Spreadsheets get MTD reprieve?

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In recent months accountants have been coming to terms with the potential demise of spreadsheet-based accounting tools as a result of HMRC’s digital revolution. But the Making Tax Digital consultation documents may have offered a lifeline for the professions favourite application.

A single sentence tucked away within the 78 pages of the Bringing business tax in the digital age consultation presented a glimmer of hope for spreadsheet enthusiasts.

Responding to the challenges businesses who keep their records on “paper or simple spreadsheets” face, HMRC revealed that it is “exploring, with specialists, the role of spreadsheets in business record keeping and their ability to meet the requirements and benefits of MTD compatible software”.  

Businesses still rely on paper-based records

Research by the ICAEW IT Faculty back in March may have encouraged HMRC to reconsider its anti-spreadsheet stance. Three-quarters of businesses surveyed did not use accounting software, while 41% of the manufacturing and construction industries still rely on paper-based records.  

This prevalence was echoed by AccountingWEB members whose clients exclusively use spreadsheets. DMBAcc reported: “I have 50 clients whom I can serve adequately at present. Not one of them has commercial software. Most use spreadsheets which they understand. I don't need commercial software for 50 clients nor do I want it when I see the confusion it causes.”

AccountingWEB’s consulting tax editor Rebecca Cave agreed that spreadsheets are an adequate record keeping tool. “I keep all my records from my company on a spreadsheet,” she said. “I understand my figures. I don't need some fancy software to tell me what a debit and a credit is. I am a trained accountant.”

I don't need some fancy software to tell me what a debit and a credit is. I am a trained accountant.

But, if spreadsheets are ruled out as part of MTD, businesses will face the extra costs of moving to commercial software - although HMRC has vowed that some free products will be available.

Despite the pause for thought and consultation, Rebecca Benneyworth, tax lecturer and head of an HMRC advisory group on Making Tax Digital, thinks spreadsheets are “going to have to fight their corner to remain in the picture”.

“While spreadsheets are a good way of managing data and have historically been very popular with accountants and some of their clients, I think the issue in Making Tax Digital is that HMRC is hoping that by using software (actual software packages and apps) this will eliminate a lot of errors that are made while the books are being written up.” 

Spreadsheets still ubiquitous in business

The IT faculty’s David Lyford-Smith, who will also be assessing the future of spreadsheets in an upcoming ICAEW event, commented: “While [spreadsheets] have their reputational tarnishes – largely from improper use by poorly trained users – the spreadsheet is a big part of current business practice.” 

While [spreadsheets] have their reputational tarnishes – largely from improper use by poorly trained users – the spreadsheet is a big part of current business practice.” 

In order to filter out errors, Benneyworth said HMRC is hoping to use upstream compliance, where application programming interfaces (APIs) will be built into the software to pick up errors as they arrive.

To illustrate her point, Benneyworth cited the example of somebody entering a £720 taxi fare. She explained that the software would be intuitive enough to ask whether the right figure has been entered, because in this scenario, the taxi fare would be an unusually high amount.

As a solution, Rebecca Cave said spreadsheets can still have a role if software is developed which can convert the spreadsheet data to the standard required by HMRC. “My problem for my company is translating the figures from the spreadsheet and to get them into the format that can be submitted to HMRC using iXBRL. I need some software to do that”

Benneyworth agreed, explaining that spreadsheets can be resuscitated by a software provider who could create a spreadsheet add-on which incorporates upstream checking. “If somebody wrote that, it would be a really good way of going forward.”

Despite the uncertainties, Lyford-Smith remains positive for spreadsheets: “Going into the future, the ever-growing amount of data available may well outpace the spreadsheet format, but the accessibility of the medium is hard to beat and I suspect that, while their role may change, spreadsheets are here to stay in one form or another.

Spreadsheets will die out

Xero’s Gary Turner, meanwhile, is less optimistic about spreadsheets’ future. Turner said the ubiquity that accountants and Lyford-Smith highlighted will fall away in the medium “not least because of MTD”.

Spreadsheet dependent businesses will die out, and in turn help to end the market for spreadsheets.

Turner discussed the future of spreadsheets in a LinkedIn post written last year, where he declared that “our love affair with spreadsheet is finally coming to an end". 

While MTD could speed up the digital natural selection, Turner lists the shift to mobile - “Have you ever tried to use a spreadsheet app on mobile or touch device?” he asks - better alternatives in cloud apps, and errors as reasons for the tool’s demise.

Calling spreadsheets in business “the new smoking”, Turner said: “In a world that’s becoming increasingly digital and therefore intolerant of human error it's reasonable to predict that eventually the incidence of spreadsheets constructed by feeble humans will become a negative flag or a signifier of loose management controls, or other corporate mortality heightening factors.”

He concluded: “Spreadsheet dependent businesses will die out, and in turn help to end the market for spreadsheets.”

What do you think? Will spreadsheets survive the digital transformation, or is this a tool that’s susceptible to error, and redundant in these modern times?   

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About Richard Hattersley

Richard Hattersley

Richard is AccountingWEB's Practice Editor. If you have any comments or suggestions for us get in touch.

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By MBK
08th Sep 2016 12:52

What is key about spreadsheets is that, for non-accountants, they are visually so much easier to look at an understand than accounting software. Which is why there are still so many businesses out there that, even when running accounting software, also run an analysed cash book either in excel or manually.

All that will happen with MTD if HMRC don't allow spreadsheets is that spreadsheet users will carry on as before and upload quarterly totals to a compliant app and submit just those totals. As soon as HMRC realise this then they will work out that they might as well allow spreadsheets.

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By Tornado
08th Sep 2016 13:11

"But, if spreadsheets are ruled out as part of MTD, businesses will face the extra costs of moving to commercial software - although HMRC has vowed that some free products will be available."

It is not the cost of the software that is the problem, it is the hundreds of unpaid hours that Accountants and taxpayers will have to spend trying to understand specific tax and accounting software, and in the case of many of my clients, for example, the fact that many of them will NEVER understand accounting software. If they did understand how to use accounting software, then they would be doing that already. I know, I have tried enough times to achieve this.

HMRC have this dream that they will be sent details of every transaction that a business makes in almost real time accounting. Talk of providing electronic ways to extract information from spreadsheets is more rubbish spouted by people who quite clearly do not understand what they are dealing with. Spreadsheets come in an almost infinite variety and are often bespoke for the businesses that use them. People have often created these complex spreadsheets because there was no commercial software available to do the job correctly.

I find the Government's approach to this aspect of MTD shows a breathtaking ignorance of how the current systems work and the offer of some free software that will inevitably only be suitable for a handful of people makes them all look pretty stupid.

So I think it is time again to ask Why are the Government are so keen to make impossible changes to a tax system that works very well at the moment? Why is it they are so obsessed with knowing about every penny and every transaction that businesses deal with?

Bear in mind that Corporates are destined to be subject to the same regime ....

The sooner the Government realises and accepts that the current system works well with lots of practical options for people to take in order to arrive at the stated information that HMRC require, the sooner they can get back to improving the tax system in more practical ways, such as providing a first class 'customer service' as a priority.

The best way to proceed with any MTD plans should be to allow people to opt in and then from that base of willing pioneers, the system can be developed into something that more people will want to opt into over time.

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to Tornado
08th Sep 2016 14:00

Tornado wrote:
HMRC have this dream that they will be sent details of every transaction that a business makes in almost real time accounting.

FWIW, it has been clarified in the consultation docs that this is not the case and they will only be looking for summary totals.

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By Tornado
08th Sep 2016 14:23

Jonathan-AT-Aiteo wrote:

Tornado wrote: HMRC have this dream that they will be sent details of every transaction that a business makes in almost real time accounting.

FWIW, it has been clarified in the consultation docs that this is not the case and they will only be looking for summary totals.

Then why the requirement to use specific software?

"The way you interact with the tax system is changing. From 2018 it will become increasingly digital and most businesses, the self-employed and landlords will need to use software or apps to keep their business records, and to update HMRC quarterly. The underlying tax rules will be simplified to support these changes."

If it was just a matter of extracting information from current accounting records then this particular topic would never have been started as we can probably all extract summaries in this way at the moment.

I think my view is correct that the Dream of the Government is to have access to every last penny and transaction of every business.

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By DMBAcc
08th Sep 2016 16:45

So please explain to a dullard like me, why are HMRC insisting on our using commercial software packages. Why aren't spreadhseets good enough etc?

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By RobertD
08th Sep 2016 12:55

"Xero’s Gary Turner, meanwhile, is less optimistic about spreadsheets". Well what a surprise! Allowing clients to use spreadsheets would make MTD a lot more easier to swallow. Our love affair should be allowed to die naturally rather than be snuffed out by a glut of greedy software companies. Their circling like vultures over the taxpayers carcass and their input in this process quite frankly makes me sick. It's like leaving Dracula in charge of the blood bank!

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to RobertD
08th Sep 2016 17:49

Hey, Robert. The date on that spreadsheet article I wrote in 2015, from which the above comments attributed to me were lifted, actually predates all the details about HRMC's attitude and guidance toward spreadsheets, and actually doesn't even reference MTD at all.

I'd stand by every word even if MTD wasn't a thing. Would love to hear a rebuttal of my points if you have any.

So, please refrain from the barbs - not really cricket.

Gary Turner
Managing Director, Xero
@garyturner

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By RobertD
to garyturner
08th Sep 2016 19:46

garyturner wrote:

Hey, Robert. The date on that spreadsheet article I wrote in 2015, from which the above comments attributed to me were lifted, actually predates all the details about HRMC's attitude and guidance toward spreadsheets, and actually doesn't even reference MTD at all.

I'd stand by every word even if MTD wasn't a thing. Would love to hear a rebuttal of my points if you have any.

So, please refrain from the barbs - not really cricket.

Gary Turner
Managing Director, Xero
@garyturner

Poor you Gary
If your comments were taken out of contents, have it out with AW.
As far as my comments are concerned I stick by them. For what it's worth my practice has already dismissed recommending Xero based on cost.
I'm sorry if vultures doesn't sit well with you. I'm sure you will find solace in your bank balance.
just because spreadsheets don't perform well on mobiles doesn't make them obsolete. It is a fallacy that everyone wants to do everything on their phone and that includes record keeping.

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to RobertD
08th Sep 2016 19:36

I'm sorry if I presented Gary's comments out of context. I included quotes from Gary's LinkedIn blog from last year because I felt it extended the conversation away from MTD.

Regardless if spreadsheets will play a role as a record keeping tool, the challenges Gary suggested still remain for spreadsheets.

Funnily enough, I downloaded the spreadsheet app and I struggled to use it.

Human error is another challenge spreadsheets face. This is why the IT faculty are promoting their twenty good principles for good spreadsheet practice.

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to RobertD
08th Sep 2016 20:10

So, that would be a no, then, you won't post a rebuttal. My request for a more constructive tone of debate isn't because your comments offend me, rather they don't add any value.

But, that's entirely your prerogative.

Gary Turner
Managing Director, Xero
@garyturner

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08th Sep 2016 13:01

Saying you cannot use spreadsheets is just a way of selling something. A good spreadsheet (one which has checks and balances) is just as effective as any software package. Of course HMRC want software packages, easier for them. Besides none of them are technically trained to read accounts from a spreadsheet, or from any other mode come to that. All we are doing here is doing what other people want, when what we have been doing for all these years has been effective. We don't tell HMRC how to run their crumbling ruin of a department, so they should not tell us.

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to Donald6000
08th Sep 2016 14:21

Whilst normally I am not one for promoting anarchy I think we should all say a resounding NO to MTD as proposed. There is nothing wrong with spreadsheets and I shudder to think what the HMRC freebie software will be like.
I too hope no-one is going native.

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By Tornado
to david wilks
08th Sep 2016 19:38

david wilks wrote:

Whilst normally I am not one for promoting anarchy I think we should all say a resounding NO to MTD as proposed. There is nothing wrong with spreadsheets and I shudder to think what the HMRC freebie software will be like.
I too hope no-one is going native.

Everyone else seems to take to the streets with protests and strikes so why not Accountants, Book-Keepers and everyone else affected by MTD (that would be about 40 million people then). Get your T shirts and slogans ready (Down with MTD) and meet me outside the the Ye Olde Calculator in Hackney at 9.30 next Tuesday and we can march in mass to Westminster and jolly well show the Government a thing or two. They need to know that there is no messing with us.

Stand up and be counted ... and use a spreadsheet ...

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08th Sep 2016 13:06

HMRC and the commentators in this article still don't seem to understand the old adage "garbage in = garbage out". This holds true whether you are using a spreadsheet, a software package or an app.

Practising accountants, and the controls that they operate when preparing accounts (reconciliations, analytical review, etc.), are the main defence against error and omission. HMRC will eventually come to realise this if they are successful in persuading millions of micro businesses that they no longer need an accountant - the impact on widening the tax gap will be huge (another adage springs to mind - "death by a thousand cuts").

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to Ian McClelland
08th Sep 2016 13:21

garbage in = garbage out. seen many sole trader clients enter their own drawings as wages in acs software and several people who think they are good at book keeping operating both Sage and a cloud Mac based alternative who still manage to have dividends come off as an expense in their limited company chart of accounts. to say nothing of the "staff" christmas lunches for subcontractors, grocery items and ciggies as part of petrol claims, tv packages as part of broadband claim ... the list goes on and on. wonder how the error checking in the software would pick up the client who had previously done their own return claiming capital allowances on their car, then the full HP payment including capital in the interest box then a 45ppm claim under motor expenses because someone told them they could do that instead of keeping petrol receipts! we do earn our money throwing these things out before they reach HMRC!

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08th Sep 2016 13:10

I sincerely hope that the Highly Esteemed Mesdames Bennyworth and Cave haven't gone native.

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08th Sep 2016 13:13

Somebody needs to take a stance against HMRC's 'Orwellian' drive to beat every taxpayer into submission. There are literally hundreds of thousands of taxpayers who are incapable of operating a computer, let alone learning how to use software to keep their records. We accountants have been dealing with the shoe-box and carrier bag brigade long enough to ensure accounts represent a 'True and Fair View'................

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By 0098087
08th Sep 2016 13:17

Spreadsheets to die out. What planet are these people on? People use them and always will. The time limit of 2 years for MTD is the worst thing. How are we supposed to get our white van man who gets his receipts stuffs them in his glovebox converted to Smartphone accounting. They won't want to know. There is no need for this change whatsoever. I would like to know who is/has driven this. Was it the previous chancellor?
It seems these things are being set up to catch people out. No other reason

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By Tornado
08th Sep 2016 13:19

The more we hear about MTD from HMRC, the more obvious it is that it will not work. In fact I am confident enough to say that it will NOT work at all in its current proposed format.

Perhaps it would have been better to speak to Accountants and all those at the sharp end FIRST before coming up with crackpot ideas that are looking more ridiculous every day.

It is looking more and more as though the Government consulted those with VESTED INTERESTS first. I wonder why?

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08th Sep 2016 13:23

On the demise of the spreadsheet alone, it appears everyone commenting assumes that spreadsheets are only used for accounts and bookkeeping, when in fact they aren't.

I use spreadsheets on a daily basis for providing illustrations of the consequences of a variety of transactions and company reorganisations to demonstrate the various tax consequences where there is some freedom over the precise method in which a transaction is conducted.

The spreadsheet is here to stay, although the circumstances in which it's used may change.

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By Tornado
to SteLacca
08th Sep 2016 14:47

SteLacca wrote:

On the demise of the spreadsheet alone, it appears everyone commenting assumes that spreadsheets are only used for accounts and bookkeeping, when in fact they aren't.

I use spreadsheets on a daily basis for providing illustrations of the consequences of a variety of transactions and company reorganisations to demonstrate the various tax consequences where there is some freedom over the precise method in which a transaction is conducted.

The spreadsheet is here to stay, although the circumstances in which it's used may change.

This topic is really about the substitution of spreadsheet accounting applications with software specifically designed to comply with the requirements of MTD.

You are perfectly correct, of course, in that spreadsheets are used extensively for limitless other purposes and do the job extremely well. Once you move away from the basics, it can be seen that Excel is packed with astounding features and can do some wonderful things.

The spreadsheet is decades away from demise, although those trying to sell a compulsory expensive alternative might try and paint a much different picture.

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to SteLacca
08th Sep 2016 19:40

Good point, SteLacca.

Your post reminds me of a recent Any Answer dilemma where a member wanted help organising data on a spreadsheet to present to a jury.

Like you said, spreadsheets have more uses than just accounts.

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08th Sep 2016 13:25

Perhaps this is a good comparison

16 column analysis books -> spreadsheets -> online mobile software

retro telephones -> dumbphones -> smartphones

If the wave of technology change is going to sweep over our industry as it is many others, one needs to adapt surely?

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08th Sep 2016 13:32

If you want to manipulate data there is nothing better than a spreadsheet!! Being able to filter your data is something no bespoke software will offer and most report options seem to have been prepared by some IT "whizzkid" who wouldn't know a debit from a credit if he fell over it.

Until bespoke software offers the same flexibility that spreadsheets offer then I'll continue work with my beloved rows & columns....

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By MBK
08th Sep 2016 13:35

@yaakovgrant

Nice try.

But, as a prerequisite of buying a smartphone, I require it to do (as a minimum) what a dumbphone did.

The problem with online mobile software is that it doesn't do what the spreadsheet did.

So online mobile software is something new - it is not evolution. It's a reinventing of the wheel. Why mess with the wheel when it works so well?

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08th Sep 2016 13:50

There's no two ways about it - for a small business, say a builder with a couple subbies, and a builders merchant supplier, accounting is completely arcane - the mere fact that debit and credits are 'relative to whose looking' is just the start.
Grappling with VAT, Sub-contractor payments and the CIS gubbins with/without materials is just about do-able - but depreciation and capital allowances etc. .......
Ins and outs they can keep in a book - and a spreadsheet is just the latter-day equivalent. 'The accountant' sort all the other stuff out. Curiously they work to earn a living, not to generate tax liability for the state to [***] about and give me an extra 20 unpaid hours of mind-numbing work a month - and that's just to get stuff ready to give to the accountant !
The disjoint between HMRC and reality increases by the minute as do the costs of pandering to their unfitness for purpose.

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By Tornado
08th Sep 2016 13:56

"Perhaps this is a good comparison

16 column analysis books -> spreadsheets -> online mobile software

retro telephones -> dumbphones -> smartphones

If the wave of technology change is going to sweep over our industry as it is many others, one needs to adapt surely?"

You make a good point but as I have said before on Aweb, I was one of the first small accountants in the UK to use computer generated accounts and word processing software in 1981. It was immediately obvious to me that whilst I was able to more efficiently process my client's accounts and tax returns, there was no need for my clients to change the way they preferred to run their businesses and over the last 35 years I have remembered that I am working with my clients. Just because I have modern technology, I should not expect them to change the way they operate their businesses unless there is real need or desire to.

I have clients who keep their records in notebooks or spreadsheets, whatever they like as along as I can interpret this information accurately and use my modern technology to process and deliver the expected results.

We need to pay more attention to the needs of our clients, who may still have a retro phone or none at all, which most accountants and agents can do very efficiently at the moment. It is just too arrogant and unreasonable to take the view that just because there is some new technology available, then everyone MUST use it.

The profession are quite capable of adapting to new ways of doing things as long as there is a real advantage and tangible benefit and that is our strength which the Government are choosing to ignore. If the Government were to treat Accountants with a lot more respect and work with us to move forward then we can use our knowledge of modern technology to assist those that are unable or unwilling to do it themselves, very much as we do at the moment.

What is so Broke about the tax system at the moment that it requires mending?

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08th Sep 2016 14:05

Using the ICAEW's recent research as linked to above, the calculation of UK businesses that ARE using accounting software gives a figure of 1.25 million.

I struggle to get my estimates of the user numbers for Sage, QuickBooks, Xero, KashFlow et-al. to total anything near a million.

This suggests that either [a] the ICAEW percentages are not accurate or [b] there is an unknown, invisible accounting software provider making up the difference between the visible software companies and the total. A bit like "Dark Matter" in the universe?

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By Tornado
to Adrian Pearson
08th Sep 2016 14:19

In my experience, I find that clients have purchased a Sage (or whatever) licence, and renew it each year but either only use a part of the software (e.g sales ledger) or none at all as they are waiting until they get around to using it.

I would therefore treat any quoted user figures from any accounting software supplier with a little scepticism if they are based on licences issued.

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08th Sep 2016 14:11

My concern is that no one is representing the small accounting practice. I am convinced that both HMRC and our governing bodies have no idea about just how small some of our clients are. We still receive the good old plastic bag full of screwed up receipts from some of our clients.

In the past we have actively discouraged our clients from using accounting software as more often than not they get in a right mess. Without some understanding of double entry and VAT it is very easy to get things wrong. The bank or VAT would never reconcile and in most cases we would end up having to re-do everything anyway and the job would take twice as long. I have no objection to accounting software, but it is unrealistic to expect everyone to be able to use it. I’m sure I could buy some sort of architecture software but it doesn’t mean I could design a house.

Spreadsheets on the other hand are very visual. Clients can understand them and errors are easier to identify, especially as I encourage my clients to basically copy their bank statements. Having said that I am still left with numerous clients who still write in books , use duplicate books or as stated before, hand in the plastic bag. How are we, the small accounted expected to deal with MTD.

We, the accountant are the defense against errors and I fail to see how MTD will improve anything.
Accountant’s fees will have to increase and clients will take it upon themselves to “have a go”. Well all I have to say is good luck with those errors then HMRC.

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08th Sep 2016 14:23

All in all, this demonstrates an ignorant understanding of the needs of taxpayers and their professional advisers. This very expensive exercise (from both a time and financial perspective) has obviously been cobbled together by those who have probably never run a business or have any experience of the real world. This will do nothing other than to impose further strangulation on small businesses and further alienate those clients who do not even use spreadsheets, let alone MTD compliant software. The only people who stand to gain from this are the likes of Gary Turner who stand to trouser handsome profits from this thoroughly draconian exercise!

I'm fed up with an organisation that spends 1.3 billion on such an ill thought out programme and yet lacks the wherewithal to provide existing basic services such as reliable customer helplines, reliable online tools and face to face support. I'm afraid to say that HMRC gives a convincing impression of an organisation that really doesn't give a damn in making the day to day role of practitioners ever more unnecessarily infuriating and frustrating because the basic levels of service provision are quite simply not there with no real signs of positive change in the pipeline. All rather depressing really, particularly in a so called 1st world country such as the UK!

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08th Sep 2016 14:25

The supposed benefits of MTD do not justify the huge investment and upheaval. Helping taxpayers avoid mistakes, offering IT hungry plumbers more digital services, allowing pay-as-you go etc are all trifling.

Despite what HMRC say the way this is all heading is that they will not be satisfied with quarterly totals, but they will soon want detailed transactions uploaded to them, hence why they are fixated on MTD software and against spreadsheets.

The purpose of this that HMRC will develop tools to enable them to scan the individual transactions of every taxpayer to look for anomalies. For example it could pick up that a taxi ride for £720 is something to enquire into.

Looking further it will compare the records of taxpayers. If Sam the shopkeeper claimed a deduction of £1,000 for Pete the plumber to fix their toilet, HMRC will check that there is a corresponding sales invoice in Pete's books.

HMRC need to come clean about their ulterior motives.

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to jon_griffey
08th Sep 2016 16:02

Jon Griffey is absolutely correct in his assumption. If HMRC truly only want quarterly totals, we can extract that data from the existing records maintained in any format (whether that is on paper, spreadsheet or bookkeeping software) and provide it to HMRC. Forcing a business to use specific software will not, of itself, improve the accuracy of the data. Someone unable to keep proper paper records will more than likely be unable to maintain proper computerised records and will still need the help of an accountant or bookkeeper who will be qualified to extract quarterly totals from one system just as easily as from another.

Whilst I think that most businesses would benefit from using modern, cloud-based bookkeeping solutions, we live in a free democracy and government should not dictate the method by which we run our books, no matter how much better one method may be considered to be.

The only reason to insist upon specialised software is for HMRC to ultimately demand access to the underlying data at a detailed transaction level for reasons such as those indicated by Jon Griffey. Whilst this conjures up slightly Orwellian fears about state intrusion, one can understand why HMRC might want such access. If, therefore, this is the reason, then HMRC do, indeed, "need to come clean about their ulterior motives". However, if this is not the reason, then what possible purpose might there be for HMRC to mandate one system over another?

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By 0098087
08th Sep 2016 14:32

This is why we had a chancellor who never had a job in the real world before. No understanding of the way business works.

From what I can gather the ACCA are just so tight with their government masters that they've done nothing to speak against this. Perhaps they were members of the Buillingdon Club in days gone by or went to Eton.

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08th Sep 2016 14:49

I have just done a complicated Indian tax return for one of my three clients who do overseas tax returns. The entire Indian tax system is a spreadsheet. There is no tax software, just a very big spreadsheet. each company enters their information into a spreadsheet and submits that spreadsheet.
If spreadsheets are sufficient for one of the largest and fastest growing economies, and indeed their only way, why can we not use them

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08th Sep 2016 14:55

I have a client who uses the second biggest cloud based accounting program. his accounts balance, and the software is happy with everything.
The only problem is he has entered every single expense in the first category available which happens to be plant and machinery capital assets. all sales are similarly entered as cash sales.
Last year his spreadsheet was big and unwieldy but it worked perfectly and the tax return was far quicker to do and more accurate

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08th Sep 2016 14:58

The Government wants us all to work 'til we drop, but are making it more and more difficult for us to do so.
I am a 65 year old and have had many many problems with HMRC over the past two years sending letters to clients demanding money or the bailiffs. When I eventually get through to them by 'phone they admit that they have made an error and the client has, not only, already paid but has paid within the specified period. How on earth will they deal with another change??
I have 50 plus clients 45 who work on excel spreadsheets and have done do for a long time. It's no good HMRC going computerised or digital for the generation who don't have and will not have computers, apps and the cloud. So what do we do about them charge them twice as much to do it for them ( which most can't afford) No the answer is to find a way of "digitalizing" spreadsheets.

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By Tornado
08th Sep 2016 15:06

My current tax software (cloud based which STILL does not work correctly for 2016) seems to be taking part in a pilot HMRC experiment to highlight potential errors when completing a Tax Return. Such 'nudges' as the expenses are less than expected for this turnover' or even ' The stock level is lower than expected for this type of business' and so on provide me with endless amusement as well as irritation as I cannot turn this off.

I know that my figures are correct but it seems that every Tax Return I complete has something 'Not Expected' in it. If this is the level of the anticipated 'nudges' to those completing their MTD statements then they may either be tempted to make their figures agree with 'the expected' or alternatively the dwindling number of HMRC staff are going to be spending a lot of time on wild goose chases.

Why should I care? Quite frankly I don't as long as my time is not wasted.

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By 0098087
08th Sep 2016 15:11

Exactly, screw them for more money. Online software will be at least £10 a month. Clients won't have it and as usual we get the blame. As I said before I'd get out of the profession if I could.

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08th Sep 2016 15:20

Who the hell does Gary Turner think he is? What an arrogant piece of work.
Someone who's devised software that will take at least twice as long as simply analysing on a spreadsheet then completing a tax return denounces spreadsheets at every opportunity. Shock! Horror!
Was he a PPI claims company manager in a previous role?

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to cstwragby
08th Sep 2016 17:47

Again, it's not clear in the article above but the comments attributed to me - by which I fully stand - were made in July 2015 and effectively pre-date all the details from HRMC about MTD and spreadsheets, and the original article doesn't even reference MTD and is a generic piece about the long term prospects for spreadsheets.

If you have any rational, constructive points to make about my original article as a rebuttal of it, I would be very happy to hear them.

Gary Turner
Managing Director, Xero
@garyturner

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08th Sep 2016 16:02

I use spreadsheets extensively for all manner of bespoke reporting. I am an insolvency practitioner and user a spreadsheet based questionnaire when interview directors of insolvent companies which uses the infoi automate all sorts of processes. I have a spreadsheet based checklist which monitors progress in cases and automates repetitive tasks like producing at one click all the documents needed to convene a creditors meeting.
In another life, I am a director of a Scottish professional football club and use a spreadsheet based matchday system to record incomes from turnstiles, catering outlets, programme sales and the myriad other things that go on at a football match on a Saturday. Its end product is a journal for upload to our cloud based accounting systems.
These are all bespoke tasks where there is either no commercially available software or, if there is, it is exhorbitantly expensive such as is the case with Insolvency software.
We use Kashflow for basic bookkeeping but whilst it is a decent and intuitive accounting package, it has no sensible report generator so the solution is a spreadsheet monthly reporting package into which a trila balance is imported - as are budget figures for my carefully preserved copy of the late lamented Winforecast.
Spreadsheets are an incredibly useful tool in the right hands and I suspect I will be long gone before they die out. When Xero or any other cloud based package can do what I describe above without a lengthy learning curve, I might consider it.

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08th Sep 2016 16:14

“While spreadsheets are a good way of managing data and have historically been very popular with accountants and some of their clients, I think the issue in Making Tax Digital is that HMRC is hoping that by using software (actual software packages and apps) this will eliminate a lot of errors that are made while the books are being written up.”

Why should using tax software eliminate a lot of errors. My experience of small businesses using accounting software is the exact opposite.

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08th Sep 2016 16:14

“While spreadsheets are a good way of managing data and have historically been very popular with accountants and some of their clients, I think the issue in Making Tax Digital is that HMRC is hoping that by using software (actual software packages and apps) this will eliminate a lot of errors that are made while the books are being written up.”

Why should using tax software eliminate a lot of errors. My experience of small businesses using accounting software is the exact opposite.

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08th Sep 2016 16:26

I have around 100 clients, most of whom are artists or craftspeople. Most of them can use a spreadsheet but some of those don't complete them correctly. The remainder complete analysis books or give me plastic bags. If I'm lucky they will have organised their receipts by month or by subject. Because I have no wish for them to be subjected to an HMRC investigation, I review their work to satisfy myself that it's OK to use for accounts preparation. So I don't think that a very expensive taxi fare would pass unnoticed and I'm sure that most accountants dealing with small business would feel the same.

As we all know HMRC make mistakes. In October 2015 I completed a paper return for the PR of a recently deceased client. In March the PR received a penalty notice for late submission of a tax return. When I telephoned HMRC I was told that the return had been received but the receipt had not been recorded on their computer systems. In May this year I received a few SA302s which showed a slightly different tax liability to my calculations. In each case there was a difference of 2.80 - one week's Class 2 NIC. Whilst the computation showed the correct figure within the text, the IT and Class 2 due included the additional 2.80. When I telephoned HMRC the officer that I spoke to had no idea how this could have happened. So whilst errors like these occur, how can they be trusted to make MTD work?

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08th Sep 2016 16:40

I know.
We accountants love spreadsheets.
HMRC appear to love all things digital.
Why don't we just send HMRC the quarterly spreadsheets (pdf, to avoid corruption, in the post) and let them enter the figures on our client's digital accounts. In that way if they come up with a different answer we can point out the error of their ways.

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By RobertD
08th Sep 2016 16:50

How many of you have used the "Information to help you complete your return" in HMRC services? I sometimes check the state pension (SP) on there. Some SP age clients don't have this section populated. I have just opened one to see that although the client started the SP on 09.11.15 his amount due for 15/16 is £126.00 That's £25.00 a month. What could possibly go wrong, they can't it right now.

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08th Sep 2016 17:54

I am a sole practitioner. The majority of my clients are sole traders; most of them want me to do everything for them in relation to their bookkeeping etc and just would not entertain the idea of entering their own transactions into accountancy software. If the MTD results in me having to submit quarterly "returns" for my clients (as they won't want to) using software to record each transaction, I just won't have the man-power and I will have to find another profession. As it is, whilst several of my clients do use accountancy software, as they are not trained bookkeepers, they often analyse a transaction incorrectly (such as drawings as wages) so if this infomration is submitted without checking, HMRC will end up receiving incorrect data. Whose fault will that be? Will the client receive penalties for incorrect information? (E.g. understated profits in the above wages example) What if the client doesn't have a computer or a smartphone or even an internet connection? We already have the problem for employees whereby certain forms are only available by completing them online then printing them before handing to their employer. This assumes that they are office-base and/or have access to a computer AND printer. I was under the impression that the MTD was going to be available for those already keeping their records on accountancy software rather than obligatory!

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By nickja
08th Sep 2016 19:04

“our love affair with spreadsheet is finally coming to an end"

Xero’s Gary Turner might well be right but does he not realise how self-serving that sounds or how it might be interpreted as confirmation that MTD is being driven by Xero and other software houses keen to profit substantially from it?

Not all of us are happy with being told, rather than persuaded, what to so, all the more so by someone so cocksure.

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to nickja
08th Sep 2016 19:52

Just want to reiterate, Gary's blog post was written a year ago. I've amended the article to make that fact clear.

I included his comments because he raised some interesting challenges spreadsheets face beyond MTD - from mobile phone apps to human error.

When he wrote the blog, MTD wasn't a thing. I'm sorry if I presented Gary's comments out of context.

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