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Sage launches MTD ITSA sole trader solution

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Sage has rolled out a raft of tools targeting the Making Tax Digital market, including a new package for sole traders, a tie-up with property specialists Hammock to cater for landlords, and a shake-up of how its accounting partners pay for licences.

18th Oct 2022
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Newcastle-based developer Sage has launched Sage Accounting Individual, a new solution designed for businesses with simple tax affairs, which slots in below its three current accounting tiers (Start, Standard and Plus).

Through the solution, businesses can import transactions through bank feeds or a data extraction tool, manage and categorise transactions via mobile, tablet or web browser (as shown by the screenshot below), make adjustments and corrections, and ultimately file directly to HMRC through the software.

Sage Accounting Individuals
Sage Accounting Individuals

If the government’s Making Tax Digital for income tax self assessment (MTD ITSA) programme remains on schedule and goes live in April 2024, the business or its accountant will be able to view tax estimates and file quarterly updates, end of period statements and final declarations through the tool.

Sage Accounting Individual

Accountants and clients can connect through the Sage for Accountants platform, which offers accountants a single, searchable client list. From the platform, accountants can sign up clients, assign them tasks or reminders and add subscriptions for additional services.

Sage Accounting Individual is available for accountants today at £4 a month, with discounts available for accounting partners (more details below).

The FTSE 100-listed firm told AccountingWEB that while accountants will be the first to use the new solution, Sage is currently planning to allow direct access for businesses to use the tool from April 2023. A short video introducing the solution and demonstrating some of its features can be found here.

In an interview prior to the launch and announcements, Andreas Georgiou, VP/head of product marketing at Sage told AccountingWEB that the Sage Accounting Individual tier was a response to the specific MTD ITSA needs of the simplest sole trader clients. “It’s a whole end-to-end process at an affordable price point,” he said.

Georgiou added that Sage had gone a step further than its rivals and built its solution in a way that provides flexibility for the end user and connectivity for accountants.

“Our whole thesis is that the market can’t cope if accountants can’t cope, and accountants can’t cope if they don’t digitise,” he said. “MTD ITSA will be a shift in how accountants need to work. The huge dependency many sole traders have on accountants is set to grow and create even greater pressure on the sector to handle the increased workload as efficiently and profitably as possible.”

The market can’t cope if accountants can’t cope”

Outlining the thinking behind the Sage Individuals solution, Sage’s director of global product management Gerty Bester added that by bringing digital records into play, MTD ITSA has brought bookkeeping and compliance closer together and fundamentally changes the nature of the relationship between accountants and their clients.

“We want to give tools and technology to accountants to work with customers and change the relationship from reactive to proactive,” said Bester.

Volume purchase agreements

In the same announcement, Sage also introduced plans to shake up how its accounting partners pay for licences with the introduction of volume purchase agreements (VPAs).

Under the VPA system, partners agree a plan with Sage for the number of clients likely to sign up for subscriptions, lock in the best available deal, then only pay for clients when they implement. 

“We’re seeing a growing sense of dissatisfaction among accountants at being treated as a channel,” said Georgiou. “Providers impose shelfware in the form of bulk deals on customers. Even if they don’t use them, accountants have to buy licences to protect their partner status.

“Sage partners can now benefit from Sage for Accountants membership discounts in a fair and transparent way, without having to buy in bulk upfront and incur costs before they or their clients use the solutions.”

Georgiou added that accountants can also earn Sage partner points for each purchase made, through which partners can access further discounts.

Sage-Hammock partnership

Sage also announced a new partnership with UK property technology firm Hammock. 

As the introduction of MTD ITSA draws closer, many accountants are bracing themselves for increased demand from landlord clients, and through a tie-up with Hammock, Sage believes it has found a coherent solution for accountants to manage landlord clients’ tax and compliance needs.

Founded in 2019, Hammock initially focused on selling to the landlord market. However, according to co-founder and COO Marco Ferrari, they soon received enquiries from accountants whose clients were using the tool, and the vendor’s stand was one of the most popular at last year’s AccountingWEB Live Expo.

Hammock was the recent recipient of a $5.5m funding round, and currently provides banking, bookkeeping, draft property tax statements and property performance insights to customers. 

Once MTD ITSA is mandated April 2024, the integration will allow accountants or landlords to view tax estimates and file quarterly returns, end of period statements and final declarations under the new digital tax regime directly through Sage software.

The partnership is available now and Sage accountants can sign up to Hammock at this page.

AccountingWEB view

Sage’s entry into the sole trader-landlord space was inevitable, particularly with the launch of rivals’ products such as Xero Go and FreeAgent’s landlord solution. However, the Geordie developer believes its product’s point of difference is in its all-in-one-place offering for accountants, giving them the option to sign up clients, extract and manage their data and file their returns through one app.

Coupled with a competitive price and coherent partner pricing strategy, it looks like a solid offering in an increasingly competitive space.

There remain many outstanding questions about MTD ITSA for landlords, so the Hammock tie-up seems a pragmatic solution to tackling landlord clients rather than spending time developing a bespoke solution or sculpting existing functionality into a new form. Will it be enough to win over the spreadsheet crowd? Only time will tell.

While Sage executives remained diplomatically silent when asked the MTD ITSA delay elephant-in-the-room question, a recent AccountingWEB ring-round of other accounting software executives revealed doubts over whether the digital tax scheme will remain on its current timeline.

Given the current turmoil in Westminister, it’s perhaps understandable we haven’t had an update on the project from Whitehall, but a £1.2bn project can only go overlooked for so long. We may hear more in the coming weeks when the latest Chancellor has had time to unpack his briefcase.

18 October 2022: This article was edited to amend the functionality details of the Hammock-Sage partnership

Replies (31)

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By RFL H
18th Oct 2022 10:04

Good old HMRC forcing its "customers" to pay software vendors unnecessary money to collect vast amounts of data that will never be used.

Thanks (5)
Tornado
By Tornado
18th Oct 2022 10:29

Software for dealing with small clients has not been a problem for me for decades and the solutions I use (spreadsheets) already deal with the records neatly and cheaply and can be easily adapted to deal with MTD for ITSA if required. This sort of software for Sage will not help me at all, but it may help others.

The main problem with MTD for ITSA is, and always has been, the enormous amount of extra time and effort that we will be required to do to keep records and to submit quarterly returns that are of no practical use, together with some sort of year end return. Obtaining information on time from clients will be difficult, I do not have the resources to deal with the extra work involved and my clients will not want to, or be able to pay, for the significant extra time that this will require.

Like most Accountants, clients that are capable of dealing with Accounting Software will already be using it, and for those where it is not a viable solution, we have devised other bespoke ways to ensure that their Tax Returns are accurate and complete. This is due to the skill and professionalism of Accountants and others providing these sorts of services.

Realistic solutions for MTD for ITSA would be to either raise the mandatary limit to at least £85,000 or make it optional, although the ultimate solution is to scrap the project altogether and stick with the proven Self-Assessment system which is apparently going to inexplicably continue to operate at the same time as MTD for ITSA.

Judging by the appalling lack of information being pulled through by my Tax Software at the moment via HMRC API's, (NOT even State Pension information), HMRC are miles away from getting their systems to work properly and their pretence that all will be OK by April 2024 is at best laughable or at worst a lie.

What we need is some honesty and a pragmatic approach from HMRC to this project.

No doubt the Sage offering is good but it is not for me.

Thanks (13)
Replying to Tornado:
Chris M
By mr. mischief
19th Oct 2022 07:24

If anything, in my experience the pull through links with HMRC from my software are worse this year than in previous years. I hope this impending shambles lands on Jeremy Hunt's desk, axe MTD please Jeremy!

Thanks (6)
ghm
By TaxTeddy
18th Oct 2022 10:33

I find it quite interesting because I constantly read these new product launches and think to myself ..."nah".

Which suggests one of two things. Either -

- there are a lot of small practitioners like me who are wedded to the spreadsheet methodology for MTDIT regardless of the multitude of software offerings available, or

- my practice will flounder because I am the only one not offering a super duper slick software solution to MTDIT.

Can't wait to find out.

Thanks (1)
Replying to TaxTeddy:
Tornado
By Tornado
18th Oct 2022 10:42

"- my practice will flounder because I am the only one not offering a super duper slick software solution to MTDIT.

You definitely will not be the only one!

Thanks (1)
the sea otter
By memyself-eye
18th Oct 2022 11:32

£4 a month for now, the five, then six.....(plus VAT?) and what about the non represented tax payers- sorry 'customers' who don't even know that MTD ITSA is coming their way.

I give up - oh I already did!

Thanks (1)
Replying to memyself-eye:
Morph
By kevinringer
20th Oct 2022 12:10

Before MTD VAT started, Sage Instant (that's the desktop Sage 50) cost £95 for a perpetual licence which could last 10 years.

When MTD VAT started, users had to sign up to a Sage 50cloud licence for the MTD VAT module. At the time my clients were paying £15 a month = £1800 over 10 years.

Today, anyone signing up for Sage 50cloud is charged £72.50 a month (see https://www.sage.com/en-gb/products/sage-50cloud/) = £8,700 over 10 years.

So since the introduction of MTD, the cost of the software have been increased by over 9000%. And that's in the space of 4 years.

Clear evidence that the software industry is milking the MTD cow. I wonder if HMRC are receiving commission from Sage.

Thanks (4)
By ireallyshouldknowthisbut
18th Oct 2022 11:33

"If the government’s Making Tax Digital for income tax self assessment (MTD ITSA) programme remains on schedule and goes live in April 2024"

The first word in that sentence is doing a huge amount of heavy lifting.

Thanks (5)
Replying to ireallyshouldknowthisbut:
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By Hugo Fair
18th Oct 2022 12:15

... and providing camouflage from the 2nd part of the sentence which continues "will be able to view tax estimates and file quarterly updates, end of period statements and final declarations through the tool".

The desired implication is that the software's ready ... but I suspect it means that the software will be developed IF/WHEN the govt confirms that it's going ahead?

Thanks (3)
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By Hugo Fair
18th Oct 2022 12:25

So Sage have swallowed the Govt line (plus the hook & sinker) - or is it merely mutual?

Georgiou added .. “Our whole thesis is that the market can’t cope if accountants can’t cope, and accountants can’t cope if they don’t digitise”.

Says it all, but really?!?

Thanks (3)
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By North East Accountant
18th Oct 2022 13:00

Let's assume MTD ITSA will happen as planned, and not get into why it shouldn't etc etc.

How do you deal with sole traders and landlords? Spreadsheet or software?

Spreadsheets, we all know and love but no receipt capture, no bank feeds, bridging software needed, risk of client messing it up, etc...but free for software.

Software, can do receipt capture, bank feeds, file at click of button, no bridging software needed....but software cost.

So if you can get software for £4 + VAT per month (max), with further discounts, that has receipt capture, bank feeds, one click filing, why on earth would you bother with a spreadsheet?

And when you see it in action, it's slick, easy to use, and don't forget you don't need double entry with it.

This is a game changer from Sage.

Thanks (2)
Replying to North East Accountant:
Tornado
By Tornado
18th Oct 2022 13:27

"Let's assume MTD ITSA will happen as planned"

That statement is as bad as the notorious IF.

There is no need to assume it will happen as planned as there is overwhelming evidence to suggest it will not.

As Accountants, we naturally tend to believe the actual rather than the fantasy, unless we are trying to be a bit amusing.

Thanks (2)
Replying to Tornado:
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By North East Accountant
18th Oct 2022 14:07

As of today the fact is that HMRC say it's going ahead on 6th April 2024. That's a fact, which we may not like, but it is. Of course, we all know it may change at some point.

What I was trying to do was not have all the usual, MTD is rubbish, it's not going to happen, etc, etc and actually have a conversation based on that.

Actual fact today=MTD ITSA starts on 06/04/24.

Fantasy today=MTD ITSA will not start on 06/04/24.

It's not NEA living in fantasy land, today.

Thanks (1)
Replying to North East Accountant:
By ireallyshouldknowthisbut
18th Oct 2022 14:59

If the worst comes to the worst, and they really are insane enough to make this compulsory from 1st April for landlords, then software with bank feeds will be great................but only if you assume the client has a business bank account.

Many accidental landlords and sole traders with a handful of transactions don't have a business bank account. My wife's BTL income just goes into her current account, zero business case at the moment for a separate account for 2 dozen transactions a year. Many of my clients are the same, what i normally ask them to do is run a query on their bank account and dump out the rental ones for us to cross check the agents statements to work out what they mean. 90% of the work on rental accounts is working out what the net actually is..
I have been asking clients to ensure they have a separate account, but not many have listened.

Reality will be to get a third party to sling any old tosh in on a 'cheap is best' basis, and we back it out, and put in the right numbers annually.

Fundamentally my job is to work out how much the tax is, in the most efficient manner for the least hassle for us an the client. Filing pointless quarterly reports is at best a distraction.

Thanks (3)
Replying to ireallyshouldknowthisbut:
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By Paul Crowley
18th Oct 2022 18:15

Landlords with agents?
Bank just shows net of all costs

Thanks (3)
Replying to North East Accountant:
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By adam.arca
20th Oct 2022 13:22

North East Accountant wrote:

Actual fact today=MTD ITSA starts on 06/04/24.

Fantasy today=MTD ITSA will not start on 06/04/24.

I get your point and I'm sure everyone else does too. But you're wrong, unfortunately.

The actual fact today is that the Revenue SAY that MTD ITSA starts on 06/04/24 and that's a huge difference from what you're saying.

You can of course assume the worst and prepare for that but you would be betting against the odds to assume HMRC can deliver a project on time and fit for purpose and, in this case, working exactly how your software is set up to work.

It's that gap between what the Revenue say and what we believe they will achieve which is causing most accountants to hedge their bets when it comes to ramping up for MTD.

Thanks (1)
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By GHarr497688
18th Oct 2022 15:31

When I started in Accountancy in 1979 computers were just starting to be used for Accounts Production. If you look at Sage you will see it's date range was 1980 so this indicates that Accounting software has been available since then , that's 42 years. All the current version of Sage are a version of the original . For 42 years it's been possible to keep records on Sage and complete quarterly reports. So what is so different now ? To use Sage you have to understand the difference between Revenue & Capital otherwise the software produces meaningless figures. With MTDVAT and MTDITSA you also need to understand about tax ( many sorts of tax) , you also need to have the time to put all the entries on the software and then check everything should you wish a correct module. I have clients who bring the VAT to me just at the end of a quarter. When you think about MTDITSA you realise HMRC have failed to publish information about the start date to the people who are being mandated to use the systems. All in all it's just going to die a natural death so why on earth don't the software houses , organisation such as AWEB , the professional bodies and Accountant just do a joint letter saying just this.

Thanks (3)
Replying to GHarr497688:
Tornado
By Tornado
18th Oct 2022 15:50

"When I started in Accountancy in 1979 computers were just starting to be used for Accounts Production"

Yes, it was 1981 when we first started using desktop software to prepare Accounts. The program was called Auditman and we were initially using a Beta version.

I believe that Sage bought out CSM (Computer Services Midlands) along with Auditman and scrapped it.

Thanks (3)
Replying to Tornado:
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By Paul Crowley
18th Oct 2022 18:18

We had auditman
Killed by sage
But they tried to mix up all four Software offerings that they bought at the same time
It just did not work

Thanks (2)
Replying to Tornado:
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By deanshepherd
18th Oct 2022 19:42

I remember Auditman. Odd name given it was just for producing accounts. We also used Minuteman for time recording. I assume that was also CSM?

Thanks (2)
Replying to deanshepherd:
Tornado
By Tornado
18th Oct 2022 23:03

I seem to remember being offered Minuteman but we were spending something like £8,000 on the software, hardware and accessories and went for a word proccessing system instead which turned out to be a better choice.

Whilst we were able to prepare Accounts, letters and other documents about three times faster with this set up, the clients always lagged behind in their enthusiasm and competence in using Accounting software to the extent that we had to start charging those that used programs like Sage, about three time more than usual to sort out their mess, and for some clients, that would still be the case today.

Thanks (3)
Replying to GHarr497688:
Morph
By kevinringer
20th Oct 2022 12:14

We used Auditman too. We'll have to have a reunion.

Thanks (3)
Replying to kevinringer:
Tornado
By Tornado
20th Oct 2022 13:19

I have the original sales blurb for Auditman (Incomplete Records Accounting System) from about 1983 which includes -

'This highly acclaimed package is already widely used within the profession, and is fast becoming established as the standard against which other systems are compared. Clarity of presentation and simplicity of operation enable the system to be operated with only a minimum of Accountancy knowledge, and no previous computer experience is necessary. By embodying traditional accounting methods in the system, no staff re-training is necessary and installation is both simple and straightforward.'

We did not intend using inexperienced staff but the impression that people with little Accountancy knowledge could use the system was as untrue then as it is today. The system worked well in experienced hands, however, and could be used for in year book-keeping from which final Accounts (of any kind) could be prepared, or from year end Data and all in 32K of RAM and two half megabyte disc drives and dozens of five and a quarter inch floppy discs.

As I have mentioned before, it is not what the software can do that is important, it is what the people using it can do which is the deciding factor,and the MTD project arrogantly ignores the latter.

Thanks (3)
Replying to Tornado:
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By rboggon.yahoo.co.uk
20th Oct 2022 15:37

I joined Hartley in 1979. We had HAPAS which boasted flexible formatting (Flexol) which meant that you could could copy the existing layout of accounts into the computer software. Accountants liked that! We ran initially on Wangs (WCS15 and VP2200) with a memory of 16k and 32k. Those were the days!
Anybody else remember them?

Thanks (0)
Replying to GHarr497688:
Morph
By kevinringer
20th Oct 2022 12:19

GHarr497688 wrote:

All in all it's just going to die a natural death so why on earth don't the software houses , organisation such as AWEB , the professional bodies and Accountant just do a joint letter saying just this.


Because the software industry are making a killing from MTD so they want it very much alive. AWeb is a community/publisher for accountants and not a pressure group. The PBs have been making their views known to HMRC but HMRC is paying them as much attention as HMRC paid them about their pre-launch feedback on 30-day CGT etc. It is up to us, to lobby our PBs and HMRC.
Thanks (3)
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By Winnie Wiggleroom
19th Oct 2022 07:42

What is interesting to me about this is that when MTD first came in Sage were offering 100 licences for £100, in fact the way the deal was done it was 10 plus licenses and 100 start licences for £100.

On top of that they gave us a percentage discount back every quarter, until they pulled that deal after a couple of years, meaning we were paying below £1 per licence but of course we had to take more licenses than we needed at the time for us that meant that we were paying about £1.40 per used licence, however we have made a decent profit on re selling to clients at a rate to them well below what they would have paid otherwise. win win, apart from the software is not the best but we get by.

QBO periodically offer a similar thing.

So now Sage have realised that deal is dead what deal will we get exactly, its sounds like an interesting variation, it would be nice if they told their "partners" first, BUT it will certainly be more than the £1 and this time there will be no scope for on selling for more because our fees are going to have to go up anyway.

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