Benneyworth: A small practitioner’s journey into MTD
Rebecca Benneyworth responds to AccountingWEB members’ negative views of MTD with observations drawn from her own expierence working digitally with very small client businesses.
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:
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Rebecca trained in London with Kidsons and, on qualifying, spent some time as Chief Accountant of a manufacturing company. She now has her own small practice in Gloucestershire that comprises of owner managed businesses and small companies.
She also lectures extensively for a range of professional bodies, accountancy firms,...
Replies (236)
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I agree that MTD is for the benefit of HMRC but if you read any of the replies it is not for the benefit of accounting practitioners. Your entry is attacking accountants which is grossly unfair. Please vent your anger on HMRC and the software suppliers. We want to support our clients. We did not ask for MTD
Thanks (7)I said what I did as many replies, from practitioners, seem to talk about being able to charge for more (profitable) work, or to drop clients that don't give them an easy (and hence profitable) time.
I am certainly not saying all accountants are like that, but it is a theme that has come across on this and other threads.
Like I say, very few have mentioned the end taxpayer, who ultimately picks up the bill for these changes without seeing any benefit.
Thanks (1)"many replies, from practitioners, seem to talk about being able to charge for more (profitable) work, or to drop clients that don't give them an easy (and hence profitable) time. ... very few have mentioned the end taxpayer, who ultimately picks up the bill for these changes without seeing any benefit."
I'm sorry but I really can't see any evidence (in this or other MTD threads) to warrant those aspersions. Indeed the common factor is practitioners pointing out that the burden (in effort and cost) is both unfair on the taxpayer and entirely incommensurate with any supposed benefits.
For someone like you, who runs a successful venture "in an FCA environment", I'm frankly surprised that you'd expect other professionals to offer their services at a loss ... which is a major concern to accountants (not how to increase their profits).
It's fair enough for you to have a proverbial bee in your bonnet ("Day-to-day tax should be simple enough for taxpayers to deal with without needing professional fees or software. PERIOD. NO EXCUSE." according to https://www.accountingweb.co.uk/tech/tech-pulse/why-smes-are-not-adoptin...)
... but this shouldn't spill over into mis-directed attacks on a whole profession.
Thanks (4)Search Any answers MTD
Then Search most liked
Challenging MTD is what we are all attemting to do
You clearly need no help, but others will
Thanks (1)Many ? It's an imprecise word.
Perhaps you're right. But heavily outweighed by those railing against it.
Dropping clients may well be what happens. If - and I stress if - this comes to fruition as planned, I doubt if there'll be enough bookkeepers and accountants to go round. The clients who are "difficult" will absolutely be at the highest risk of being given the Spanish Archer.
It's a tough old world. Demand may outstrip supply. We'll see.
Thanks (2)What came first, the chicken or the egg? If HMRC had not decided, without a mass consultation of accountants AND taxpayers who would be affected, we would not be in this situation at all.
You speak of accountants hoping to charge more, I can show you lots of accountants who have decided to retire rather than have this stress with HMRC, their clients, possibly the software producers, and all for less than their time costs.
Thanks (0)You've obviously been very unlucky (or not careful enough) in your choice of accountants down the years if that's all you think they do. What about tax-planning or business advice? I think if you'd found a really good accountant and tax advisor (and they often come together) your opinion would be very different.
Thanks (2)Complain to your MP
Complain to the press
Sign some of the petitions
But get the figues correct
There are 6 reports needed in a year
There are no responders here supporting MTD
Your suggestion that MTD is in any way supported by or beneficial to accountants is really inappropriate and unfortunate
You need to seperate the useful from the compulsion
People that could get a benefit from better record keeping have already done so
That is not MTD. That is commercial common sense. If my clients could keep got electronic records I would be pleased. But that does not make my job any quicker.
Thanks (1)Dear Rebecca (again) and all
Following my previous post I have to tell you of a situation that occured this morning.
I received a letter from HMRC dated 21 October 2021 regarding corporation tax for a client. It is marked "Urgent - your client's company status for corporation tax". It goes on the give the full name of the client, UTR and our reference. It then says date of incorporation ** August 2020, first accounting period 1 September 2021 to 31 August 2022, due date for filing 31 August 2023. (yes, really).
I called HMRC and eventually got through only to be told to ignore the letter as it is wrong. Really! To make matters worse the person from the call centre acknowledged that the accounts and corporation tax return for the actual first accounting period to 31 August 2021 had been received by them and all was in order.
A lame excuse was made that "they got it wrong". Also, many such letters have been duplicated and sent out and if I was to receive another one I should ignore that as well.
So, HMRC, now let's discuss the workings of MTD ITSA!!!!!!!!!!!
Thanks (2)First Giles then Rebecca, both more or less using standard MTD jargon. Seems like HMRC are a bit concerned. Ok, my Practice mirrors many on here. 75% (could push that to 80) of my clients have no problem with digital stuff, the other 25% will not be able to cope. To force that sort of thing on the business world is totally unacceptable. There is no reason for quarterly updates, it doesn't even prove that the tax payer is keeping digital records. It will only prove that the figures sent in are submitted using a digital system. Then again all this has been said before and no doubt as often as HMRC roll out their MTD jargon we will roll out our reasons why it won't work. Stalemate.
Thanks (6)I am not concerned as when they bring this ridiculous idea in they will realise mass none compliance and not publish the data ( hush it all up like Coronavirus , HIPS etc.) The process is just making everyones lives a misery with the Software Houses laughing in everyones faces. I think I know who will have the last laugh and it won't be HMRC or the Software Houses !
Thanks (3)John, I had not realised I was using MTD 'jargon'. I wrote this article from the heart at one sitting with no edits because I was trying to put forward a different view about the implications of MTD for small practices and small clients.
Reflecting on the many responses above, I am struck that implementing it for all clients is the key issue - that many comments have been made by those who use digital already but don't see it as useful or relevant to some of their clients.
My observation is that using a bank feed with free software is sufficient for most small clients. They don't need a separate bank account for the business but it is much easier if they do (and as I point out, more privacy). This would be free of charge up to this point. With 'rules' etc that would be probably 15 minutes work maximum per quarter to process the transactions for a landlord and submit the update. That's no more than an hour a year - not done by me but by someone cheaper. Then probably 15 minutes tops for me to review and submit the end of year. If they can photo receipts for expenditure that helps but we don't require it.
All the client has to do is connect their bank every 90 days (a challenge for some) and either photo receipts or provide them to us in another way.
Thanks (0)I have to ask the question, Rebecca, WHY?? WHAT FOR??
Why have more work stowed upon us for no reason?
OK if HMRC want to bring their systems into the 21st century, great. Don't force us tax payers (yes Rishi confirmed today that we are tax payers) to do something that is not a natural progression for the SME's.
Let's make this quite clear. Voluntary MTD will happen. Mandatory MTD and quarterly updates will not happen for most earning under £85k.
Thanks (0)Don't bet on that. It's a bet you can only lose.
Thanks (1)I'm not a betting man. The feel from Accountants is negative for good reason. Just wait until the smaller business get to grips with it. My view is that HMRC will abandon quarterly updates as long as the yearly figures (either by us or client) are digitised which I think is a fair compromise considering quarterly updates serve no purpose at all.
Thanks (0)John, unless you can get yourself into Parliament and then put in charge of HMRC (before 2024) I think you will have to accept that this is happening. Nobody on here has the power to stop it, and as has been shown by the loan charge debacle, even getting a load of MP's onside and a massive campaign, it is very difficult to get changes made. And that's not even with the money that has already been spent.
MTD is a reality and our future, like it or not - I know, I know, most on here would put it more strongly than not liking it. But realistically we just need to find a way to do it.
Thanks (0)Let's look at the reality of it. It's already been put off many times. we are now looking at April 2024. Now HMRC have to get the IT staff back that left over IR35. That will take some dosh. So let's say they even get enough staff to take it on, it's going to be 2025 before something emerges. No, Rebecca, quarterly updates for the under £85k is a non starter. What did GO say? No tax returns after 2020.
Thanks (0)The poll tax was happening....until it hit the public....and then it wasn't.
Thanks (0)Ach - the poll tax wasn't all bad.
It got shut of Thatcher for us, didn't it ?
Thanks (0)We do not need more deadlines and penalties, there are already plenty. Quarterly for VAT registered clients and once a year for non-VAT registered clients is more than enough. Don't forget we are also filing up to once a month under PAYE.
The cost of compliance will far exceed any perceived benefits. In addition, when are businesses, landlords and accountants ever supposed to get a break?
Thanks (0)I too have estimated (optimistically I really feel) that an hour per 'simple' client could be needed each year. I also estimate that we have 250+ clients that will be affected. Say 260 hours work. This work will be divided in to 4 quarters and in all likelihood most of it will end up squashed in to the last couple of weeks as that is the nature of clients. But, anyway, that's 65 hours work 4 time a year. Close on two weeks chargeable time. In year one we are also doing the old SA returns, amongst other things, so I just cannot see how HMRC expect us, as a small practice, to find the additional time.
Before then we will already have had to find time to advise clients on digital record keeping whilst still dealing with the current SA system and the reality will be that we will need to find time to hand hold many clients through the change. Additionally many clients are not 'simple' to deal with and so I hour per year is no doubt nothing like enough time for some.
So, irrespective of how good or beneficial the MTD system might be in years to come I cannot see where the time comes from to get it off the ground to begin with and I don't see that HMRC have really given this any consideration, despite the extra year's grace we now have.
Thanks (1)I believe that HMRC has stated that the cost to the taxpayer will be £6 or so a return, how will that work out for you Rebecca?
And will you and your staff ever be able to take time off again with so many MTD deadlines?
I don't know any client who I would expect to benefit from MTD. It will be a cost to them all, with no benefit.
I notice that, in common with HMRC and others who extol the virtues of MTD, you write an article and never address the many valid comments raised.
Thanks (5)If the records are up to date- how long will it take a member of staff to go into the software and click submit? How small a unit do we bill in? I have not checked £6 per submission - it feels a bit low if the agent is doing it but I guess it depends on charge-out rates and minimum time. I'll be charging a flat fee per quarter.
Bookkeeping is a separate service and charged for separately, so I'm not including this, and because it is done in house there are no errors to correct (not that it matters for quarterly submissions).
Thanks (0)What about when the client has done it.....are you proposing we just submit whatever rubbish has been entered into the software?
No checking of accuracy.
No checking for completeness.
No client approval of the submission.
HMRC, ICAEW, Software Companies, and yourself, are dubbing down the tax system with this approach of just click a button........be careful what you wish for........the fallout will be horrendous.
As for the submission HMRC have announced in the budget red book today (page 144 of 202) that CGT reporting is to go up from 30 to 60 days........is that because HMRC devised such a great system in the first place....no it's because the system is rubbish.
As it stands MTDfIT is a rubbish system, serving no purpose (or certainly not the stated one) and I hope we all don't have to go through the pain of it for 3, 6, 9 or 12 months before it collapses and HMRC row back.............just like they have on the 30 day reporting.
Thanks (1)But let's just think about that. If the records are poor you will have to sort them out in order to prepare the year end accounts. so is it not better to resolve the issues regularly, on, say, a quarterly basis, rather than after the year end when the client has forgotten what it is all about? I'm coming at this from poor paper records, which took lots of time to sort out at the year end, and needed skilled people to unscramble it all.
Or why not cut out the middle man by employing a relatively cheap, bright person who can deal with the transactions on a regular basis - not an accountant and not a bookkeeper as they are not doing either accounting or bookkeeping, but just following instructions (written 'cheat sheet' for every job, which is updated regularly based on transactions they are seeing, so anyone can pick up the job if needs be). I await your push back, but that works for us, and taking someone who is bright but not fully occupied in their own business and has flexible amounts of time available genuinely works. There are likely to be thousands of people with other responsibilities (caring etc) who would be more than eager for a job like that. Our charges for bookkeeping are low - software licence (at cost to us) plus fixed amount per month, starting at £5 per month for the smallest businesses, but more commonly £10 per month. No charge for photo capture software, although I am planning to drop Dext in view of their proposed increased charges.
Then I have a clean set of books to review at the year end. And my job is easier by loads.
Thanks (0)We have a couple (not many) who do their own bookkeeping within our cloud accounting licenses etc and I insist that they submit returns on their own Gateway ID, if I have not completed the process from start to finish then it is not being submitted using our Gateway ID's.
Thankfully after starting with a few more attempting to do their own (even with very comprehensive training) they've given up and we do it for them (at extra charge).
This is the part that bugs me, other than me being able to get Accounts / Tax Returns super quick what does the client get out of it? Nothing, just extra cost, At a time when the cost of living is getting more expensive putting this burden of extra cost on the tax payer is shocking.
When tax payers start doing their own (as will inevitably happen) HMRC will say they need more money to employ more staff, they'll be having their cake AND eating it (regardless of the fact the staff will be utterly horrendously trained and not have a clue, other than having Qualified Accountants on the end of the phone with an innate knowledge of particular software they are F****d)
Thanks (0)Hello Rebecca
May I add my experiences here, since I don't think that anyone else has had the same as me....? I have a very small practice made up of equally very small businesses - as well as looking after my husband's business.
I have been using Sage since it was called Financial Controller and ran on DOS.
I have always insisted on preparing my clients' bookwork for reasons stated by yourself and others. I would do this initially by logging into an workbook tailored for each individual client then, once completely reconciled, I would log the totals into Sage - much quicker than selecting the nominal code for each transaction.
HMRC cites errors in duplicating entries as the reason for each transaction being included in the MTD transmission - however this simply did not happen as both the spreadsheet entries and the Sage entries reconciled perfectly.
As each transaction needs to be included in the submission I would either have to pay for bridging software then use the Sage figures for the management and final accounts - added expense and faff - or log everything directly into Sage which takes far longer.
I had to ask most of my clients to go to another accountant as I simply did not have the time to enter every transaction for each client directly into Sage and the fee I charged simply did not make paying for bridging software an option.
Xero etc? Well I had one client who insisted on keeping his own records on Xero. He was happy for me to keep my records in tandem - however my results were nothing like his! When he indicated that he would simply like me to prepare final accounts and his corporation tax return from his records I asked a Xero expert to look through his records to see where the differences arose.
What a nightmare! The reconciliations went on and on - so I had to ask him to go to the Xero expert for his final accounts and corporation tax return - as my software was not compatible with Xero. This made me very sad as, like most of my clients, I had looked after this one for so very many years, since the commencement of the business.
Thanks (1)I echo your experience with a client using software by themselves - never again, which is why I could not contemplate clients doing their own record keeping on software. This influenced my thinking in the early days when I was vehemently against all of this for small businesses. I still personally think £10,000 is far too low, but we are where we are.
One point I would like to just put right is that the transactions will not have to be on the submissions. The submission is the total of the transactions for the quarter on a cumulative basis. It will be easy enough to do from spreadsheets and bridging software similar to the 'Absolute Excel VAT Filer' (no, I didn't get paid to say that either folks) will make it pretty easy to do (that works out at about £1 per VAT return for small firms). If you wanted to do via Sage you would probably have to upload the entries rather than type them in which might be tricky.
For those using spreadsheets I see no reason at all not to continue - they don't suit me because all of my clients had paper records - but contrary to what the software companies tell you, spreadsheets will be fine under the new rules.
Thanks (0)Hello Rebecca
May I add my experiences here, since I don't think that anyone else has had the same as me....? I have a very small practice made up of equally very small businesses - as well as looking after my husband's business.
I have been using Sage since it was called Financial Controller and ran on DOS.
I have always insisted on preparing my clients' bookwork for reasons stated by yourself and others. I would do this initially by logging into an workbook tailored for each individual client then, once completely reconciled, I would log the totals into Sage - much quicker than selecting the nominal code for each transaction.
HMRC cites errors in duplicating entries as the reason for each transaction being included in the MTD transmission - however this simply did not happen as both the spreadsheet entries and the Sage entries reconciled perfectly.
As each transaction needs to be included in the submission I would either have to pay for bridging software then use the Sage figures for the management and final accounts - added expense and faff - or log everything directly into Sage which takes far longer.
I had to ask most of my clients to go to another accountant as I simply did not have the time to enter every transaction for each client directly into Sage and the fee I charged simply did not make paying for bridging software an option.
Xero etc? Well I had one client who insisted on keeping his own records on Xero. He was happy for me to keep my records in tandem - however my results were nothing like his! When he indicated that he would simply like me to prepare final accounts and his corporation tax return from his records I asked a Xero expert to look through his records to see where the differences arose.
What a nightmare! The reconciliations went on and on - so I had to ask him to go to the Xero expert for his final accounts and corporation tax return - as my software was not compatible with Xero. This made me very sad as, like most of my clients, I had looked after this one for so very many years, since the commencement of the business.
Thanks (0)MTD - Making Tax Difficult.
Thanks (1)Having read all this stream I have to agree with most of what has been said.
There will be no benefit from MTDfITSA for HMRC or for the taxpayer.
The software companies and HMRC (by free co-operation) will benefit.
Taxpayers will not only have to pay more for services they don't need but also pay taxes to fund this nonsense and the salaries of the HMRC people promulgating it.
Accountants will retire and HMRC will lose the benefit of their oversight on submissions as many people will have to go it alone and probably make errors.
HMRC will struggle to do any enquiries as computerised records are much less intelligible than manual ones and errors more difficult to see and obviously they don't have people who can understand the problems.
But HMRC will gain one benefit - a few of us on this platform will decide we've had enough of wet-nursing HMRC's dysfunctional systems and retire, thus removing a lot of criticism and the hoots of laughter when it all goes bottoms up.
Thanks (3)Having read all this stream I have to agree with most of what has been said.
There will be no benefit from MTDfITSA for HMRC or for the taxpayer.
The software companies and HMRC (by free co-operation) will benefit.
Taxpayers will not only have to pay more for services they don't need but also pay taxes to fund this nonsense and the salaries of the HMRC people promulgating it.
Accountants will retire and HMRC will lose the benefit of their oversight on submissions as many people will have to go it alone and probably make errors.
HMRC will struggle to do any enquiries as computerised records are much less intelligible than manual ones and errors more difficult to see and obviously they don't have people who can understand the problems.
But HMRC will gain one benefit - a few of us on this platform will decide we've had enough of wet-nursing HMRC's dysfunctional systems and retire, thus removing a lot of criticism and the hoots of laughter when it all goes bottoms up.
Thanks (0)That me - I am 60 and had just about as much as I can take. I can't even get a PAYE scheme open at the moment , can't get on web-chat and VAT error and mistake claim ignored . To get HMRC to even remove the agents address has taken a formal complaint letter. Everything I send in goes recorded and the only letter I actually send are to HMRC. It really is a national disgrace that needs attention NOW. Scrap MTD and put your resources and staff into fixing a broken system...
Thanks (6)One of my client's can't get a PAYE scheme open. He has applied again in case he made an error in the first one. He needs a scheme so that his apprentice can go to college.
Thanks (0)Let us know when two schemes have been opened, and the penalty notices start rolling in as only one has been used for submissions.
Thanks (0)I'm not doing any of this either and will gradually cut my small amount of compliance work and go 100% advice. I only ever did a small amount of easy compliance because it was, well, too easy to pass up.
I'm sure there will be plenty of well meaning, home working mums, who also walk dogs on the side, who will be more than happy to have a go at people's books between the hours of 10 and 3. Good luck to all involved I say!
Thanks (3)Software houses putting their prices up? Nah couldn't happen! It just did my friends - this email from Intuit came this morning.............
The price of QuickBooks subscriptions is changing
Hello Colin,
We’re writing to let you know that the price for QuickBooks Online Essentials and Plus is increasing.
When will my price be changing?
From 15 January 2022 the price of QuickBooks Online Essentials and Plus will increase, this will be reflected in your first bill after this date. This increase will impact any new subscriptions purchased, along with your current subscriptions (there are some exceptions, that are listed further down in this email).
Thanks (2)I am in agreement with much of what Rebecca says here. BUT my shared opinion that MTD need not be too onerous is predicated on one very critical point. I am assuming that HMRC will not need the quarterly figures to be at all accurate (as no tax is paid based on these 'qtrly updates').
I recognise that I've made a very big assumption and, as I said at https://www.accountingweb.co.uk/comment/reply/196410/881212 (on Giles McCallum's article):
"Is the purpose of quarterly filing simply to prove to HMRC on a regular basis that they are being MTD-compliant in-year and not leaving it all until the year-end? Can we just link up the software for our clients, ensure that they use that linked bank and then ignore the accuracy of the content until we perform our annual work? Because that would achieve his stated aim that the "core purpose behind quarterly updates is to bring record keeping more up-to-date"."
HMRC urgently need to answer these questions and tell us exactly what they expect to receive on a quarterly basis.
Thanks (2)What would be the point of being MTD compliant if the submissions can all be a load of bunk?
What's the point of quarterly submissions if they don't have to be accurate?
Why would being MTD compliant in-year be of any importance given the above?
Thanks (7)Have you read my posts at https://www.accountingweb.co.uk/comment/reply/196410/881212 and many others I've made on AWEB? The stated aim is to encourage businesses to keep their records digitally. The purpose of quarterly submissions is (I believe) to prove to HMRC that this is being done. My submission doesn't need to be accurate to prove that I am using a digital system for keeping my books. It only needs to inform HMRC what system I'm using and that this system is flagged as MTD-compliant. By doing so multiple times during the year, I am proving that my books are digital in close to real time and are not simply re-keyed into a digital system after the year-end.
By all means argue that there is no need for HMRC to mandate that businesses should be maintaining digital records (that's a perfectly valid opinion, although one that I'm less inclined to agree with) but, if we accept that there may be some advantages in encouraging digital record keeping, then checking compliance a few times a year seems sensible.
Having accepted that principle, please let's stop complaining that there is no value to the data submitted quarterly. Of course there isn't, because provision of valuable data is not the stated purpose of the quarterly updates (per Giles McCallum, Director of MTD at HMRC), at least for the first few years until we've all got used to MTD and further mandation can then be applied. Accuracy need only apply to the final submission after the year-end.
Thanks (1)Ah right. So you're saying this is the thin end of the wedge.
Why am I not reassured by that ?
Thanks (3)That's a fair response! I'd hope that HMRC would wait a few years until we've all got very used to the basic principle of digital record keeping before they went further, but who knows?
Thanks (0)"please let's stop complaining that there is no value to the data submitted quarterly.
Accuracy need only apply to the final submission after the year-end."
Yes (from what we've been led to believe so far), BUT ... the impact of the quarterly submissions is extra work + intermediate submissions prior to final submission.
Because (according to John Hemming), inaccurate values in the Quarterly submissions have to be corrected (via some sort of Update submission) - followed immediately by the EOPS (to confirm those book-keeping values).
Only then are you allowed to commence real accounts prep and tax calcs - and to submit all these (akin to the current SATR) before a final Declaration.
In other words, the inaccuracy of values in Quarterly submissions will lead to extra work ... just as of course will attempting to ensure only accurate vales are submitted.
Catch-22!
Thanks (3)I'd love to know exactly what the process is for correcting any errors and omissions in the quarterly returns. Only John Hemmings has given us the slightest insight. If, ultimately, we have to submit a transaction by transaction set of books to HMRC, we're just buying ourselves time, as opposed to saving ourselves effort, in submitting inaccurate quarterly returns.
Thanks (0)Sorry, this is incorrect - there is no submission to correct the quarterly submissions. As they are cumulative the errors need to be corrected in the records as and when they are discovered, and they will then be reflected in the next quarterly submission, or on the EOPS - end of period statement - which does have an accuracy requirement as it is simply the SA103 or SA105 in API format rather than XML as currently.
Thanks (1)I have made this point several times over the past weeks. MTD in its current form is a futile exercise - HMRC is making us dance to its tune only because the MP in charge, Lucy Frazer, is too compliant with their requests and grants them whatever they ask for.
Thanks (2)You are correct. The quarterly submissions are just a 'data dump' and I think it's true to say that initially the date quality will be very poor. I do think that as time goes on the data will improve. there is no accuracy requirement and the legislation does not require any form of declaration about accuracy / completeness. It does, however, indicate that 9some0 records have been kept during the quarters in compliance with the requirements.
The benefit to the government (rather than HMRC) is to get a better handle on economic activity. The idea (but not one I see in the near future) is to provide better (possibly quarterly) information about tax liabilities for taxpayers but that has some serious limitations. Obviously eventually the Treasury will like to accelerate the payment of tax but that is way down the list, and in my view not possible in the short term.
And thank you for your comment - you may yet be lynched for it!
Thanks (1)I've been lynched many times on here for my comments on MTD and I've got thick skin! I have no problem with people vehemently disagreeing with me (my opinion is no more valid than theirs) but, when they keep on wilfully missing the point that MTD is about changing the way in which businesses keep their financial records and has nothing whatsoever (at least for now) to do with submitting accurate data more frequently, I get very frustrated with the level of the debate within the profession.
Thanks (1)So if it's about how business keep their records, for whose benefit? Is the HMRC whereby we have demonstrated that the information will be garbage on high percentage, benefit of the govt for economic reasons, again this has been thoroughly debunked as ludicrous if the information is garbage, or the benefit of the business where most business would/will change if it suits them. I'm at a loss as to who benefits?
Thanks (0)But if it is about submitting inaccurate data then surely you'll accept that others will have a problem with that and will find it, at best, pointless.
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