Death of the tax return: The software view
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What happens to the last minute new clients who turn up mid January .... At the moment If we have a UTR we can file a return and sort the 64/8 afterwards..... ????
What happens to the last minute new clients who turn up mid January .... At the moment If we have a UTR we can file a return and sort the 64/8 afterwards..... ????
Am I missing something?
when SA first started with the standard abrieviated P&L on the ITR, there was a discussion as to whether the ITR covered the basic rule that a taxpayer is to submit sufficient information to enable HMRC to make an informed judgment of the taxpayer affairs. That rule still applies.
The concensus was and still is, therefore, for all but the smallest of business enterprises accounts should still be prepared and submitted in order to meet the basic duty requirement
"A taxpayer is to submit...etc"
To my personal experience non-statutory submission of financial statements attached to the ITR has regularly pre-empted HMRC enquiry.
Nothing has been said which will in the proposed procedures prevent HMRC from using the basic rule, to initiate enquiry. So, for safety, accounts will still have to be prepared.
We hope insurance premiums are a waste of money, but the risk of untoward events remains sufficiently probable that only a fool would not take out fire insurance. [***] happens.
Notwithstanding this, there are two fundamental issues which nobody seems to be addressing:
1) Every change in HMRC / tax administration through the last two decades has involved moving work and cost from HMRC onto the shoulders and wallet of the taxpayer.
For good or bad, this is no different. This cost is in essence a hidden tax. (Do not claim there is no cost, if there were to be no cost to the taxpayer, why are the eyes of software houses across the kingdom lighting up in anticipation?) What ethical or democratic right have HMRC to advocate this, and then cynically declare they have reduced the cost of the tax system?
2) HMRC still holds rigidly to the doctrine, and penalises taxpayers, because there is no such thing as "honest mistake" or unwanted error. How in the name of all that is holy may HMRC stick to this doctrine in the circumstances envisaged? [***] Sapiens does not function in this way, especially as regards use of IT.
What happens to cash puechases
Those who make cash purchases or use their personal credit cards will still need to process those payments. Some clients who have a phobia to figures may be using the services of an accountant on a monthly basis rather than the traditional once a year.
Phobias
Those who make cash purchases or use their personal credit cards will still need to process those payments. Some clients who have a phobia to figures may be using the services of an accountant on a monthly basis rather than the traditional once a year.
It's a problem that has to have a solution.
If I have a phobia - travelling by bus, say - I need to come up with another method of travelling.
Given how late so many clients need it I think that accountants will have to be more disciplined by demand information earlier - IF accounts are needed monthly. I can't see that being introduced for everybody in 2020.
Re: What happens to cash purchases
Even if they pay from a bank account, they are still going to need to process those payments. A bank statement doesn't contain enough information for a computer to know what the payment is for and whether it is valid. For example, if the payment is to Currys or John Lewis, it might be for business equipment (capital allowances) or computer consumables (an expense), or it might be drawings.
Thanks for your comments jonbryce. Just wanted to add that most bank payments will actually be processed before they hit the bank account.
It is also feasible to develop systems which can identify bank debits and credits such as bank charges and interest using reference numbers. For the new scheme to work, innovative methods of processing information will have to be adopted by the banks to allow their system to talk to HMRC systems and other stakeholders . The only problem might be with identifying the cost centres but that will only affect the management accounts not the statutory accounts. I must however concede some items may still end up in a suspense account but that will be the exception.
Being forced by the system to quote a reference number with for example the first 6 digits representing the expense code when making card payments should work. Invoice numbers could also include expenditure codes so BACS payments can also be processed that way. Everything I have written would be difficult for very small SMEs to operate so the government have to get the details of the legislation right. Certain exemptions will have to apply to those earning modest incomes.
Filter
Accountants act as a first level filter and remove all the ''wrong'' stuff from accounts.
If we are removed from this level then there will be a big pile of wrongness submitted...
Should be interesting to watch as HMRC are swamped with nonesense
The more I hear
the more it reiterates my feeling that HMRC and the IT bodes haven't got a clue how SME's work. They will though when they try to implement this crap.
How much is it going to change?
I can see "online tax accounts" just being a way for HMRC to share the information they already have and ask taxpayers to check this information rather than supplying a duplicate version of the same data. HMRC already has details of PAYE, pensions, state benefits, bank interest and other income with tax deducted at source. The taxpayer (or their accountant) will need to check these figures and provide details of any other income (e.g. self employment or income from property) where tax wasn't deducted.
I'd be amazed if there isn't a deadline by which the data has to be supplied, checked and marked as complete by the taxpayer. It may even be January 31st. But if we're unlucky the Government will use this as an excuse to bring the deadline forward after their (failed) attempt to do this a few years ago. (Under this new system taxpayers are less likely to overstate their income, so I'm sure HMRC will want something in return...)
For accountants, taxpayers are going to have to gather the same information, and complete the same accounts, as they do now. Some of the more diligent self-employed/Ltd company taxpayers will want to report income throughout the year, although if they have any sense they'll still want an accountant to check the figures at the end of the year before the accounts are fully signed off.
The one group of taxpayers who will benefit are those with very simple tax affairs where all their income has tax deducted at source. They can have a look at the data on HMRC's portal, check the income against their P60 etc, and sign off the year themselves. But are those people a big market for accountants anyway? Speaking personally, I only do one or two of these very basic tax returns per year.
I almost laughed...
... when I read the software's view. Of course they would be saying much of this as it means more software to be sold and more excuse to raise the prices they charge.
But the real truth is unless there is a massive gross simplification of the tax system, software are not going to replace what accountants can do because it would imply the end user has, as a minimum, a pretty strong knowledge of the nuances of tax. By my experience this is not the case for many of the small business owners (I appreciate different accountants have different clientele).
By trying to "force" them onto a system that encourages them to file information without an accountant, would raise the amount of honest errors they produce and open them up to HMRC's enquiry system. When that happens ? Then they come running to us. Or alternatively they end up needing to be spoonfed every bit of information that gets dripped fed to HMRC.
To quote their so called view's expressed "It is not the “end of the world” for accountants" or "“real opportunity to improve things” for tax agents."
Absolutely not - we will always be needed but that is not the issue here. The point is - it creates chaos - changing a system that has worked and so many years and it creates a huge amount of unnecessary administration work. Again this burden hits the smallest business owners the hardest. Those small businesses that just want to concentrate on what they do end up being overwhelmed the huge increase in administration work with RTI then Auto enrolment and now this so called abolishment of the SA Tax Return.
Nice soundbite - Tory party - but now please think again and try and keep your mind on the citizens (or ahem.. with respect to HMRC: be more customer focused). The UK economy is base is driven much by the SMEs and it would be a shame if all small employers or potential new startups start thinking it would be easier for them to not employ staff or indeed not bother starting up in business at all.
After last nights
performance things will only get worse for DC. So looks like we gonna get some hillbillies in government yee ha. Hell yer.
The end is not nigh
Ever since I started in the profession in 1986 prophets of doom have predicted that technology will make the accountant redundant. We have seen continuous innovations such as accounting and payroll software, self-assessment (as HMRC said at the time its so easy, you won't need an accountant), online filing, the 'cloud' and now digital tax accounts. However we are still here, and dare I say it, business is good.
As I see it the only difference digital tax accounts will make is that information will be pre-populated. This will save much time scrapping about for P45/P11D information, receiving unnecessary HMRC enquiries because the CIS deduction isn't what HMRC think it should be and so on. The net result is that one could in theory complete two tax returns for say £60 each in the time it currently takes to complete one for say £100. Its called efficiency. The client, accountant, HMRC and of course software providers can all be winners.
The big hidden losers though are junior staff. There is rapidly decreasing need for the junior role. Old tasks like ticking the bank, calling and checking, casting cashbooks, posting the data etc that we were weaned on have largely gone. How will school leavers get into the profession? Will we see a skills shortage?
Very perceptive Jon,
A gent from Deloitte's forecast on the BBC a couple of weeks ago that 10 Million jobs will disappear from the UK economy over the next 25 (I think) years.
If these 'starter jobs' are gone then where will the next generation(s) of experts come from? Without basic understanding (may I mention Double Entry?) will there be a true grasp of the 'numbers'?
And, yes, I am pretty fed up with chasing cliemt for stuff like P60s, pension statements etc, whilst in the sure and ceertain knowledge that HMRC already know these numbers and are sitting smugly on them!
Just to add some balance here
This has been coming for years, ever since software became enabled to submit VAT returns, accounts & Tax returns, why is it that people think that the process of change has to stop?
This can be demonstrated by the following comments by:
John Jenkins: "HMRC and the IT bodes haven't got a clue how SME's work"
Tom 7000: "Accountants act as a first level filter and remove all the ''wrong'' stuff from accounts. if we are removed from this level then there will be a big pile of wrongness submitted..."
These both assume that their SME accounting will remain in the dark ages and that businesses are unable to improve. Or perhaps it indicates that accountants have a vested interest in preventing improvement?
If you are sitting in front of HMRC at an enquiry or records check and they start picking holes in the client's accounting, is it really good enough in 2014 to explain it by: "well yes, but you have to understand this is an incomplete records job"? You'll either get a raised eyebrow or be laughed at.
Once upon a time, for various reasons, incomplete records jobs were the norm, in fact IRIS stands for Incomplete Records Information System, these days they should be the exception and if a business, with some monitoring & guidance from an accountant (if needed) is unable to keep reasonably accurate books, I'd question whether they should be in business, it comes with the territory.
So, just as I used to tell my junior members of staff last century, just because someone did it that way last year,doesn't mean you have to do it that way this year, can you improve it? In this case it means a concerted effort to train, guide & educate clients into taking this seriously, and guess what, you can charge them for it.
PS: Well said Jon. Going one better, I was around when VAT came in, in 1972/3, some businesses and accountants started emptying the super markets
Didn't know that
in fact IRIS stands for Incomplete Records Information System,
Does it really? You learn something every day!
@Paul Scholes
This has been coming for years, ever since software became enabled to submit VAT returns, accounts & Tax returns, why is it that people think that the process of change has to stop?
This can be demonstrated by the following comments by:
John Jenkins: "HMRC and the IT bodes haven't got a clue how SME's work"
Tom 7000: "Accountants act as a first level filter and remove all the ''wrong'' stuff from accounts. if we are removed from this level then there will be a big pile of wrongness submitted..."
These both assume that their SME accounting will remain in the dark ages and that businesses are unable to improve. Or perhaps it indicates that accountants have a vested interest in preventing improvement?
If you are sitting in front of HMRC at an enquiry or records check and they start picking holes in the client's accounting, is it really good enough in 2014 to explain it by: "well yes, but you have to understand this is an incomplete records job"? You'll either get a raised eyebrow or be laughed at.
Once upon a time, for various reasons, incomplete records jobs were the norm, in fact IRIS stands for Incomplete Records Information System, these days they should be the exception and if a business, with some monitoring & guidance from an accountant (if needed) is unable to keep reasonably accurate books, I'd question whether they should be in business, it comes with the territory.
So, just as I used to tell my junior members of staff last century, just because someone did it that way last year,doesn't mean you have to do it that way this year, can you improve it? In this case it means a concerted effort to train, guide & educate clients into taking this seriously, and guess what, you can charge them for it.
I don't agree entirely with your comment. Lets take an example - A hairdresser can be good at his job but know very little about accounting issues to what is tax allowable and what is not tax allowable expenditure. He will be able to keep basic daily takings and a perhaps a list of expenditures made and he knows he has enough in his pocket afterwards to upkeep his spending. He may not be computer literate but could perhaps use a few apps.
But my point is really this - why should he need to know all this? All he needs to know is how to do what he is good at - cutting hair. It should be really up to him whether he utilises an accountant to submit his records to the taxman or not. By creating a system that forces him to submit say monthly returns to HMRC forces him to either a). pay more to his accountants or b) dabble with something he dislikes and is not entirely comfortable with.
You forget not everyone is numerate or computer literate, it doesn't stop them doing what they are good at. This is nothing to do with progress. People all have a knowledge base reasonable for their own occupation. By your reckoning, taking this example onwards, with the amount of haircuts you have had in your life it is reasonable you should be able to cut your own hair. Well do you ? - I bet you rely on your hairdresser to do that. But maybe if you ask your hairdresser and made a concerted effort to learn, maybe he can teach you how to cut your own hair and he can charge you for teaching you too.
I've now blown my chances.....
of being the only one able to answer the question in the next Accountants' Pub Quiz.
It is indeed, it's a shame I didn't keep the original paperwork from the demo I had of Iris in 1979, it had all four words emblazoned across their marketing literature as a sort of badge of honour.
They had only just moved into their office and we sat on packing cases!
I also can't resist saying that I didn't take it up then because it was too expensive ;-)
What if an hairdresser has a flood in their shop?
Do they say: "I shouldn't need to know about this" and drown or should they use an accountant to show them how to keep records using simple bookkeeping software. The accountant could even set up the software to show what profits are made on different products and services to help them to be more successful. They don't have to go down that route but I think it's a lot better than many taxpayers providing accountants with rubbish in mid January.
tax account notifications
If there's going to be lots of information entered on these tax accounts will HMRC notify us when they add information or will we have to trawl through the information regularly and try to work out what has changed?
This Google Trends chart is interesting
Google Trends chart, based upon UK data - link to chart here.
Whether you replace 'business planning' with 'business strategy', and even accounting for the fact that not everyone searching for 'tax return' on Google every January will be a company director or self-employed, the contrast is stark all the same.
Gary Turner
Managing Director, Xero
@garyturner
Bank transactions and cash
Bank transactions can be uploaded to accounting software and explained by the taxpayer. Cash transactions can be entered and explained by the taxpayer. I don't think anybody is saying that taxpayers should abdicate all responsibility.
@WongR
Hi - When I spoke about the responsibility to keep accurate and adequate books I deliberately referred to "the business".
You are right, not everyone is numerate and not everyone can grasp the basics of tax rules and so, like any other business, they bring or buy in the people they need to help them out, which in many cases may be a spouse, child, or bookkeeper, to help with the bookkeeping, and then an accountant to help with any tax issues that they are unsure about.
My main concern is with the firms who never explain the ins & outs of bookkeeping and basic tax to their clients. Either they assume that they are too thick to take it in, or worry that if the client gets too clever, it will do them out of billable hours or just stay in a rut, doing what they did last year, correcting a mess, months after the year end.
My experience has always been that, with some guidance all clients (or people they get in to help them) can take this stuff in, even the basic dos & don'ts with regard to tax stuff, and so only need me for "topping & tailing" or more advanced work.
I may be taking it out of context but, you question; "why should he need to know all this? All he needs to know is how to do what he is good at - cutting hair." If you employed that thought process to Ford, they would make great cars but nobody would buy them, because the engineers are crap at marketing and sales.
The simple answer to your question, and example, is that yes, I could cut my own hair (and made a complete mess when I tried, after too many beers) but the law doesn't give a monkeys about it, or how good your hairdresser cuts hair, the law does however expect him/her to Self Assess, it's his/her responsibility and HMRC make it clear the sort of records that should be kept.
You complain about a system that forces him to send in his accounts monthly, rather than annually. Firstly it may not be monthly, it may, like VAT, be quarterly, secondly, if the books are up to date and reasonably accurate then why not? I can't believe they will want a monthly or quarterly tax comp, so I'm guessing the software will just send in a basic P&L that's currently shown on the SA self employed pages, then, like RTI there may well be an annual final submission, perhaps with tax adjustments?
I do agree with you that, if the client keeps desk bound books and, through inadequate guidance and assistance, needs the help of an accountant every month this is going to be a real pain but it needn't be. The books can be on the Cloud and the accountant can take some time in education & support then will end up spending 10 minutes a month to check over the numbers before they are submitted, rather than a day or two months after the year end.
@Paul Scholes
Hi - When I spoke about the responsibility to keep accurate and adequate books I deliberately referred to "the business".
You are right, not everyone is numerate and not everyone can grasp the basics of tax rules and so, like any other business, they bring or buy in the people they need to help them out, which in many cases may be a spouse, child, or bookkeeper, to help with the bookkeeping, and then an accountant to help with any tax issues that they are unsure about.
My main concern is with the firms who never explain the ins & outs of bookkeeping and basic tax to their clients. Either they assume that they are too thick to take it in, or worry that if the client gets too clever, it will do them out of billable hours or just stay in a rut, doing what they did last year, correcting a mess, months after the year end.
My experience has always been that, with some guidance all clients (or people they get in to help them) can take this stuff in, even the basic dos & don'ts with regard to tax stuff, and so only need me for "topping & tailing" or more advanced work.
I may be taking it out of context but, you question; "why should he need to know all this? All he needs to know is how to do what he is good at - cutting hair." If you employed that thought process to Ford, they would make great cars but nobody would buy them, because the engineers are crap at marketing and sales.
The simple answer to your question, and example, is that yes, I could cut my own hair (and made a complete mess when I tried, after too many beers) but the law doesn't give a monkeys about it, or how good your hairdresser cuts hair, the law does however expect him/her to Self Assess, it's his/her responsibility and HMRC make it clear the sort of records that should be kept.
You complain about a system that forces him to send in his accounts monthly, rather than annually. Firstly it may not be monthly, it may, like VAT, be quarterly, secondly, if the books are up to date and reasonably accurate then why not? I can't believe they will want a monthly or quarterly tax comp, so I'm guessing the software will just send in a basic P&L that's currently shown on the SA self employed pages, then, like RTI there may well be an annual final submission, perhaps with tax adjustments?
I do agree with you that, if the client keeps desk bound books and, through inadequate guidance and assistance, needs the help of an accountant every month this is going to be a real pain but it needn't be. The books can be on the Cloud and the accountant can take some time in education & support then will end up spending 10 minutes a month to check over the numbers before they are submitted, rather than a day or two months after the year end.
As I said I didn't agree entirely with your original post (ie there are areas of agreement), but I think HMRC needs to put into context between keeping reasonably accurate records (ie the availability of Daily Gross Takings and keeping invoices of expenditures with bank statements etc) compared with being forced to submit their information online (yes many of my clients are not internet savvy / indeed might be afraid to enter the information incorrectly to HMRC). To many small clients HMRC is just trouble, do something wrong and expect the big stick (and the big bill) so they are simply frightened to communicate with HMRC. Unfortunately HMRC simply do not have a friendly image in the eyes of most small business (gee I wonder why?).
Teaching clients to book keep is one thing. Asking them submit information to HMRC is something entirely different whether that be monthly or quarterly. Until legislation change, people are taxed on an annual basis, I do not see why this new HMRC system should be rammed down their throat given most small businesses are happy with the status quo which provides HMRC with their information requirements whilst minimising the disruption to their business operations.
In terms of teaching dos and don'ts - the truth is alot of times HMRC rules are not logical in their eyes (I have chinese clients - and you'd roll your eyes up at some of the basic questions I get asked). I do spend alot of time educating them, but the level of absorption varies from client to client and there lies the problem.
As for cloud accounting, many people are still concerned with the safety of using internet in regards to safety of information and indeed many are still preparing manual records. Manual records are still very much "proper accounting records". At the risk of sounding like a dinosaur, but it is still my belief that this is happening all too early and we really need to consider implementing this in the future generations...
Systems
With online bookkeeping now you can get the system to classify transactions based on what is on the bank statement. It wouldn't take long to explain the other transactions. Whatever HMRC requires to be report I am sure the online bookkeeping software will make it as easy as possible.
Systems
I would presume the present online bookkeeping systems will provide a link to HMRC.
As always, history is a good indication of the future. You ignore it at your peril.
Progress
I dont think we should limit our progress to that which is acceptable to chinese clients and people who are scared of the internet.
There are serious concerns about monthly reporting. Payroll was achieved by the fact that people saw advantages in using computers to prepare payroll. It is going to be a big change to get people to keep their records up to date to enable accountants to review data monthly. Will it happen in one go or will there be requirements regarding turnover limits which will gradually be reduced?
Re: Progress ?
I dont think we should limit our progress to that which is acceptable to chinese clients and people who are scared of the internet.
There are serious concerns about monthly reporting. Payroll was achieved by the fact that people saw advantages in using computers to prepare payroll. It is going to be a big change to get people to keep their records up to date to enable accountants to review data monthly. Will it happen in one go or will there be requirements regarding turnover limits which will gradually be reduced?
My clients do tend to be Chinese but I only mentioned it because I didn't want to alienate all these supposedly wonderful businesses whom are all well educated, uses the internet and are all very software savvy whom these posters all seem to only know about. I understand if all your CIS sub contractors are well versed in internet submissions and are great fans of HMRC with full confidence that they would put all this information they submit to good use. In fact I'd be interested if you polled all your small clients and see how many of them think the changes being hinted on so far are good ideas.
But more to the point is should all book keeping be computerised ? And how would most small accountants cope if every month all their clients bring up a bag of book keeping, to which there is a deadline to review and there is pressure to ensure it is all input correctly within the new HMRC systems. And what if there are subjective information or valuations involved ? I think you find all your time chasing for figures and details once a month rather than once a year. It is this bit that frightens me more than anything. Now if you add Auto Enrolment on top of that?.....
Whate ver happened to basic education.
It is not that clients are stupid. After all we work for them, not the other way round.
It is that to efficiently operate software, any accounting software, it needs to be done on a regular production line basis, this is why Payroll mostly works.
Very few businesses these days operate this way. The twelve month accounting period is itself an artificial invention. Farmers, theatres, livestock breeder, builders, underwriters, all operate on different cycles. Seasons, shows, contracts, projects, etc.
How about solicitors, who may well bill one figure, but when it is assessed in court, this will be amended.
When I want a can of beans, I walk out my front door, five minutes to the local corner-shop, and home again. Ten minutes, job done. I do not get into my car, start it up drive 100 metres, etc.T'aint worth it.
Similarly, I use I.T. for taxes, acs production, co.hse, and so on. I do not need it for my own acs. Simply not worth turning the computer on.
Not a problem
If there is a need for accountants to input data because many clients don't want anything to do with computers then accountants would change their business model to take account of what is required.
Some accountants may shy away from less computer literate people and other's would target them and see it as an opportunity.
I do wonder
I do wonder if some of colleagues (and software houses?) really believe that clients have a money-tap, so whatever we ask them for, they pay.
My long experience is, it does not work that way. Most clients have a budget in mind.
Above that they will not pay.
For example; I had two clients, longstanding, friendly. no arguments. Unfortunately for me, a young CA working from a room in his parents house, and just starting, quoted them £840 pa. for preparing trading micro-company Ltd accounts-(incomplete records), C.Tax, reg.office, ITR, and monthly payroll.
I cannot, and have no intention of competing with that. I am a bit upset, but cannot disagree with my clients because they are correct. Money counts.
What may / will? happen is that the dreaded "Unqualifieds" and similar will have a Xmas party when /if this new system starts.
For those of us with "Professional" costs to cover, appropriate fees will be problematical.
Right price?
Who decides what is the right price for clients to pay?
If somebody can do as good a job as somebody else but cheaper then it makes sense to go to the cheaper accountant. If somebody doesn't do as good a job but is cheaper and the client is influenced by that then eventually they will realise their mistake. I don't think anybody has a right to charge what they want and the client has to accept it.
If there is a lot more data input to do then accountants can easily employ people to do that and take advantage of the improved management information to provide a service that is more useful to some clients.
I'm here as Peter's second
@David Gordon FCCA - what "professional costs" do you have that I don't, as an unqualified working from home? Your ACCA subs obviously, a frame in which to hang your certificate? polish for the brass plate?
Half my clients are 90% to 95% there in preparing their own accounts, so whether qualified or not (whatever that means) makes little difference when carrying out the 5%-10% to produce a set of Micro accounts and do a simple salary+dividends+bank interest tax return (two of mine did their own last year on FreeAgent).
So someone like me (only much younger) came along and nicked a small micro business from you at £840, that's not far off what I'd charge, but I'd make sure their records were complete.
Five years ago, regardless of whether I was professional (whatever that means) or working from home, I would have charged the same client £1,500. Today they do much of the work that I would have done then, even the payroll, they have up to date accounts, which they now understand, and I charge them £900, and that includes the cost of the Cloud software they use and it's a good fee.
As Peter says, that's me choosing the business model that best fits, it's adaption to account for changes in the environment, it's what businesses have been doing for hundreds of years, but then maybe professions are different?
From monthly filing
Here we go, it will never work, monthly filing there is no need for it, why has leglislation and filing requirements for small Limited Companies been watered down and requirements for sole traders is up, going forward will we all have to have a limited Company.
Paul - are you for real?
How about-
For starters
Professional Indemnity, CPD for me and staff, Employer's NI, Office o/heads,Multi-user software costs
And so on.
I said I am not complaining, that is after all how I / many of us started.
The point I am trying to make is that fees are not elastic. They are for most of our clients a Hidden tax liability, because the system has evolved into one where anything other than the simplest return require professional assistance.
I do not know how old you are, but I remember many small traders filling in the back page of a Simplex book, or of the "Gregson" audit summary book, and taking that into the inspector, Job done. Including at least one Inland Revenue office in London prepared to accept accounts written in a foreign language.
"Efficiency" and "costs savings" are not the same animals.
A system for the assessment of taxes, with the administration and collection thereof, is an excellent example of a process which may be undertaken without or with the use of IT.
If therefore one were to be able to calculate the number of man-hours required for a not IT administration- taking into account clients- tax officers- accountants, paper and pen.
Then compare that with the man-hours equivalent of a system using IT -
If the system using IT uses, in effect, more man-hours, it is not more efficient that the preceding system.
Man-hours used is the measure of efficiency.
It may for economic reasons be "Cheaper" but it ain't more "Efficient".
I am willing to bet a bottle of malt whiskey against an empty Coke tin that the 2015 man-hours time equivalent per taxpayer is a multiple of what it was in 1975.
Computers
Anybody who thinks that using computers to keep accounts takes longer than writing it up in a book must be crazy.
David - am I for real?
Do you mean am I lying just to prove a point or that because, in 40 years, you've battled change, the way I come at things must all be fantasy?
If, as I hope, it's the latter then the difference between us is that I remember only too well doing this stuff in the 70s but have adapted and so now do things differently. If the comparison is correct then perhaps I am in a better position to judge the two approaches than you?
With regard to the efficiency & cost savings, or not, of employing the right systems to carry out work I will again second Peter in his comment immediately above.
Yes, if I buy a calculator to add up figures and the keys are too close together and the 2 key is stuck then it was a complete waste of money, so I (or you) would return to using pencil and paper to add up OR I would go and buy a calculator that is more suitable and reliable.
An example from my past was when the firm I was with gave up various unreliable and disjointed software and spreadsheets and moved everything "client" to Iris. After a few years, and after we adopted the Practice Management element, I calculated (with my new calculator) that we were saving ourselves perhaps two technical and one administrative salary, plus we were carrying out the work more efficiently, with less fire fighting, releasing time for other things, which in our case was taking on more clients.
That is my experience of using IT and new methods, I do agree however that this may not have always been the case in the Government departments but the principles are the same even there.
As to costs, in your post above you commented/questioned:
"What may / will? happen is that the dreaded "Unqualifieds" and similar will have a Xmas party when /if this new system starts.
For those of us with "Professional" costs to cover, appropriate fees will be problematical."
The reason for the distain in my question was firstly to wonder what "professional" costs differentiated you from me an "unqualified" how was it that you were held back by having these extra costs from someone who didn't and could therefore take advantage of you?
As I guessed, the only professional costs you have are PI & CPD, so no difference there then, leaving, I guess your subs to a regulatory body, are they really that dreadful? The other costs you quote are business costs, like the professional subs, you chose to expend these, they are not forced upon you, just I used to when I had audits, staff and lots of clients to service.
As I say, I used to charge the sort of client you lost £1,500 and, if I valued that client and still had the same size firm then I am pretty sure I could now charge them £900.
The fact that I am smaller and with fewer overheads has made little difference to the fees I charge my larger clients, they still get me and the same stuff but for many others my fees have dropped significantly, mainly due to their & my use of Cloud accounting, they do far more f the work than before plus they save huge amounts of my time, so clearly my experience is different to yours, but is equally as real.
The second reason for my distain was in the use of the perjorative expression "dreaded unqualifieds". Some might have been courteous enough to explain that they only meant people who had insufficient experience, ie were unqualified to carry out the work but, reading the paragraph that immediately follows, it comes across as though you your definition encompasses anyone who doesn't spend out the same money as you and so, who must be unprofessional, or, at its simplest, anyone who is one of "them".
There's every possibility that you are not like that in real life and that you meant no insult but given where xenophobia can take us I too feel justified in wondering whether you are for real.
Please do not misunderstand me
I apologise if I am not making myself clear.
As regards IT. Despite what my grandchildren think I am not a dinosaur. I have been using computers in my office since 1979. The thing is, it is similar to the obesity epidemic. For most of human existence most of our predecessors' concern was to find enough to eat. All of a sudden, in the UK at least, we have inexpensive food coming out of ears, but because of our environmental history, many of us find it difficult to say "Enough!!".
At least since the Domesday book, the collating of sufficient quality information within useful time constraints, including perhaps the first fifteen years of my professional career, was often boring hard work. Not in the intellectual sense, but just in the daily grind.
All of a sudden, and it is all of a sudden, we have quality data and information coming out of our backsides.
Many, including me, who ought to know better just cannot stop collecting it. It is in the full medical sense, addictive.
Fortunately, In commerce and the profession because at the end of the day we need to earn a living, we have a constraint which says Whoa! do you need this, get on with your job and pay the grocery bill.
Regrettably HMRC executive and similar have no such constraint.
Consequently they go on and on. Sometimes I think it is because they associate the volume of stuff they can collect as an indication of the size of their private parts.
We see it in our language. Many of us, including said grandchildren, find it difficult to believe but;
Computers do not think, nor do they understand. They compute, and they compute according to procedures fed into them by [***] Sapiens. No more no less. They are machine tools, amazing wonderful machines, but still inanimate machines. As the judge said (In response to BG's barrister saying that claimant should not have got upset because she knew that the (spurious) demands were simply produced by a computer), -the British Gas case-
"Every computer system ultimately depends on some person with a keyboard".
He then fined BG £10,000 plus costs.
HMRC and, sadly, some of my professional colleagues have not yet learned that lesson. They insist on spreading the message that the "Next" IT system (It always the "Next") will similar to Harry Potter, wave a magic wand and all will be well. As far as I may judge from my last few years' experience, the result is just as likely to be more "Voldemort" than"HP".
I think
you've made a worthwhile point, David, Just because it's IT doesn't make it better, especially if the framework hasn't been thought out. I wonder just how many IT projects have been started but not finished by HMRC?
With all the hi tech stuff at present perhaps it might be time to consolidate and allow those without know how to catch up.
Spot on
you've made a worthwhile point, David, Just because it's IT doesn't make it better, especially if the framework hasn't been thought out. I wonder just how many IT projects have been started but not finished by HMRC?
With all the hi tech stuff at present perhaps it might be time to consolidate and allow those without know how to catch up.
I think in my eyes John has hit the point on the head. Its not that computers are not a good thing but merely the framework and the education in place are not ready. To quote HMRC's previously popular phrase "tax does not have to be taxing" - we all know this is not true but there is no reason to make things worse for the small business community.
Not all industries are suitable for the computerisation process but the need for taxes and information submission are universal. The additional information requirement requires additional resources and additional education to deal with. So why burden the tax payers when no further benefit is gained from doing so?
I disagree
"The thing is, it is similar to the obesity epidemic. For most of human existence most of our predecessors' concern was to find enough to eat. All of a sudden, in the UK at least, we have inexpensive food coming out of ears, but because of our environmental history, many of us find it difficult to say "Enough!!"."
Lack of exercise causes obesity more so than eating too much.
When I was younger I ate a lot but I played football and tennis and ran a lot and had a lot of other exercise. Maybe my metabolism was better, too. Now I have to sit at a desk and work long hours and I have no problem getting fat.