You might also be interested in
Replies (6)
Please login or register to join the discussion.
We need your stories
Please post your (fictional) client profiles below. Do you know a farmer like Theo Wellington?
Perhaps your cleint is Bob Builder who receives most of his payments in cash and pays for materials out of cash before banking the balance.
Do you have Salt-of-the-Earth cleints who have never touched a computer but have a number of let properties they inherited.
How will those cleints cope with Making Tax Digitial?
Making tax digital
I approach retirement age with huge relief. MTD to me shows HMRC's complete ignorance of a substantial tranche of their 'customers'. Only a few self employed have a real handle on the tax rules. "I'm just a digger driver, I leave all that paperwork to you Jes". Most work far longer hours for far less money than employed office sitters, of which I was one in an earlier corporate life. With all the cajoling, explaining, urging, threatening in the world, you won't change the mind-set of the majority of the solo self employed.
If they feel squeezed into a mould outside their knowledge and comfort zone, they'll quit, go underground, or pass the buck to us, depending on their personality and moral code. Most of my client base is below VAT threshold turnover so they only prepare (I use the word loosely) their final books after their year end.
If I was carrying on with this job, I would be setting up an initial 'baseline' chat with such clients to explain what we needed to be doing from now on. Then having a brief quarterly review - SCRIPTED, by phone or brief visit - with such clients. From that we would submit a 'best estimate' quarter for them. That would be minimum extra cost; and cooperation from them would be able to be 'forced' because the HMRC reporting will be a requirement from Big Brother, not the accountant being a bit OTT as they often think we are. Perhaps it could become a welcome opportunity for spreading the load, relieving the year end stress.. and we might end up thanking HMRC ??!!
Bad experience
We recently helped an elderly client migrate from paper and pencil ledgers to the cloud. The whole experience ended in disaster when, after investing significant time and energy, by them and by us, including the client buying a smart phone to make best use of the technology, which we all thought would really help her, their internet proved to be ridiculously slow. This is the only client we have had with a slow internet and it was truly terrible, even though they are based very near us and ours is very fast. The client is a carer for her husband as well as being elderly, and running quite a busy business.
They managed to stay sane and go back to spreadsheets as a slightly better alternative to paper but the whole thing could have been avoided if only we had an inkling it was possible to have such a slow internet connection. I spoke to our MP who did not seem surprised and assured me faster broadband will arrive but I dread having to broach this again with this client as we all feel badly scarred by their experience. It's an exceptional case, usually helping clients onto new technology has proven very successful and popular for us.
Hope this helps. It feels like cruelty and makes me sick to think i might have to go over this again with this particular client who truly gave it her best and we were all defeated by the technology.
Farmers are a good example
The whole point of annual accounts is that they match income to costs according to the production cycle. Quarterly reporting will impose artificial cycles of production. Farmer Giles year end is 31 March. His sheep lamb and cows calve about then, so by the end of June he has a lot of lambs nearly ready to sell and some good sized calves. He will probably also have harvested much of his fodder for the winter - high stock valuation. However, at this point in his cycle he will be skint because he hasn't sold many lambs or calves and he has had to pay for the fertiliser used to make the crops grow, and the contractor who harvested the crops. He's also fed the sheep, lambs and cattle and had to pay for that. Now he has to borrow money to pay taxes to HMRC, so he can't afford the deposit on that equipment he was going to buy that would have wiped out any profit anyway. By the end of September he has sold most of his lambs and calves, but has now finished harvesting his crops for the winter so his valuation is still reasonably high, so probably neutral for tax. December and he has finished selling livestock and used half of his fodder. By the end of March his feed stocks are exhausted and he doesn't have any animals to sell yet, so he has lost money for this quarter. Hopefully whatever rules are in place then will allow him to reclaim the tax he paid 9 months ago.
By the way, he is one of the clients that brings in his VAT return figures each quarter on a piece of paper as he can't submit them online because he's never learned how to use a computer.
it's like so many government 'initiatives' - it's actually adding glue to the wheels of commerce, and also making my personal work life even more of a nightmare. I'm surrounded by dopey clients who take 0% responsibility for all this toss, so of curse when the fines roll in they just look at me with their doe-eyes, and say "i thought you were looking after it all Malc", and expect ME to pay the fines. grrrrrr
Think of RTI who runs that - clients or accountants? etc.
We already file everything onslime with HMRCy so why change anything? Just make everyone else do same