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Post Info TOPIC: End of Annual Tax Returns


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End of Annual Tax Returns


Has anyone started looking into this yet?

It seems that it applies to companies as well as individuals but there is very little detail on the ground about how monthly rather than annual reporting is going to work?

I'm particularly worried that monthly reporting could surely only be based on the accounting (paper) profits entered into peoples bookkeeping software rather than taxable profits. Plus of course it's difficult enough getting information out of clients on an annual rather than monthly basis in time to fix everything that they've entered throughout the period.

It seems that once more we live in interesting times indeed!

 



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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.



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Nobody?

Really!

You do realise that this change is likely to be the most seismic shift in our industry in a generation and is likely to mean accountants taking all of their client bookkeeping back in house don't you?

Two reasons for that statement :

1) More clients will be deciding to do it themselves. They'll end up paying more than they should but they won't realise it.

2) For more sensible clients who retain professional representation more regular reporting removes the flexibility of the accountants only needing to be involved in the accounts once a year.

There are all manner of scenario's that could evolve from that. The obvious one is that many accountants simply will not have current capacity for the additional work and the result of that will, I suspect, be a closer working relationship between accountants and bookkeepers bringing bookkeeping services onto payroll.

Or, considering the additional costs involved in hiring more staff accountants may sched some less lucrative or more difficult to get payment from clients creating potential opportunities.

Personal view is that I believe that the people working closest with accountants at the moment regardless of their qualifications will be snapped up but thereafter I do worry though that we may go back to people struggling to break into the profession as bookkeeping seperate from accounts will to all intent and purpose be dead in our primary market.

That would also of course mean people not really being able to practice until they reach MICB status.

That actually ties in well with the ICB's move away from bookkeeping but small practices who currently do only the bookkeeping under something like AICB need to brace themselves now for the changes that are coming and perhaps start looking at trying to get to at least MICB in order to stay self employed.

What do you think that you will need to know in order to be able to handle client returns on a very regular basis? Is MICB enough?

Alternatively what will make you a more attractive proposition to a position with an accountancy practice? (Take a look at roles advertised on Reed/Jobsite/Total Jobs/Indeed/etc. and ensure that you are able to tick all of the boxes (right software, right qualifications, right experience)).

Its time to start thinking about this as the storms gathering on the horizon but it seems that only accountants are at all perturbed by it.

This is not another RTI or AE. It is a fundamental change to filing requirments that will in one way or another affect everyone reading this.

Come on people, lets get some comments flowing in this thread as by this time next year the first 10 million should have moved over (with everyone over to their own digital tax accounts by 2020).

Maybe someone like Brian or Dave who have more industry inside knowledge would like to comment on here about whether they believe that in light of coming changes it would be wise for everyone who is self employed currently practicing at AICB level who does not wish to move to an accountancy qualification such as AAT to move up to MICB status with its additional emphasis on accountancy?

Conversely, maybe Neil, Nick or Sonya may wish to comment from an AAT perspective on how people currently practicing under a diferent qualification could get to MAAT MIP status before the storm hits?

Just to emphasise... CHANGE IS COMING..... get ready for it, plan, network with accountants, take accountancy qualifications and above all start discussing it.


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Shaun

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Hi Shaun,


Just thinking out loud. It could be a case of 'the boy who cried wolf' as to why there isn't more comment.

Remember how against RTI I was. For smaller firms it hasn't happened. The whole outcry was about reporting the unknown in advance and penalties. Only BACS cases are really reporting in real time and that was more of a technical challenge rather than an ethical one.

I think we're of like-mind in that AE, heavy compliance, living wage etc merely repress wages or job numbers so naturally I'm for reducing the burden. Again, like RTI, penalties are key. Any one of us can dream up figures on a monthly basis to meet a deadline so the way this is implemented is paramount.

Providing there is some sort of annual reconciliation against which penalties are applied then monthly reporting is possible but expensive for the one-man-band. To change his behaviour from annual to monthly though, I expect Big Brother to make it sound worse than it will end up being.

Have a good weekend and just thank your lucky stars you only do a 9-5 unlike the poor Underground drivers. Joke :)

Tim



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JRA


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Agreed - this will be an interesting topic and will change the landscape for people who like to outsource their tax returns to the likes of people in this forum.

Quick google suggest that it will start early 2016 - which isn't that far away.

Could we post some links to good articles that all could share?

I may also contact CIMA to see what they say about it ...


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Hi Tim,

you are of course correct as always, this could all end up as a storm in a teacup.

The issue with this one over, say RTI, is that if voiced concerns about the fundamental nature of the changes are not false then the lead time for people to put themselves into a position to weather it has to start now... And I would even go as far as saying that now is a bit late (but still achievable).

It all basically comes down to peoples attitudes to risk.

Call me a cynic but what a surprise that KPMG have been gearing themselves up to handle SME monthly bookkeeping and accounts for the past two years... Certainly changes to HMRC IT systems cannot have just started with the timescales that we are talking about. My money is on this all being part and parcel of the same program as RTI with that simply being the first release of a completely new integrated reporting platform which we are being drip fed.

I think that the major difference between our posts and the boy who cried wolf is that he was blowing things out of proportion when there was no threat and when there was a real threat nobody listened.

In our case we can see the wolves circling and we're pointing directly at them. Its down to others to weigh up the risks of ignoring them.

We may not have been completely correct on RTI but our posts made people start to think about things and prepare for them rather than burying their heads in the sand about changes that were happening.

Lol on the nine to five... I'm taking that as 9 a.m. to 5 a.m.

I'd love to know what profession tube drivers are comparing their lot against? I suspect that it may be the Sultan on Brunei!

Have a good weekend matey... Know that you'll be working but at least its nicer when the clients are having a weekend break.

All the best,

Shaun.

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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.



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Hi Christopher,

I think that posting links is an excellent idea.

I came accross these over on Aweb :

www.accountingweb.co.uk/article/chancellor-phases-out-annual-tax-return/573797

www.accountingweb.co.uk/article/accountants-top-death-annual-tax-return-concerns/573875

They are geared from a slightly different angle from many of the concerns that we will hit here but reading them is a good start.

I'll be keeping an eye out for ACCA announcements and post links. You can be in charge of the CIMA ones.

All the best,

Shaun.

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Shaun

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Just read some of those posts over on Aweb... WOW... And you all thought that I might be overplaying the importance of this!!!!! There is talk over there of death of an industry.

Makes me feel quite the optimist by comparison!

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Shaun

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JRA


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Hello Shaun,

No problem will check CIMA soon

I did notice this just now though

www.gov.uk/government/uploads/system/uploads/attachment_data/file/413975/making-tax-easier.pdf

May be useful for leaving with clients just so that they know it's official and not just book keepers/accountants trying to make more money...

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That was a really good link Christopher.

The concept as its been sold in that link really sells the benefits whilst glossing over the costly and time consuming changes that small businesses, bookkeepers and accountants will need to make.



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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.



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Shamus wrote:
I've blended your two posts together Shaun, hope you don't mind

Has anyone started looking into this yet?

It seems that it applies to companies as well as individuals but there is very little detail on the ground about how monthly rather than annual reporting is going to work?

Meant to pick up on your first post but was busy and forgot.  I wasn't aware that Companies had the opportunity (!!) of being able to report monthly.   How would that work, a CT600 monthly report? I honestly can't see that working and how much would accountants charge?  Considering £600-£800 is a ball park figure for a set of small company accounts what would be the annual cost of doing it monthly?  You could easily be talking £5-£8k  Just re-read the HMRC bumph on this and it says 5000 small businesses.  It was my understanding that this relates to sole traders.

I'm particularly worried that monthly reporting could surely only be based on the accounting (paper) profits entered into peoples bookkeeping software rather than taxable profits. Plus of course it's difficult enough getting information out of clients on an annual rather than monthly basis in time to fix everything that they've entered throughout the period.

I've got to agree with you there.  To be honest with you other than a read up at the time it was announced I haven't given any thought to it whatsoever, even though at the time I was quite keen on finding more info.  From memory I never really gleaned much because any real substance was thin on the ground.  However my understanding is that monthly reporting is not a necessity, but simply an opportunity (!!) for small businesses/individuals to update their dta  as they go along rather than it being a ball ache once a year.  Also, unless I've got it wrong, the information picked up by the dta will be the final assessment for the year, once all the monthly updating has been done.  I think in the smae way that the self employment section is completed now.

---------------------------------------------

You do realise that this change is likely to be the most seismic shift in our industry in a generation and is likely to mean accountants taking all of their client bookkeeping back in house don't you?

Two reasons for that statement :

1) More clients will be deciding to do it themselves. They'll end up paying more than they should but they won't realise it. 

The new people I see doing it themselves are those currently using cloud software, due to the integrated feed they are planning once the digital tax account is on stream.  As you know I specialise in micro businesses and, other than one company who do their own bookkeeping, I do all the bookkeeping and file the SA every year.  

How will it cost those who do it themselves more?  No change for the person who already does it themselves, albeit updating HMRC more regularly.  Those who currently use a bookkeeper/accountant will save money on fees unless, of course, they don't do it accurately.

2) For more sensible clients who retain professional representation more regular reporting removes the flexibility of the accountants only needing to be involved in the accounts once a year.

I have to ask the question I intimated above.  Do you have to report monthly?  My understanding is that this is an option, not a requirement.

There are all manner of scenario's that could evolve from that. The obvious one is that many accountants simply will not have current capacity for the additional work and the result of that will, I suspect, be a closer working relationship between accountants and bookkeepers bringing bookkeeping services onto payroll.

You said above that you believed accountants would be bringing bookkeeping back inhouse, so not quite sure what you mean by this. Do you mean accountants will still need bookkeepers but employ them direct? Surely this would be more costly for the accountant, why would there need to be a change in the current model, where the bookkeeper works freelance?

Or, considering the additional costs involved in hiring more staff accountants may sched some less lucrative or more difficult to get payment from clients creating potential opportunities.

Bring it on, I'm happy to service the businesses that the accountants aren't interested in.

Personal view is that I believe that the people working closest with accountants at the moment regardless of their qualifications will be snapped up but thereafter I do worry though that we may go back to people struggling to break into the profession as bookkeeping seperate from accounts will to all intent and purpose be dead in our primary market.

I'm not seeing it Shaun (happy to be wrong in that) An accountant isn't interested in filing a small business tax return for £125, whereas I, and no doubt other bookkeepers who file SA's, are.

That would also of course mean people not really being able to practice until they reach MICB status.

Will accountants recognise MICB, won't they be more interested in MAAT?

That actually ties in well with the ICB's move away from bookkeeping but small practices who currently do only the bookkeeping under something like AICB need to brace themselves now for the changes that are coming and perhaps start looking at trying to get to at least MICB in order to stay self employed.

If I was to go down that route I'd be more inclined to work for myself as an accountant rather than working for an accountant, but that's just me.

What do you think that you will need to know in order to be able to handle client returns on a very regular basis? Is MICB enough?

Dunno, as you know I'm QBE, and happy to file SA's. The majority of my clients have fairly basic requirements, so I'm not bogged down by complex situations. My one downfall is not having the knowledge to advise on tax savings, which is where a good accountant comes into his (her) own.

Alternatively what will make you a more attractive proposition to a position with an accountancy practice? (Take a look at roles advertised on Reed/Jobsite/Total Jobs/Indeed/etc. and ensure that you are able to tick all of the boxes (right software, right qualifications, right experience)).

It looks like you're approaching this from a bookkeeper that only does bookkeeping to trial balance.  (ICB/IAB?) Are'nt they a dying breed anyway?  The bookkeepers I see on here regularly go beyond that (Joanne possibly excepted, and she deals primarily in Ltd Co's)

This is not another RTI or AE. It is a fundamental change to filing requirments that will in one way or another affect everyone reading this.

Again, maybe I've got this wrong, but is there an insistence in the having to report monthly? As far as I'm aware you can still file annually if you wish.

I've just deviated to check my understanding, and still there is scant info out there. so here's my understanding of it  The self assessment return will disapear, to be replaced with a digital tax account.  So lets say your name is April Showers, running a business called Rainbow Fashions.  The digital account will hold all info known about April, if she's also in employment details of her earnings and tax will already be there, ditto if she's in receipt of child benefit.  HMRC will still need the info from her self employment and she will have the option of updating this as she go's along (eg monthly, quarterly or whetever) or once a year with the exact same information she currently includes on her tax return.   Have I got that right or have I totally misunderstood the situation?

Just to emphasise... CHANGE IS COMING..... get ready for it, plan, network with accountants, take accountancy qualifications and above all start discussing it.

I'm happy to discuss it, but other than the AAT which I'm already planning to do from October, my modus operandi will remain unchanged, unless I'm presented with no option but to report monthly, or the client requests it.

 


 Bloody hell Shaun, I think that's the most I've posted in one post smile



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Leger wrote:
Shamus wrote:
I've blended your two posts together Shaun, hope you don't mind
No probs John.

Has anyone started looking into this yet?

It seems that it applies to companies as well as individuals but there is very little detail on the ground about how monthly rather than annual reporting is going to work?

Meant to pick up on your first post but was busy and forgot.  I wasn't aware that Companies had the opportunity (!!) of being able to report monthly.   How would that work, a CT600 monthly report? I honestly can't see that working and how much would accountants charge?  Considering £600-£800 is a ball park figure for a set of small company accounts what would be the annual cost of doing it monthly?  You could easily be talking £5-£8k  Just re-read the HMRC bumph on this and it says 5000 small businesses.  It was my understanding that this relates to sole traders.

But they mention Corporation tax in the little bit of bumph thats been released before which would also indicate small incorporated entities.

As for fee's we don't know what this entails yet but I know that no client is going to accept that sort of increase in fee levels.

Lets wait before talking money. For now we just need to concentrate on ensuring that people are thinkng about this and how it effects the level of knowledge that they need to have to service their clients post change.

I'm particularly worried that monthly reporting could surely only be based on the accounting (paper) profits entered into peoples bookkeeping software rather than taxable profits. Plus of course it's difficult enough getting information out of clients on an annual rather than monthly basis in time to fix everything that they've entered throughout the period.

I've got to agree with you there.  To be honest with you other than a read up at the time it was announced I haven't given any thought to it whatsoever, even though at the time I was quite keen on finding more info.  From memory I never really gleaned much because any real substance was thin on the ground.  However my understanding is that monthly reporting is not a necessity, but simply an opportunity (!!) for small businesses/individuals to update their dta  as they go along rather than it being a ball ache once a year.  Also, unless I've got it wrong, the information picked up by the dta will be the final assessment for the year, once all the monthly updating has been done.  I think in the smae way that the self employment section is completed now.

Notice in the smallprint although they omit the words universal credit such is implied which would require monthly reporting.

---------------------------------------------

You do realise that this change is likely to be the most seismic shift in our industry in a generation and is likely to mean accountants taking all of their client bookkeeping back in house don't you?

Two reasons for that statement :

1) More clients will be deciding to do it themselves. They'll end up paying more than they should but they won't realise it. 

The new people I see doing it themselves are those currently using cloud software, due to the integrated feed they are planning once the digital tax account is on stream.  As you know I specialise in micro businesses and, other than one company who do their own bookkeeping, I do all the bookkeeping and file the SA every year.  

How will it cost those who do it themselves more?  No change for the person who already does it themselves, albeit updating HMRC more regularly.  Those who currently use a bookkeeper/accountant will save money on fees unless, of course, they don't do it accurately.

I was indicating paying more in tax than they should. If they do it themselves they wouldn't be paying us anything. Would they save more than they lose? Who knows.

2) For more sensible clients who retain professional representation more regular reporting removes the flexibility of the accountants only needing to be involved in the accounts once a year.

I have to ask the question I intimated above.  Do you have to report monthly?  My understanding is that this is an option, not a requirement.

Its too early to know as they are keeping the details of this under tight wraps. Thats largely why this thread has been created to try and gather as much information as we can as early as possible so that if people do need to do extra study they have as much lead time as possible.

There are all manner of scenario's that could evolve from that. The obvious one is that many accountants simply will not have current capacity for the additional work and the result of that will, I suspect, be a closer working relationship between accountants and bookkeepers bringing bookkeeping services onto payroll.

You said above that you believed accountants would be bringing bookkeeping back inhouse, so not quite sure what you mean by this. Do you mean accountants will still need bookkeepers but employ them direct? Surely this would be more costly for the accountant, why would there need to be a change in the current model, where the bookkeeper works freelance?

If accountants need to process on a more regular basis they will want bookkeepers working in house (or at least directly controlled) rather than an annual check of the bookkeeping.

Bookkeeping will still need to be done and its both a yes and no to your statement. Yes it will cost more but then the busiesses would not have seperate bookkeepers to pay as the bookkeepers would be part of the accountancy service.

Or, considering the additional costs involved in hiring more staff accountants may sched some less lucrative or more difficult to get payment from clients creating potential opportunities.

Bring it on, I'm happy to service the businesses that the accountants aren't interested in.

But bookkeepers would still need to change their servcies to offer a full service rather than stopping at trial balance and many bookkeepers are not yet equiped for offering that level of service.

Personal view is that I believe that the people working closest with accountants at the moment regardless of their qualifications will be snapped up but thereafter I do worry though that we may go back to people struggling to break into the profession as bookkeeping seperate from accounts will to all intent and purpose be dead in our primary market.

I'm not seeing it Shaun (happy to be wrong in that) An accountant isn't interested in filing a small business tax return for £125, whereas I, and no doubt other bookkeepers who file SA's, are.

There will be no more filing of self assessments. If as seems to be indicated monthly filing is required then there will be no more £125 clients. Either they do it themselves or things are going to have to get more expensive for them.

That would also of course mean people not really being able to practice until they reach MICB status.

Will accountants recognise MICB, won't they be more interested in MAAT?

For being hired by an accountant the accountant is more interested in experience and the software that you have expertise in than the bit of paper that you hold. When I am talking about MICB in this context I am talking about people doing the more advanced qualifications of their existing professional body in order to gain entry level accountancy skills in order to offer a full service to smaller clients.

That actually ties in well with the ICB's move away from bookkeeping but small practices who currently do only the bookkeeping under something like AICB need to brace themselves now for the changes that are coming and perhaps start looking at trying to get to at least MICB in order to stay self employed.

If I was to go down that route I'd be more inclined to work for myself as an accountant rather than working for an accountant, but that's just me.

Thats why I was mentioning people progressing to MICB which may in future be the minimum knowledge level requirement for self employment

What do you think that you will need to know in order to be able to handle client returns on a very regular basis? Is MICB enough?

Dunno, as you know I'm QBE, and happy to file SA's. The majority of my clients have fairly basic requirements, so I'm not bogged down by complex situations. My one downfall is not having the knowledge to advise on tax savings, which is where a good accountant comes into his (her) own.

Alternatively what will make you a more attractive proposition to a position with an accountancy practice? (Take a look at roles advertised on Reed/Jobsite/Total Jobs/Indeed/etc. and ensure that you are able to tick all of the boxes (right software, right qualifications, right experience)).

It looks like you're approaching this from a bookkeeper that only does bookkeeping to trial balance.  (ICB/IAB?) Are'nt they a dying breed anyway?  The bookkeepers I see on here regularly go beyond that (Joanne possibly excepted, and she deals primarily in Ltd Co's)

Its emphasising to those not currently offering a full accounting service that this change is basically the final nail in the coffin of bookkeeping as a seperate profession and bodies such as the ICB have to realise that they need to be making accountants geared towards SME's which is the same maket as IFA and AAT.

This is not another RTI or AE. It is a fundamental change to filing requirments that will in one way or another affect everyone reading this.

Again, maybe I've got this wrong, but is there an insistence in the having to report monthly? As far as I'm aware you can still file annually if you wish.

I've just deviated to check my understanding, and still there is scant info out there. so here's my understanding of it  The self assessment return will disapear, to be replaced with a digital tax account.  So lets say your name is April Showers, running a business called Rainbow Fashions.  The digital account will hold all info known about April, if she's also in employment details of her earnings and tax will already be there, ditto if she's in receipt of child benefit.  HMRC will still need the info from her self employment and she will have the option of updating this as she go's along (eg monthly, quarterly or whetever) or once a year with the exact same information she currently includes on her tax return.   Have I got that right or have I totally misunderstood the situation?

As discussed, there is little information forthcoming and we are simply trying to get ahead of the curve with what little we have.

It seems obvious that there is the intention for there to be a link between the changes and universal credit which would dictate monthly filing.

We desperately need more info now in order for people to plan for a change coming as early as 2016

Just to emphasise... CHANGE IS COMING..... get ready for it, plan, network with accountants, take accountancy qualifications and above all start discussing it.

I'm happy to discuss it, but other than the AAT which I'm already planning to do from October, my modus operandi will remain unchanged, unless I'm presented with no option but to report monthly, or the client requests it.

 


 Bloody hell Shaun, I think that's the most I've posted in one post smile


And don't you feel better for it John wink

I can see your point but people need to be frightened into thinking about this and getting ready to prepare for it.

We have no real detail at the moment, we don't even know how information will get into the new system (although we do know that there will be an end to having to type the same information in every year as forms are to be autopopulated) but the timescales are so tight that if we wait for the announcemens it may be too late for people to do anything about matters.

All the best,

Shaun.

 

 

 

 

 



__________________

Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.



Master Book-keeper

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Date:

Shamus wrote:
Leger wrote:
 I wasn't aware that Companies had the opportunity (!!) of being able to report monthly.   How would that work, a CT600 monthly report? I honestly can't see that working and how much would accountants charge?  Considering £600-£800 is a ball park figure for a set of small company accounts what would be the annual cost of doing it monthly?  You could easily be talking £5-£8k  Just re-read the HMRC bumph on this and it says 5000 small businesses.  It was my understanding that this relates to sole traders.

But they mention Corporation tax in the little bit of bumph thats been released before which would also indicate small incorporated entities.

Are you referring to this?   "Digital accounts will give small businesses greater certainty and control over their tax position. Those which pay more than one tax (such as corporation tax, VAT and Pay-As-You-Earn (PAYE)) will be able to take a single view of their total liabilities across all taxes."  Hmm, I initially read that differently, but thinking about it it's a fair point.  I was originally thinking that the Director has access to the amount he owes VAT CT etc but then I have to remember that a Ltd Co is a separate entity to the tax payer.  Why are they muddying the waters here.  It's perfectly fine to have a snapshot of my Ltd Co available as a dta, but I think my personal tax affairs should be a separate dta.  Example what happens when there are two or more Directors?

As for fee's we don't know what this entails yet but I know that no client is going to accept that sort of increase in fee levels.

Absolutely not.  I can't possibly see any reason why a Ltd Co should need to report monthly, fine to have a monthly snapshot for the business, you can get that from a management report, but as I'm sure you know, you're not going to be able to extract a taxable CT report from it.  Sorry Shaun, but I just can't see this happening for Ltd Co's

 

I'm particularly worried that monthly reporting could surely only be based on the accounting (paper) profits entered into peoples bookkeeping software rather than taxable profits. Plus of course it's difficult enough getting information out of clients on an annual rather than monthly basis in time to fix everything that they've entered throughout the period.

I've got to agree with you there.  To be honest with you other than a read up at the time it was announced I haven't given any thought to it whatsoever, even though at the time I was quite keen on finding more info.  From memory I never really gleaned much because any real substance was thin on the ground.  However my understanding is that monthly reporting is not a necessity, but simply an opportunity (!!) for small businesses/individuals to update their dta  as they go along rather than it being a ball ache once a year.  Also, unless I've got it wrong, the information picked up by the dta will be the final assessment for the year, once all the monthly updating has been done.  I think in the smae way that the self employment section is completed now.

Notice in the small print although they omit the words universal credit such is implied which would require monthly reporting.

Ah yes, IDS syndrome.  I'm somewhat sympathetic to the small business having to give HMRC details of their income if they are in receipt of benefits but talk about from one extreme to the other.  When tax credits first came out you had to produce figures every 6 months, and there's nothing wrong with that whatsoever, and it worked, because you had to fill a form out similar to an income and expenditure sheet.  

Monthly reporting for UC is a requirement, that's a fact, but it's not accurate though, because you can't include capital allowances (ever) and Heaven forbid if you have seasonal fluctuations, you're deemed to have earned nmw at 35 hours no matter what.  If dta is going to be anywhere near that model we're screwed. seriously.  Personally I don't think it will be.

---------------------------------------------

I'm not seeing it Shaun (happy to be wrong in that) An accountant isn't interested in filing a small business tax return for £125, whereas I, and no doubt other bookkeepers who file SA's, are.

There will be no more filing of self assessments. If as seems to be indicated monthly filing is required then there will be no more £125 clients. Either they do it themselves or things are going to have to get more expensive for them.

Ok, assuming I take your scenario, it isn't an issue for me to do monthly bookkeeping, as I already do that for some of my clients anyway.  We'll have to wait and see how updating the dta is going to work, but yes, I can see me having to charge double or treble what I charge now, assuming one to two hours a month spent doing the sums. If I'm already doing monthly bookkeeping I can't see me having to charge extra, other than the time updating the dta.

 

 

That actually ties in well with the ICB's move away from bookkeeping but small practices who currently do only the bookkeeping under something like AICB need to brace themselves now for the changes that are coming and perhaps start looking at trying to get to at least MICB in order to stay self employed.

If I was to go down that route I'd be more inclined to work for myself as an accountant rather than working for an accountant, but that's just me.

Thats why I was mentioning people progressing to MICB which may in future be the minimum knowledge level requirement for self employment

Yes, I can see that now.

 

 

This is not another RTI or AE. It is a fundamental change to filing requirments that will in one way or another affect everyone reading this.

Again, maybe I've got this wrong, but is there an insistence in the having to report monthly? As far as I'm aware you can still file annually if you wish.

I've just deviated to check my understanding, and still there is scant info out there. so here's my understanding of it  The self assessment return will disapear, to be replaced with a digital tax account.  So lets say your name is April Showers, running a business called Rainbow Fashions.  The digital account will hold all info known about April, if she's also in employment details of her earnings and tax will already be there, ditto if she's in receipt of child benefit.  HMRC will still need the info from her self employment and she will have the option of updating this as she go's along (eg monthly, quarterly or whetever) or once a year with the exact same information she currently includes on her tax return.   Have I got that right or have I totally misunderstood the situation?

As discussed, there is little information forthcoming and we are simply trying to get ahead of the curve with what little we have.

It seems obvious that there is the intention for there to be a link between the changes and universal credit which would dictate monthly filing.

Universal credit already discussed but I'm not seeing the link.  Which bit make's you think it seems obvious?

We desperately need more info now in order for people to plan for a change coming as early as 2016

 

Oh, I wholeheartedly agree, and it's unusual for me to ignore something that I had taken an interest in previously.  I guess that's down to the fact that there was scant info there to begin with, but given that the change is due to start in 8 months time, you would expect that info to be out there, wouldn't you?

Just to emphasise... CHANGE IS COMING..... get ready for it, plan, network with accountants, take accountancy qualifications and above all start discussing it.

I'm happy to discuss it, but other than the AAT which I'm already planning to do from October, my modus operandi will remain unchanged, unless I'm presented with no option but to report monthly, or the client requests it.

FOOTNOTE:  I may well have to change given the scenario you envisage, it's possible I'm being too blase about it and you're being overtly fearful, but you're certainly right to get people to sit up and take notice.

 


 Bloody hell Shaun, I think that's the most I've posted in one post smile


And don't you feel better for it John wink

I can see your point but people need to be frightened into thinking about this and getting ready to prepare for it.

We have no real detail at the moment, we don't even know how information will get into the new system (although we do know that there will be an end to having to type the same information in every year as forms are to be autopopulated) but the timescales are so tight that if we wait for the announcemens it may be too late for people to do anything about matters.

Yes fair dinkum.  I hope you're wrong because what you're talking about is a fundamental shift in how things are reported. We all knowccounts aren't simply a question of income minus expenditure equals profit.  There's a host of things that get tallied up and worked out at year end, and forced monthly reporting will change that drastically, unless the final month includes a year end adjustment.

There's a massive potential for the individual doing their own reporting to FU big style, especially with cloud software (only one example of someone who had use xero and asked me to file.  He'd got quite a few things in the wrong place.  If that had been uploaded automatically it wouldn't have been accurate, not by a long chalk.

Interesting times for sure.

 

PS Whatever I've snipped I'm in agreement with.

 

 

 

 

 

 


 



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Shamus wrote:

Just read some of those posts over on Aweb... WOW... And you all thought that I might be overplaying the importance of this!!!!! There is talk over there of death of an industry.

Makes me feel quite the optimist by comparison!


 Ive only just started reading some of the posts on Aweb and have to say I agree with you.  I havent got time today to read all of this lot and make too many comments.  I have to say I noticed the link that Christopher put in, scan read it and thought - oh here we go, they are trying to persuade us this will be great and save us loads of time and be easy to do.  My first thought after 'what a load of b.......' was oh like RTI has (nt) worked.  But then I had cause to go into my  own login on HMRC and its now forcing you to go onto the dashboard option, well you can still opt out, but it does say that by xx date in 2016 I will have no choice.  Phase one done.  

My issue, given I only deal with Limited companies as John rightly says, is that I didnt even really read it properly to realise it could impact on them.  Now Im wondering at what level of Incorporated bodies it will reach to and how it will be managed on a day to day basis, or should I say month by month basis.  Many dont prepare management accounts and are not organised enough to close down periods on a monthly basis so how would this be managed at period end. Never mind, just as much as for the sole traders, in terms of all the adjustments that need to be completed, that the majority of non accounting related folk have no idea how to cover off that normally feature at year end. My next thought was then the shenanigans amongst certain Directors who overdraw their DLAs during the year with no thought as to the availability of profits/pay for things personally and/or buy personal things through the business bank account etc. 

Is universal credit even working as I know the working tax credit system is falling over and RTI doesnt do what it is supposed to do so are we just heading for yet another system that fails everyone and crates more of a mess than it could ever sort.

Or have a missed the point.

Somebody suggested to me recently I should consider being under an Accountant.

As an aside, I was thinking about your comment, John, about many bookkeepers on here regularly going past TB.  I wonder if their PI cover allows this given the rules of certain governing bodies/actual PI insurance terms.

Anyway as Shaun and Christoper said - it would be good to post any information that crops up on here for us all to consider.  I must have a read of the AWeb comments more thoroughly.  

Can we have this as a sticky Shaun? 



-- Edited by Cheshire on Sunday 9th of August 2015 05:41:50 PM

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Joanne  McCormick

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PI discussion moved to this thread :

www.book-keepers.org.uk/t60679524/professional-indemnity-insurance-seperated-discussion/

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Ooo slapped legs Joanne! lol. The right move. I shouldnt post these fivolities on here neither but hey Im such an anarchist!

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Joanne  McCormick

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Hi All,

I didn't know much about this but will be doing a lot of research/reading over the coming days/weeks during spare time. But I guess it has just answered my recent post about renewing my MIP AAT licence, which I should definitely do!

Thanks for all the links and info, which will take a bit of time to get through so I best make a start!!

Corry

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Master Book-keeper

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Came across these links today, and it looks like I'm wrong, because limited companies will have a digital tax account.  

https://hmrcdigital.blog.gov.uk/2015/03/27/your-tax-account-passes-its-live-assessment/

https://hmrcdigital.blog.gov.uk/wp-content/uploads/sites/20/2015/07/Personal-Tax-Account-roadmap.pdf

https://hmrcdigital.blog.gov.uk/wp-content/uploads/sites/20/2015/07/Business-Tax-Account-Roadmap.pdf

It also looks line the foundations are in place for the digital tax accounts.  After reading the first link above, I checked my online gateway and it came up with a new page. I've attached a screenshot, but when I go to complete tax return it reverts to the present online one. I don't think there's one in place for the Ltd Co yet though.

 

 



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The plan seems to be for clients to do quarterly submissions with a reply from HMRC say your projected tax bill will be £xyz, so the client can save toward it or make voluntary payments and then at the end of the year, the Agent with do the final accounts/tax computations and submit them. (Isn't this what a tax return is?)


6 Consultative documents : deadline 7 November 2016 at 11:45pm - www.gov.uk/government/collections/making-tax-digital-consultations

Am I wrong in think that this all does not look simpler !



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There are 6 consultation documents out there at the moment see

https://www.gov.uk/government/collections/making-tax-digital-consultations

Consultation period ends 7 November so have a look at the documents and get your comments away to HMRC.

My take on the main points and my comments

1. Sole traders and landlords under VAT threshold will need to comply from April 2018, Sole traders and landlords over VAT threshold will need to comply from April 2019 and Ltd Companies will need to comply from April 2020. (exemption for businesses with turnover less than £10k)

2.Businesses will need to maintain digital records and send their info quarterly to HMRC by Apps.  What does digital records mean?  Dont think this will include excel and certainly wont include manual or no record keeping. 

3. Free software will be provided.  What will this software be and how good will it be.

4. Certain other businesses will be excluded.  Expect will be ones in areas with no internet.  The argument that a business doesnt know how to use internet or how to use a computer will I suspect not be a reasonable excuse.

5. Quarterly submissions will be headline figures.  Expect you will just need to submit;sales, costs and profit.  These will I expect can be estimates with tidy up done at year end.  

6. Quarterly submission due within a month of quarter end. 

7. Voluntary PAYG tax payments quarterly will be allowed.  Suspect this will become mandatory after a few years.  So that HMRC get their money from the profits earned quicker.  At the moment a sole trader with a 30 April year end doesnt pay tax on the profits earned until 21 months after the period end.

These are just the headline matters and still a lot of info to be provided.

Think will be a bit of a disaster as can hardly see all my clients moving and starting to take pictures of receipts/invoices.  It is hard enough to get info out of them once a year.

Good in theory to get everyone submitting digitally but was at an IRIS seminar this week.  They say that currently only 25% of businesses are using online accounting software and that off them using it only about 50% are using it themselves and on a regular basis.  So that means only about an 1/8th of small businesses are geared up for things. 



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"So that means only about an 1/8th of small businesses are geared up for things."

Is that your conclusion or whoever gave the seminar? I'm assuming it was theirs and is part of their agenda of encouraging the use of cloudy crap - because it's a conclusion that is so incredibly wrong the OED are going to have to completely rewrite the entry for the word 'wrong' in the dictionary so that it can cope with the concept of being able to be wrong on a whole new level.

So 25% of businesses use cloudy crap. Fair enough, I can't argue one way or another about the validity of that statistic - though I might question its source. Was it a survey question vague enough that people answered 'yes' even if they used webmail? Or was it a survey question that very specifically asked about cloudy accounts crud?

Only 50% of those are using it themselves on a regular basis. Okay, again, fair enough - I can't argue either way, other than wondering exactly what the nature of the survey (and the question itself) was. Note, howoever, the wording given for the stat - I'll emphasise the important one: "of them using it only about 50% are using it themselves on a regular basis"

BUT

Their 1/8th figure appears to have been derived from those two statistics: 50% of 25% = 12.5%, or 1/8.

If (and it's a big if) the two given percentages are correct - 25% using cloudy rubbish, and 50% of those are using it themselves regularly, then the only 1/8 conclusion to be drawn is that there is a 12.5% regular (self) use of cloudy trash by businesses.

It does NOT mean that only that eighth is geared up for the changes.

Firstly, because not using the cloudy crap (nor any desktop software) themselves does NOT mean they will be unable to submit under the stupid new system - it just means they probably won't be making the submission themselves. Instead, whoever is using the cloudy claptrap regularly on their behalf will likely be doing it.

Secondly, and this is where their agenda comes in: Built into that bogus conclusion is the assertion that businesses will have to be using cloudy codswallop in order to be able to meet the requirements of the changes. And that is utter, utter hogwash.

Learn to look beyond the hyperbole.

Edits for typos, etc.



-- Edited by VinceH on Sunday 9th of October 2016 11:06:17 AM

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Hi Mark,

the way that I'm seeing this is basically bringing reporting in line with VAT reporting. Businesses prepare for that quarterly without issue and in getting there they have done everything that would be necessary to report quarterly financial statements.

I'm thinking outside the box here but may not this also be a way of easing micro business owners into a position where they would be better prepared for VAT registration applicable to all? That could certainly sort out the £1.3 billion that this is costing (estimated) to implement.

I agree that the whole concept of voluntary payment will be short lived but on the bright side if that was implemented the whole idea of payments on account that we have at the moment where paople pay tax on profit that they may not even make would be out the window. (so swings and roundabout there for HMRC).

Interesting times that we are living in indeed.

Shaun.





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Shaun

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Hi Vince,

to my mind there is no doubt at all that the cloud providers are manipulating this to confuse references to online and app as meaning cloud based where as we've seen that is not actually in any Government document.

My fear is that in the interim on the back of this spin we are going to see more uptake of this godamn awful software by those assuming that they need to "upgrade" to it for MTD.

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Exactly, yes, I share that fear.

That's why it's important to pull people on it when they make (or repeat) bogus claims and dubious assertions that could lead people up the garden path.

Edit: "when them making" ? WTF?



-- Edited by VinceH on Sunday 9th of October 2016 12:10:37 PM

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JRA


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It's been a while since I posted on this topic, however, the following may be of interest

www.gov.uk/government/publications/issue-briefing-simple-assessment-ending-the-tax-return/simple-assessment-ending-the-tax-return

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Hi Chris

That's a different kettle of fish altogether I think.  This is taking people with relatively simple tax affairs out of the self assessment regime.

 

It was interesting reading back through the thread, and who would have thought that Shauns initial links then became the dreaded MTD, which never quite got there, mainly thanks to the lovely Theresa calling an unnecessary general election, which allowed the specialists (!) to take their foot off the gas and have a rethink.

MTD is now April 2019, and only for those businesses above the VAT threshold



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JRA wrote:

It's been a while since I posted on this topic, however, the following may be of interest

www.gov.uk/government/publications/issue-briefing-simple-assessment-ending-the-tax-return/simple-assessment-ending-the-tax-return


Another route for HMRC to rake in the fines and penalties when folk dont realise they have to check and correct within the 60 day timescale. 

Agree with John - only affecting a 'small number' - for now.



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Joanne  McCormick

Fallows  Hall  Ltd

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