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Digital accounting records to be compulsory

9th Mar 2016
Tax Writer Taxwriter Ltd
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The government expects every business to keep its accounting records in a digital form.

This key requirement will under-pin Making Tax Digital (MTD), as was made clear in the MTD for business event held on 3 March. What’s more “digital form” doesn’t mean an Excel spreadsheet. Each business and landlord will have to use some form of accounting software which has a capability to communicate with HMRC’s systems. We expect further details on this software requirement to be included in one of the five consultation documents on MTD to be released shortly after the Budget.

However, moving to a commercial software package will mean extra costs and data transfer problems for many businesses who have created their own bespoke accounting software, or who rely on Excel spreadsheets. Della Hudson of Hudson Accountants agreed that new businesses can keep adequate records on a simple spreadsheet. She said: “We run basic bookkeeping workshops based on Excel for about 40 businesses per year.”

Hudson added: “I’m a technophile and a big Xero fan, but I still have clients who have no internet connection or computer, but keep beautiful handwritten ledgers.”

Elaine Clark chartered accountant, is less sympathetic to Excel-fans and technophobes. She is not surprised that HMRC is pushing for the end of paper records. Clark predicted that it will be a huge step-change for the self-employed, small businesses and also for accountants who have yet to start using cloud-based accounting.   

Without the use of internet-connected accounting software there will be no cost savings for businesses under the MTD project. HMRC has assumed that every business will seamlessly transfer a summary of accounting data from their accounting software to HMRC each quarter.

The end of the paper bag job may be welcomed by many accountants, but it’s going to be hard work to educate clients to use accounting software. Tony Magaritelli of the ICPA estimated that it will take three to four hours per client to ween them off their existing systems and bring them up to speed on new software. Where clients don’t want to (or can’t) use accounting software, an alternative may be to introduce them to Bankstream or similar products, which provide secure feeds of banking transactions directly into an accounting package on the accountant’s desk.

How are you gearing-up your clients for the end of paper? Do you see a bright digital future ahead or early retirement by 2018?

Replies (180)

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By petersaxton
10th Mar 2016 10:52

AccountingWeb should at least set up an area so that accountants can more easily understand the advantages and disadvantages of the various online offerings. I reviewed the major players a few years ago but given the pace of change it's difficult to keep up with the changes. I would like to see comments from independent accountants rather than the place being full of disguised marketing bullshit.

I've been discussing online software with my more technophile clients but I will need to take into accounts all my clients so bank feeds/importing bank transactions and ease of attaching scanned documents will be more important now because ALL of the work may have to be done by accountancy firms - at least in the beginning - for some clients. Maybe not by Paul Scholes because I am sure that technophobe potential clients will avoid him or he will avoid them!

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By Eyesee
10th Mar 2016 11:56

Digital tax

Does anyone get it that what is going to happen is that HMRC are going to have everyone's business records at their fingertips so they will have more information than agents before any enquiry starts. We all know that for smaller businesses we spend a significant amount of time getting their records correct while the accounts prep is being done so HMRC will get the contents of the paper bag equivalent before we get to it. This is a recipe for a shambles for even some very well organised clients. Have you seen what they do with fixed asset replacements on H.P. or lease? Or are we expected to do quarterly submissions for clients? Mr Gauke & his pals are going to ignore what the taxpayers say. The fact that so many tax returns etc. are submitted electronically is largely down to agents in my experience. Clients, (HMRC's customers!!) will need help but don't worry Mr Gauke doesn't care as he is out to transfer more burden to the taxpayer so his department can save money. Yes, quarterly v.a.t. returns have been around for ages & they are going to say doing your full financials quarterly online won't be much more. Really? Get into the real world. How many smooth introductions to a new computer system for anything Government related have we seen? Zero. Look at RTI & AE. Don't worry it will be bulldozed through & the appropriate fines charged for non-compliance.

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By petersaxton
10th Mar 2016 12:00

Me

Eyesee wrote:

Does anyone get it that what is going to happen is that HMRC are going to have everyone's business records at their fingertips so they will have more information than agents before any enquiry starts. We all know that for smaller businesses we spend a significant amount of time getting their records correct while the accounts prep is being done so HMRC will get the contents of the paper bag equivalent before we get to it. This is a recipe for a shambles for even some very well organised clients. Have you seen what they do with fixed asset replacements on H.P. or lease? Or are we expected to do quarterly submissions for clients? Mr Gauke & his pals are going to ignore what the taxpayers say. The fact that so many tax returns etc. are submitted electronically is largely down to agents in my experience. Clients, (HMRC's customers!!) will need help but don't worry Mr Gauke doesn't care as he is out to transfer more burden to the taxpayer so his department can save money. Yes, quarterly v.a.t. returns have been around for ages & they are going to say doing your full financials quarterly online won't be much more. Really? Get into the real world. How many smooth introductions to a new computer system for anything Government related have we seen? Zero. Look at RTI & AE. Don't worry it will be bulldozed through & the appropriate fines charged for non-compliance.

There was a thread in Any Answers a while ago about this. I did point out that HMRC would be better placed to investigate businesses properly if the online bookkeeping with attachments was available to them but I think my message got drowned out in all the ranting and raving going on.

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By markfaherty
10th Mar 2016 12:01

Apps

I have read that HMRC will provide free apps for simple cases.

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By petersaxton
10th Mar 2016 12:05

Free apps

They wont be as easy to use as proper software.

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By Helen Rolfe
10th Mar 2016 12:20

DIGITAL TAX RECORDS

I have a client who just attempted to use QuickBooks - she is in the film industry and has no idea that when you press the button to put in an entry, there is another half to the process (we learnt it as double entry bookkeeping!!!!)

It's a small business and it took one of my staff 3 days to unravel the pickle she'd created

The government have absolutely no idea what non-numerate business owners already have to contend with just earning a living

Excel is (as I recall) a perfectly good way of keeping accounting records, as is a good old fashioned analysis book.............and I thought the law said you have to keep adequate accounting records - are the government going to make a law then that accounting records must be digital?

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By petersaxton
10th Mar 2016 12:29

Yes

Helen Rolfe wrote:

I have a client who just attempted to use QuickBooks - she is in the film industry and has no idea that when you press the button to put in an entry, there is another half to the process (we learnt it as double entry bookkeeping!!!!)

It's a small business and it took one of my staff 3 days to unravel the pickle she'd created

The government have absolutely no idea what non-numerate business owners already have to contend with just earning a living

Excel is (as I recall) a perfectly good way of keeping accounting records, as is a good old fashioned analysis book.............and I thought the law said you have to keep adequate accounting records - are the government going to make a law then that accounting records must be digital?

I would assume so otherwise they couldn't enforce it.

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By ClaireB
10th Mar 2016 12:34

This is ridiculous. 

This is ridiculous. 

There is no way a signficant proportion of my clients will be able to digitalise their accounts - farmers, farm workers, tree surgeons, plumbers, gardeners who spend their time outdoors, rarely use email let alone accounting software (and that's if they can get reliable broadband out here in the Sticks).

They engage me to do this for them, but they are not high earning businesses and I can't see them affording my doubling of fees or whatever it would take to submit their accounts and returns more regularly.

I have never written to my MP before but I think this is the only way to get some representation, if the accounting bodies don't take concerns seriously.

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By ahills
10th Mar 2016 12:39

BTL landlords

What about BTL landlords, will they need accounting software too??

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By petersaxton
10th Mar 2016 12:57

Apps

ahills wrote:

What about BTL landlords, will they need accounting software too??

The low quantity transaction taxpayers can always use apps. I would have thought some people may come out with relatively cheap software for BTL landlords.

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By ianthetaxman
10th Mar 2016 12:54

Terminator....

Anyone seen the last Terminator film?  Software that's being used to link up everything we do tries to destroy the human race, and wins -well, sort of.

Is this where we're heading?!

Some aspects of Digital Tax Accounts (DTAs) are already happening in other countries for things like bank interest and salaries, but those countries still require a tax return to be submitted.  Despite the headlines about the end of tax returns, it does look as though there will still be work for us all to do, checking that all the relevant information has been recorded etc. in one way or another.

It'll be interesting to see what will happen to the self employed person who comes to your office on 28 January with his bag of paperwork in hand, never having thought twice about what they should've been doing for the last year...

Roll on Budget Day 2016!

 

 

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jlsmith
By jlsmith
10th Mar 2016 12:45

Another government kite-flying exercise which seems to have gone down well then!

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By Montrose
10th Mar 2016 12:52

Negligence in the Brave New World aka1984

What will be the legal consequence of incorrect entries in quarterly returns.?

When do the words which bind the taxpayer bite? Just pressing a key? On whose software?

Will  income tax continue to  be an annual tax?

How will accruals be factored into quarterly returns?

We can all add to the practicalities which HMRC seem to have overlooked.

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By petersaxton
10th Mar 2016 13:04

Answers

Montrose wrote:

What will be the legal consequence of incorrect entries in quarterly returns.?

When do the words which bind the taxpayer bite? Just pressing a key? On whose software?

Will  income tax continue to  be an annual tax?

How will accruals be factored into quarterly returns?

We can all add to the practicalities which HMRC seem to have overlooked.

One error will be forgiven but a total mess will not. You will have to use somebody who has adequate skills. An excuse of "I don't know the difference between a fixed asset and a bank charge" will not be accepted.

Government has said tax will still be yearly but they might want you to pay it as it is earned in cash.

Do people still accrue for expenditure that is not material? I remember calculating accruals and prepayments on telephone when I trained with an international firm of accountants but a friend who set up on his own ignored all that and I don't bother with it now.

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By tom123
10th Mar 2016 13:05

What about larger businesses?

Coming from the perspective of a larger business:

We have an in house finance team - and decent software (Sage 200) which we know how to use.

However, the thought of having to scan my purchase invoices and receipts is horrific.

I have several lever arch files worth per month.

All subject to 'three way matching' when processed.

I couldn't run my business on a 'cloud' offering.

But I also certainly would not want to double up anywhere either.

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By petersaxton
10th Mar 2016 13:16

Why?

tom123 wrote:

Coming from the perspective of a larger business:

We have an in house finance team - and decent software (Sage 200) which we know how to use.

However, the thought of having to scan my purchase invoices and receipts is horrific.

I have several lever arch files worth per month.

All subject to 'three way matching' when processed.

I couldn't run my business on a 'cloud' offering.

But I also certainly would not want to double up anywhere either.

Some businesses scan all their post and distribute letters electronically. If you have a lot of documents it makes sense. You could ask a lot of your suppliers to submit invoices electronically.

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RLI
By lionofludesch
10th Mar 2016 14:07

People not documents

petersaxton wrote:

Some businesses scan all their post and distribute letters electronically. If you have a lot of documents it makes sense. 

If you have a lot of people to send documents to it might make sense.

You can't guarantee being able to receive documents electronically and, like tom, I have better things to do than stand over a scanner.

Scan all your post ?   Why ?   HMRC have never asked to see my invoices in 25 years trading.  They want me to scan them just in case they might want them? I don't think so.  It's madness.

David Dauke needs a chat with my 84 year old mum about the online records she'll need to keep for her Self Assessment return.

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By petersaxton
10th Mar 2016 17:46

Why bother?

lionofludesch wrote:

petersaxton wrote:

Some businesses scan all their post and distribute letters electronically. If you have a lot of documents it makes sense. 

If you have a lot of people to send documents to it might make sense.

You can't guarantee being able to receive documents electronically and, like tom, I have better things to do than stand over a scanner.

Scan all your post ?   Why ?   HMRC have never asked to see my invoices in 25 years trading.  They want me to scan them just in case they might want them? I don't think so.  It's madness.

David Dauke needs a chat with my 84 year old mum about the online records she'll need to keep for her Self Assessment return.

"Why bother to file them then? Just in case they might want to see them? HMRC have never asked to see my invoices in 25 years trading. I dont think so. It's madness."

So we should continue to do what we've done for years just because that's what we've done for years?

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RLI
By lionofludesch
11th Mar 2016 08:46

Wrong reason

petersaxton wrote:

So we should continue to do what we've done for years just because that's what we've done for years?

Not because we've done it for years.   Because the super new improved version takes longer.

It's the Emperor's New Clothes argument.

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By eppingaccountant
10th Mar 2016 13:10

Totally Pathetic

I agree with cstwragby's comment totally - HMRC and the Government do not want one person businesses and one person accountants to exist.  It is shameful.

I do find it totally pathetic that HMRC can insist that all businesses must use accounting software. There is one reason and one reason alone why they make such ludicrous demands - because they know that they can get away with it.  They can get away with it because we are too meek and mild to object to HMRC's demands.  The time has really come for all business owners who agree to put up a united front and refuse, for once and for all, to be bullied into doing impractical things such as these.  All that remains for me to ask at this stage is how do you suggest we go about it?  We are all robots jumping to the tune of the most inefficient organisation in the UK.  That cannot be right, can it?

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By Ammie
10th Mar 2016 13:24

DREAM WORLD

I expect this "dream world" idea will

* go ahead

* be a long winded learning curve

* create endless frustration coordinating clients and HMRC, whose help lines will be clogged       24/7 for a very long time.

* force small businesses and small accountant practices to rethink their future and perhaps move out.

* generate a handsome sum of fines and penalties for HMRC.

* create a cloud software companies frenzy for business, no doubt based on scare mongering.

* create some quick fix "creative accounting" by some.

* give us another stack of deadlines to meet.

Sounds familiar? Well that has been the by product of PAYE, VAT, RTI CIS, AE and almost since tax was invented, well maybe not that far back!

The only sensible solution is a middle ground based on business size, the bigger the business the more digital requirements. Smaller micros etc to sensibly estimate quarterly with an adjustment to actual once a year as it has already been suggested. After all, isn't this much about accelerating HMRC receipts?

There are certainly other motives for the move, but I suspect "national security" prevents those reasons from being made public.

Trouble is none of us, that I am aware of anyway, are big enough to "do a deal" with HM government to ease the pain.

What planet are these guys living on? Can someone enlighten me?

 

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By Silver Birch Accts
10th Mar 2016 13:36

Simplex D

I would guess that most members of AWEB have clients that use Simplex D Books (other brands are available) and have done so for years.

This type of accounting record is the mainstay for daily receipt cash/bank accounting.

They are usually well kept and are done so not by bookkeepers but ordinary hardworking trades people such as publicans,hairdressers,takeaways and shops.

I use Simplex D as an example but other accounting record types exist that are simple to use and have proved invaluable over decades.

They are easy to prepare accounts from and simple to teach bookkeeping to non-bookkeepers.

Clients who keep these records are usually very proud of them.

The beauty of these records is that they are usually written up weekly and therefore available to accountants soon after the year end.

Why consign these to history when they work.

I suspect many users will still keep these books and then say can we transfer the data to the digital sortware.

HMRC have never stated what accounting records constitute,they have sat on the fence but now you will be told to purchase digital software or else.

We are always being told that we live in a democracy and have freedom of choice.

No, not true we live in a country run by people who listen only to big business who want to market their cloud based wonders.

I am not a technophobe, I have nine computers (seven running Win10) tablets and phones.

I love computers, have magazine subscriptions and use cloud based.applications.

I teach software to clients if they want it. However many people are not that in to software or computers. That is their right, it is a free country or was!

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By The Black Knight
10th Mar 2016 13:36

all very depressing

I wish they would tell the truth

They want complete monitoring of our lives

Objections on the grounds of freedom will not be tolerated

They are on the payroll of software companies

the UK economy is being squeezed out of existence for the benefit of Germany.

They want tax where there is no profit.

every disaster is an oportunity so they are creating them as fast as they can.

Mr Gauke is a complete failure that's why he was hired.

The online stuff is not amazing it's preety rubbish really

 

Best option is to sell up and leave the UK

 

How do you manage to stop hmrc going back futher than they are allowed, they are already ignoring their time limits when looking at VAT records. Only plus is that they are still completely useless and don't have a clue what they are looking at.

as for RTI ? Why are they still making up underpayments in peoples codes then believing that that is reality. We have seen no tax collected on considerable payroll presumably based on an ongoing (dissallowed) loss relief claim from a failed avoidance scheme.

No body is going to keep up with this unless they shortcut things by making stuff up. all the accountants in the land do not have the resources to commit this much extra work and four extra deadlines. Marvelous as the extra fees that we are afraid to charge might sound.

 

The future as I predict It - it's not rocket science -

Small businesses will spend more time dealing with Admin to the point it might not be worth them carrying on. Less profit will be made and so less tax will be due. The survivors will fiddle the system, it's easy to do and the government actually encourage this. No trainees will be taken on it's become too expensive. Property prices already overvalued by the deposit required (lol) will crash. "NEW WORLD ORDER"

We will all live on benefits from Germany. On this basis we need to stay in Europe so we can all benefit from the never ending loan God just like Greece.

 

 

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By coolmanwithbeard
10th Mar 2016 13:46

Hmm

I have some clients whose original language is Thai. They cannot read or write English (although they both speak it well enough). They are British Citizens with UK passports. How will they comply unless I do it for them?

 

I don't believe any of the key software is available in Welsh either ....

 

M

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By petersaxton
10th Mar 2016 13:53

You do it

coolmanwithbeard wrote:

I have some clients whose original language is Thai. They cannot read or write English (although they both speak it well enough). They are British Citizens with UK passports. How will they comply unless I do it for them?

I don't believe any of the key software is available in Welsh either ....

M

Do it for them then. If I went abroad to a country where I couldn't speak the language I wouldn't set up in business unless I was willing to pay for somebody to do the things I couldn't do.

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By coolmanwithbeard
10th Mar 2016 17:43

I'm not saying I won't

I'm not saying I wont but suddenly they need something every quarter rather than once a year, and there is likely to be a work bulge in the first year of this as we do the annuals for last year whilst starting on the quarterlies for the next....

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By petersaxton
10th Mar 2016 13:56

The End

The problem is that the government wont tell us what the point of all this is. If they said they wanted some result and they explained their ideas about how to achieve it we could advise them. As it is we can't help them because they are not being logical. They are saying they want us to do this but wont explain why.

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By pauljohnston
10th Mar 2016 14:18

without wishing to be a doomsday believer

Pls can someone tell me what % of those using the online bookeeping systems are doing it correctly unless their accountant makes the regular adjustment.  In our case accountant intervention is about 70%.

Good Luck to HMRC in sorting out the mess that arrives (and probally the reduction in tax revenue).

As HMRC have some much trouble with its systems just think what trouble the 5 million self-employed are going to cause it

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By johnjenkins
10th Mar 2016 14:20

Wow this is just

as good as the EU article and just as important.

I said many moons ago that HMRC were out to put the one man band business on PAYE. So we now know how they will do it. Digital Accounting sent on RTI monthly. Once RTI goes on the cloud what next?. Dividends etc. will already be neatly tucked away in your little fluffy cumulus.

Can't wait for all this to get going. Ah just one problem. Stagnation. With a bit of luck DC and GO will be gone by june and BJ should appoint someone with a bit of common.

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By The tired accountant
10th Mar 2016 14:24

Poll tax.

This has the appearance of HMRC's very own poll tax fiasco.  What are they going to do if businesses and accountants simply refuse to operate this stupid system?  Accountants and small business men are not known for rebelling, but ordinary people rebelled against the poll tax, and won. 

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By petersaxton
10th Mar 2016 17:50

Beware

The tired accountant wrote:

This has the appearance of HMRC's very own poll tax fiasco.  What are they going to do if businesses and accountants simply refuse to operate this stupid system?  Accountants and small business men are not known for rebelling, but ordinary people rebelled against the poll tax, and won. 

Remember Peterloo!

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By The tired accountant
10th Mar 2016 18:17

Mounted division of HMRC

petersaxton wrote:

The tired accountant wrote:

This has the appearance of HMRC's very own poll tax fiasco.  What are they going to do if businesses and accountants simply refuse to operate this stupid system?  Accountants and small business men are not known for rebelling, but ordinary people rebelled against the poll tax, and won. 

Remember Peterloo!

 

I don't personally remember it, I'm not quite that old.  

However your comment has placed in my mind a very disturbing picture of mounted HMRC officers with drawn swords charging and cutting down any assembly of more than 3 accountants. 

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RLI
By lionofludesch
10th Mar 2016 14:31

Vote loser

Maybe that's the plan.

Maybe the HMRC mandarins would rather work with Labour.

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By Tim Vane
10th Mar 2016 14:34

It's all good as far as I'm concerned. While all you stuck in the past whingers are bleating and hand-wringing, I'll quite happily take over all of your clients, give them an app (paid for by somebody else) and carry on doing the same job I'm doing now but charging a slightly higher monthly fee. Just like I still do payroll every month despite people telling me 3 years ago that the world as we know it was about to end. All that really happened was it got easier and cheaper to do, but I could charge more.

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By eppingaccountant
13th Mar 2016 15:03

It's All Good?

Tim, in the words of Carly Simon, "You're So "Vane".

 

 

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By cstwragby
10th Mar 2016 14:50

Who's stuck in the past? I expect very few of us on here still submit paper tax returns.

If HMRC want Revenue faster they just need to change the payments on account system, no need for tinkering with all the other aspects.

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By paulcolman
10th Mar 2016 14:56

Free Accounting Software

I see it as progression and RTI was indeed just easing us into this. It gives the government a cash boost by businesses paying taxes as they earn it and not up to 21 months later.

Yes, it will cause havoc with people still using paper cashbooks or spreadsheets, but there are plenty of tools (and accountants) to help.

You can get free software that does a decent enough job such as Wave Accounting (our review of it is here) and Quickfile. Most of my clients use Wave followed by Xero, so I'd guess Wave's market share accounts for almost as much as Xero's of the 2m total users someone quoted.

Businesses either need to learn to use the software properly and keep their accounts updated regularly, or pay for accountants to tidy it up or even do all of the bookkeeping for them. Sounds good to me!

 

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By darrenwilliams
10th Mar 2016 15:45

I just feel sorry for small business

 

 RTi was mainly :-

1) Done by accountants for small business

2) A lot of larger businesses and almost all accountants were already using computer software (as it is a lot quicker for processing the complex calculations that payroll require)

 

With going digital, you have :-

1) Millions of business/self assessment people now trying to use computer systems (if you actually acted or listened to these people you would hear their stories how they pull their hair out over computers or even doing book keeping, hence they use accountants)

2) Accountants will not be able to act as a 'gatekeeper' for many reasons as we currently do.Time being one of them, as you can bet that the quarterly tax returns will have to be submit within say 30 days!!

3) Software as accountants know, if you put garbage in your get garbage out

4) Accountants not reviewing clients entries, reposting disallowable accordingly (even items like personal expenditure, drawings and so on or lets say posting a profit and loss item to a balance sheet code)

 

Just a massive difference, how  the government can provide state that x million businesses (when most is done by accountants) or how the can compare RTi to making tax digital just shows how much the government do not understand how small business normally operates and what small business does not want to do and to be honest how much people have problems doing anything 'financial/accounts'.

Sorry for the rant, I feel so sorry for small business if this comes in, really sorry for them. Many of them will end up with penalties and fines as a result and not spend time running their business. Red tape is killing small business.

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By petersaxton
10th Mar 2016 18:12

Major cock[***] up coming

darrenwilliams wrote:

 RTi was mainly :-

1) Done by accountants for small business

2) A lot of larger businesses and almost all accountants were already using computer software (as it is a lot quicker for processing the complex calculations that payroll require)

With going digital, you have :-

1) Millions of business/self assessment people now trying to use computer systems (if you actually acted or listened to these people you would hear their stories how they pull their hair out over computers or even doing book keeping, hence they use accountants)

2) Accountants will not be able to act as a 'gatekeeper' for many reasons as we currently do.Time being one of them, as you can bet that the quarterly tax returns will have to be submit within say 30 days!!

3) Software as accountants know, if you put garbage in your get garbage out

4) Accountants not reviewing clients entries, reposting disallowable accordingly (even items like personal expenditure, drawings and so on or lets say posting a profit and loss item to a balance sheet code)

Just a massive difference, how  the government can provide state that x million businesses (when most is done by accountants) or how the can compare RTi to making tax digital just shows how much the government do not understand how small business normally operates and what small business does not want to do and to be honest how much people have problems doing anything 'financial/accounts'.

Sorry for the rant, I feel so sorry for small business if this comes in, really sorry for them. Many of them will end up with penalties and fines as a result and not spend time running their business. Red tape is killing small business.

Just think of what will happen in the first quarterly accounts that will need to be done in the new system. That's three months accounts that need to be correct and you have one month to submit them. Oh, but what about the previous year? Surely you will need to have completed the accounts for that year to ensure you are using the correct balances brought forward? That means that in four months you will need to review and correct 15 months of bookkeeping? OK you can start that in the previous year if the client moves their accounts over a year earlier than they need to but there's only so much you can do in advance of the year end and there will certainly be a bottleneck at some stage. Maybe they will stagger the deadlines at introduction - this might cause even more confusion. I would have thought they should encourage businesses to get online years before late filing penalties occur and HMRC should check the introduction of online records to make sure taxpayers are making an effort at an early stage.

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Stepurhan
By stepurhan
10th Mar 2016 16:57

Biased sample

paulcolman wrote:
You can get free software that does a decent enough job such as Wave Accounting (our review of it is here) and Quickfile. Most of my clients use Wave followed by Xero, so I'd guess Wave's market share accounts for almost as much as Xero's of the 2m total users someone quoted.
Your "review" says that you recommend Wave Accounting. It is right at the top of your online accounts package list. It is the only package specifically mentioned in your blog posts. 

So it seems not unreasonable to suggest that your client list is biased towards Wave Accounting because you actively promote it. Hence your client base is not an accurate representation of the market as a whole.

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By paulcolman
10th Mar 2016 17:40

We digress!

stepurhan wrote:

Your "review" says that you recommend Wave Accounting. It is right at the top of your online accounts package list. It is the only package specifically mentioned in your blog posts. 

So it seems not unreasonable to suggest that your client list is biased towards Wave Accounting because you actively promote it. Hence your client base is not an accurate representation of the market as a whole.

I agree. Although I'd just say that my guess was very loosely (if at all to be honest) based on my clients, and we recommend other ones too depending on the client (usually Xero). Xero state they have 600k worldwide subscribers and Wave states it has 1.7m customers worldwide, but Wave is certainly less prominent in the UK. Who knows?!

Anyway, my main point was there is affordable (free) software out there, that is established and has a growing reputation. So I would argue against the points made that businesses would be forced to pay for software.

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By Tim Vane
10th Mar 2016 15:10

Your contention is that Wave (never heard of it) market share is similar to Xero? Never heard so much utter rot.

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By paulcolman
10th Mar 2016 16:21

Utter Rot?

@Tim_Vane To be honest, Wave having a similar number of UK users to Xero is a complete guess. But it's been around since 2010 and with 1.7m worldwide users, 60+ employees and 69 UK accountants listed offering Wave Pro-Services, I don't think it will be 'utter rot'.

We all prefer Xero, but many micro businesses prefer not to pay anything for software if it does a good enough job. That's why we also offer Wave.

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By SimonLever
10th Mar 2016 15:36

What's behind this?

What's behind this is that the Government want more tax to be paid earlier.

If you are self employed you pay tax up to 9 months after the year end. If you are submitting "real time" information quarterly you will then be asked to pay tax at the end of the quarter based on that income. This brings tax receipts forward by potentially up to 21 months. That is a big cashflow advantage.

The treasury are also looking to tax small company director/shareholders directly on the company profits by "look through". This has been put forward as an idea by OTS in their document Small Company Taxation Review. Published earleir this month. OTS are saying it should not be compulsory but once it is in it is difficult to see how that cannot be the eventual aim.

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By petersaxton
10th Mar 2016 17:57

17 months

SimonLever wrote:

What's behind this is that the Government want more tax to be paid earlier.

If you are self employed you pay tax up to 9 months after the year end. If you are submitting "real time" information quarterly you will then be asked to pay tax at the end of the quarter based on that income. This brings tax receipts forward by potentially up to 21 months. That is a big cashflow advantage.

The treasury are also looking to tax small company director/shareholders directly on the company profits by "look through". This has been put forward as an idea by OTS in their document Small Company Taxation Review. Published earleir this month. OTS are saying it should not be compulsory but once it is in it is difficult to see how that cannot be the eventual aim.

I'm not going to argue with the 9 months although I don't think it's entirely accurate. But lets see if that's the case. First 3 months is prepared and you have one month to submit and pay. That's 8 months before the year end. 8 + 9 = 17. Isn't that bringing tax receipts forward by potentially up to 17 months?

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By johnjenkins
10th Mar 2016 16:34

I was talking

to a Tory party stalwart the other day and his words were "I've never seen such an utter disregard for the small business from a Conservative Government. The quicker DC and GO go the better".

I don't normally believe politicians but he's right. Perhaps the sunday trading scenario is just the start.

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By North East Accountant
10th Mar 2016 17:07

Madness, unless law changes

The lunatics have taken over the asylum.

Others said it as I have previously, WHY?

That being said the only way they can make it work, particularly for the smaller business is Receipts and Payments. No adjustments for CA's, (100% AIA anyway). No relief for private use  assets eg. car, mileage app claiming business mileage only. OR

Abolish income tax on small business and tax turnover only, payable by business owner. Enter Business receipts into App and Turnover times X % =£Tax bill, job done.

Not being funny, most people could have a decent stab at that. Sack the accountant.

 

 

 

 

 

 

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By Eyesee
10th Mar 2016 17:14

Once they get to 2020 & DTA's

Once they get to 2020 & DTA's are operating brace yourself for the next step which will be : just pay your tax to account quarterly. That will screw everyone's cash-flow apart you know who. It is ALL about the money. Keep shouting & protesting otherwise we will be walked over.

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By frankdavid
10th Mar 2016 17:23

Another nail

I've been happily using HMRC's free software to submit CT600's supported by PDF's of the micro entity accounts which I have prepared on a spreadsheet. That's now been stopped and I will have to buy software to file CT600's + accounts on IXBRL format. More cost for me or my clients, No extra tax for HMRC.

 

Most of my clients keep their records on spreadsheets. some on scruffy paper records, none on digital medis. One guy with 40odd rental properties (all paid for) has just been bought a tablet by his kids and is thrilled to bits  that he has sent his first  ever e mail. Its going to be a big learning curve  for hime  before he keeps accounts in the cloud !

I forsee a situation that if you are not digital with your records you will be treated like a building worker and have tax deducted by your customer  ( with no rebate for exoenses). That would force a migration to software and lots of work for book keepers.

RTI a big success ?  among my clients its been OK because I do the payrolls !    I dont have time to be their book keeper though.

 

The mind boggles, thank God I'm semi retired

 

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By Donald6000
10th Mar 2016 20:41

Excel Spreadsheets

I would have thought that Excel spreadsheets were the bog standard analysis tool that most accountants used to analyse most aspects of SME accounts. Now we are being told that we have to use a commercial accounting package, which virtually rules me out of business as I only have one or two clients which I do for charity and to keep my hand in after retirement.

 

I cannot see the advantages to me of using Sage FC or Line 50 or whatever it is to service one or two clients. I may as well throw the towel now, in which case the clients will suffer. Perhaps David Gauke will do their accounts for them.

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