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TaxSheets becomes the first MTD ITSA software casualty

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The ripple effects of the Making Tax Digital for income tax delay have now spread to the software world, with bridging tool TaxSheets the first MTD vendor to close its doors. With the programme’s future up in the air and its scope dramatically cut, will TaxSheets be the last to pull down the shutters?

21st Dec 2022
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TaxSheets, which offered “ready-to-use” spreadsheets for the self-employed, was listed as “in development” on HMRC’s Making Tax Digital (MTD) for income tax software suppliers page until 20 December 2022.

However, an update posted on the company’s site stated that following the two-year delay to the MTD for income tax self assessment (ITSA) timetable, TaxSheets is “no longer active” and will be taken fully offline in early 2023.

“As this site is built purely for MTD ITSA this announcement makes the service no longer sustainable,” stated the update.

Existing users are able to download the TaxSheets spreadsheet tools, but the update stated that user data will be removed from the site when it is taken fully offline.

High risk

Speaking to AccountingWEB following the announcement, TaxSheets developer Antony Hatton said he will review whether it is feasible to bring the product back in two or three years’ time but at this stage, it seems unlikely. 

“As a developer, there is a high risk from investing in a project like this when the likely launch is still in doubt,” he said. “In three years’ time when we hit mandation the code, system and processes will have changed and we’ll need to keep this up to date – all with a chance it doesn’t happen or will be delayed again.”

Along with others in the software vendor community, Hatton found out about the delay via an HMRC email at 4:30pm on Monday – around the same time as the ministerial statement was released.

TaxSheets may not be the last vendor to close

The prospect of another extended period of time without income while running costs continue to pile up, plus having to keep up with changes to the HMRC APIs (with which the software must interact) may mean that TaxSheets is not the last MTD ITSA vendor to close its doors.

For many vendors, the de-scoping of the project, with the threshold for inclusion rising from £10,000 to £50,000 (with those earning more than £30,000 mandated to join the scheme in 2027 after a review), also came as a shock.

In a call with vendors yesterday, HMRC revealed that the de-scoping took the MTD market down from more than 4m to around 1.8m, effectively cutting the number of people affected by more than half.

For vendors with existing self assessment functionality this may not have a dramatic effect, but the move may affect the decision of those looking to join the complex, somewhat niche, marketplace of ITSA software.

Despite his decision to exit the market, Hatton remained positive about his time working with the programme. “I saw MTD as a catalyst – a way to change the way people put together and file their tax returns,” he said. “I can still see the benefits of this to a lot of businesses, and software to enable that is still coming. The most likely outcome is that some smaller vendors might take themselves off the software-ready page, wait a couple of years and come back to it.”

He cautioned that this may depend on the software industry’s perception of HMRC’s readiness to deliver. “This project requires investment and resources, not just from developers but also from HMRC,” he said. “You got the feeling it had lost a bit of traction this year, and I’m not 100% convinced they’ll pile a great deal more into it.”

Replies (15)

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By ireallyshouldknowthisbut
21st Dec 2022 18:10

If developers have decent software that makes life easies for clients at a sensible price point, we would absolutely want to buy and recommend that.

The trouble with MTD is its so focussed on a highly negative act of quarterly reporting that the positive aspects of the tech are buried under the weight of the lies used to justify the failed project.

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By D V Fields
21st Dec 2022 18:15

Time for Jim Harra to resign before he is pushed?

Whist there may be little sympathy for the software vendors they after all do invest time and money in trying to provide solutions.

Abject failure by HMRC.

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Replying to D V Fields:
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By Open all hours
21st Dec 2022 20:34

Long over due. I’ve had some very snooty comments on webinars when I raised the question some months ago. Chumocracy seems important to some but very suspicious to me. Don’t understand what value he has, the number of things agents have been excluded from is another red flag. It’s (almost) as though he doesn’t understand how things work. Also confusing turnover with income.

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Replying to D V Fields:
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By Rgab1947
22nd Dec 2022 10:26

The House of Lords (That famous retirement home for failed civil servants and cronies of the politicians) beckons for Jim Harra.

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Tornado
By Tornado
21st Dec 2022 18:31

“This project requires investment and resources, not just from developers but also from HMRC"

.. and Accountants, Book-keepers, Tax Advisers, businesses, Landlords, etc and everyone else involved, for no partiular benefit. It seems that the latter group are unlikely to invest anything now in this failed project.

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By User deleted
21st Dec 2022 22:42

I feel sorry for the small developers who were trying to offer a bridging solution. But the big guys knew exactly that what they were offering was overkill for microbusinesses but didn't bother telling HMRC and their adverts are a joke.

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By Nebs
22nd Dec 2022 13:21

The next time HMRC come up with an idea, and expect accountants and software companies to invest time and money for several years with the possibility of no return, many are going to think twice about getting involved.

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Replying to Nebs:
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By DMBAcc
22nd Dec 2022 15:10

Nebs - I do hope so.

I was going to get on my soapbox again but it is Christmas after all. I shall simply say that a lot of yarn was spun by some top software companies both to HMRC and "customers" (via tv adverts). I wonder how much the incompetent HMRC were seduced by these companies whose only motive was to expand their businesses by getting Gov't to MANDATE MTD for everyone.

How many of you think there is a conspiracy question to answer here? IF this project was SO WONDERFUL why weren't we given the option whether to use it or not?

Mark my words this attitude of imposition will soon be seen right across future governments. The first being a cashless society where EVERY financial transaction will be monitored. Most probably then HMRC will simply calculate a tax figure for each and everyone of us with no right of appeal.

Oops I didn't mean to get on my soapbox again - honest.

Have a great Christmas everyone.

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Replying to DMBAcc:
Tornado
By Tornado
22nd Dec 2022 16:02

"I shall simply say that a lot of yarn was spun by some top software companies"

As I understand it, and I am open to correction, a subscription industry such as providers of Accounting Software, are generally only interested in selling subscriptions and not so interested in the quality of software, as each new subscription adds at least 10 times the value of that subscription to the share value of the Software Developer Company.

Even if the subscriber never actually uses the software, the subscription is still a guaranteed income.

This does not, of course, apply to all Software Developers but those that crave for more and more subscriptions by any means may be the ones to watch.

I think the latest MTD development will put the brake on any significant increase in Accounting Software subscriptions and we will start seeing some people baling out of the software vending market soon and selling their shares to the highest bidder, no matter where that highest bidder happens to be in the World.

Just my thoughts, but you can draw your own conclusions from what you can see.

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By Paul Crowley
22nd Dec 2022 14:39

Never trust a UK government

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By NotAnAccountant2
22nd Dec 2022 16:43

Ignoring quarterly reporting, I think one of the things HMRC fail to understand, and the big software companies are not going to spell out, is that there isn't a "one size fits all" solution for the small trader.

There have been several references to "my window cleaner" over the last year or two. There will, inevitably, be some (probably older) members of this group of workers for whom software makes absolutely no sense at all.

But even for the set where it does make theoretical sense, there is probably as many different software solutions needed as there are window cleaners. Each cleaners requirements will be slightly different. No generic "MTD software" will be better than what they already have. Unless window cleaners earn a LOT more than I expect, there's no way they can afford to have a software developer write and support the perfect app/solution for their particular case.

That's "can't afford to do it", not "can't afford to do it out of the productivity savings"

And this will be true for almost all small businesses.

I'm unable to conceive of how there can be a commercial case for someone providing software for small property businesses. There just isn't enough "value add" available.

Calculating yield, return on capital invested, total return including capital etc. But I'll predict that there are few people who know what those number mean (and care about them), who couldn't calculate them themselves in a spreadsheet (maybe with the help of a bit of googling) and providing them in an app to the rest adds no value at all because they don't know what they mean.

So we're down to things like "reminder that the insurance needs renewal" (the insurance company will remind you), "reminder that the gas cert needs renewing" - this one is important but those who already don't have some way to keep on top of this are unlikely to keep on top of it with another app.

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Replying to NotAnAccountant2:
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By adjadj
23rd Dec 2022 08:40

There is already software out there for reminders. Microsoft, Google, Timeanddate and many others already have good electronic diaries , FREE, products, that integrate seemlessly into day to day usage of mobile device’s WITHOUT a the need for users do do any set up work.

You make an excellent point about once size fits all. One of the advantages of spreadsheets is that the user can extend their basic financial recording function to suit their own needs. In my case I can analyse my expenses by the categories that HMRC require and also categories that better suit my needs. I developed this on an iterative basis and it now works well for me. If I had software then I would just have to accept the way the developers thought I would use it.

I have fewer than 100 transactions a year so could not justify spending money on top end products with lots of bells and whistles in order to get the the one or two bits of functionality that are useful to me.

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By Philysis
26th Dec 2022 23:59

Under hmrc with IT , we are destined to do our own thing.. cloud software companies are doomed without mtd . They will need big investor partners , watch , Microsoft , Amazon , and even Elon may make a move, xero loses a titanic of cash every year it’s listing it bet on mtd to right the ship , it’s leadership team jumped to the lifeboat. It needs a big partner , this will happen 2024 , I guess vamos jumping last into the lifeboat gives us a clue

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By thinkingahead
29th Dec 2022 07:39

I cannot see why any new software company would want to the MTD ITSA market based on the last 8 years of spasmodic progress and then a huge U-turn. Some will exit as it is not profitable. Taypayers will eventually have very little choice of software.
For those with small numbers or transactions and no agent the spreadsheet/bridging software solution may become the default option

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Replying to thinkingahead:
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By NotAnAccountant2
29th Dec 2022 07:53

thinkingahead wrote:

I cannot see why any new software company would want to the MTD ITSA market based on the last 8 years of spasmodic progress and then a huge U-turn. Some will exit as it is not profitable. Taypayers will eventually have very little choice of software.
For those with small numbers or transactions and no agent the spreadsheet/bridging software solution may become the default option

Covering the simple cases, particularly simple land and property cases, really isn't that difficult. It's certainly posssible for a one man band to develop software to cover this in a month or two of solid work.

Lets say you can capture 2% of the 4MM landlords, charge 99p per month subscription and that's nearly a million per year turnover. Costs will be small.

I'm very well paid - but even I might have been tempted to brush off and commercialize my code and give up on the day job. Of course, now that the threshold is 30K the sums don't add up - I have no idea how many landlords there are with income >30K.

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