBenneyworth:
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By Moo
04th Nov 2021 12:19

Dear Rebecca, perhaps as you such a fervent and vocal proponent of bringing in data via a bank feed you could explain to us how that will work for the small landlord who pays some of the property expenses themselves but where most of the expenses (routine maintenance, agent fees etc) are dealt with by the letting agent.
In those cases the monthly net of expenses rent is coming into the landlord's personal bank account from the agent together with the landlord's salary, dividend income, pension etc etc. And the payments out from that account will be personal council tax, utility bills, food bills et al plus the occasional rental related payment for (say) a new fridge for the rental property. How can a bank feed from that bank account be useful??
Or are you suggesting that in some way the bank feed is taken from the bank account of the letting agent - are they supposed to maintain a separate bank account for each landlord they act for and allow the various accountants access to that data?
NO the whole concept of using bank feeds for the average small landlord is a nonsense and should be acknowledged as such.

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Replying to Moo:
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By BryanS1958
11th Nov 2021 12:53

And then of course you have to bear in mind that, due to idiot banking regulations, the taxpayer has to re-authorise their bank feeds every 90 days. If they forget then quite often when they eventually re-authorise the bank feed is either incomplete or contains duplicates. Most clients do not have the skills or inclination to ensure the bank reconciles, so the accountant will be expected to do this as part of the £6 per month fee (presumably including software cost) that HMRC envisages accountants charging for the additional MTD work.

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Replying to BryanS1958:
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By Self-Employed and Happy
12th Nov 2021 13:17

This 90 days crap is such a timewaster for me, if you ignore the emails (please reconnect blah blah)

I actively encourage my clients to ring me as they are doing it as the 3 minutes lost each time FAR outweighs the time spent working out what they've done / fixing it when they've ploughed on and completely messed stuff up.

Personally as it's read only info I don't see any reason at the connection stage you shouldn't be able to "opt in" for a longer time period, its an absolute joke.

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By whiteways
25th Oct 2021 10:55

Apparently BankStream no longer exists. It was swallowed by Quickbooks in 2016.

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By DavidAWilks
25th Oct 2021 10:58

Dear Rebecca

I am so pleased for you as regards your practice, BUT (there is always a but after such a phrase), whilst I do not wish to be unkind, I really feel your opinion is skewed. I do not know if you were encouraged to respond to the many remarks that have been posted following the McCallum article by whichever bodies to which you are connected, or even McCallum himself. I think it much better that he comes out of his ivory tower and responds personally and takes up the invitations that have been offered to see for himself just what it is like to deal with the myriad of clients that cross all of our thresholds.
Oops, there go the three elephants flying past my window again.

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Replying to DavidAWilks:
Rebecca Benneyworth profile image
By Rebecca Benneyworth
27th Oct 2021 15:12

As I have posted above, but will repeat, nobody asked me to write this article. Nobody paid me to write this article.
I just tried to help those who are worried by MTD with an alternative view.
I'm not a mouthpiece for anyone except myself.

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By raybackler
25th Oct 2021 11:23

I responded to Giles McCallum's article last week along with virtually everyone who has responded to your article. The facts haven't changed, so I won't go into detail again.

Those of my clients where it benefits them use cloud software. Many of the directors of these businesses personally hold buy to let properties and I have a number of property maintenance companies looking after the common areas in blocks of flats. These property related businesses are not registered for VAT (Exempt or below the threshold). They have turnover above £10000 and are in for a rude shock with MTD. The number of transactions they have in a year is small and it is very easy to summarise either on paper or in a spreadsheet the figures for the self assessment tax return. There will be no benefit whatsoever in submitting figures four times a year.

And that is the fundamental point. A large increase in work both for me and my clients, in a section of their income that is simple to look after at present. Not one penny of extra tax will be realised by forcing digitisation on these clients.

As others have said, where there is a benefit, those clients have already gone on to digital systems, so no additional benefit from MTD will materialise.

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By dsassoon
25th Oct 2021 11:30

So many of these articles and comments promoting MTD have no consideration or benefit for the end taxpayer, only for HMRC and the accounting practitioner.

Why on earth would I, as a taxpayer, want to use an accountant and file 4 times a year if I don't have to and there is no benefit to me - only more costs and time spent ?

I have some properties, and run a spreadsheet to record income and expenditure then just take across the final figures that are currently needed on the SA return. Very simple, no software or accountant needed (sorry to all of you ...)

It is of no benefit for me to pay an accountant £500+ to file my return, just because they might tell me I could have save £50 tax for something I didn’t realise. That is a very poor ‘return on investment’.

HMRC also need to make up their mind - in running a property, am I a business or not ?

If I am, then why can't I fully offset interest and expenses against my tax for instance, as businesses can ?
But if I am not, then why treat me as one with MTD, 4 filings etc because it suits you, not me ?

Why should I even have to use an accountant, and software, expending more costs that have no benefit for me whatsoever ?

Sorry to say, but in reality, most accountants offer nothing more to a business than filing statutory accounts and tax returns once a year (soon to be 4 times) - they are just a cost. I have run a business employing 50+ staff for 20 years, have a part time bookkeeper, and do my own VAT returns. In that time we have used 3 different accountants. None have given any real advice or help that has saved me money or made me any more profit. For most small businesses and sole traders it is the same – all cost and little to no benefit.

It seems that most of the accounting industry is there to support itself and make a comfortable living for practitioners, rather than actually serve taxpayers and businesses ? Taxpayers do not exist to support the accounting industry – it is the other way around.

Frankly, if it wasn't for the horrendously over-complex tax code, most accountants – and most of HMRC for that matter - would not be needed. Think of how much money the country would save.

Sorry for the rant, and it is not my intention to offend, but no-one is considering the end taxpayer in all of this !

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