Chartered Tax Advisers & Accountants

My Making Tax Digital Blog – starting with some cynicism!

Published On: 02 March 2017
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Probably against my better judgement, I’ve agreed to take part in HMRC’s pilot to help them evaluate the MTD software that will become essential for most small businesses to use to complete their quarterly tax “returns” (sorry, submissions, we’re not doing tax returns now, no siree), from April 2018.

To be scrupulously fair, the HMRC person who has got the short straw of having me as one of his group for the trial is actually very helpful, very pleasant and keen to use this pilot to help create the best possible new system for the self-employed who are going to be the first affected by this change.  That is the outcome I and, I am sure, most of the other self-employed, desire.

Currently, I use XERO for my accounts and my accountants (M&S) and I not unreasonably expected that I would be able to continue to use their software for the trial, albeit possibly some amended version.  However, it turns out that XERO has decided not to participate, so I was offered a range of other software providers.  I decided to go with FreeAgent.

In the last week I’ve received a couple of emails from FreeAgent.  The first asked me to complete a survey to tell them something about my business and my online/digital skills generally.  The second was to set up my account with them.

I have to say that compared to XERO, FreeAgent was very simple and quick to set up.  That said, I’ve not really started to use it yet as I do my invoicing at month end.  However, I shall report back in these blogs how all this goes.

Of more importance, I know that HMRC, contrary to their earlier statements, have now said there will be no free software provided by them and that the expectation is that the software suppliers (FreeAgent XERO, Sage, etc.) will develop some kind of lower-grade free software.  Consequently, I have emailed FreeAgent asking them to

a) confirm if that’s the case, and

b) if so, then is the software I am going to use for the pilot this ‘forever free’ version or is it their full system?

As I said to the nice man from HMRC, if the free software does what I need, then why would I continue to pay for XERO (or indeed FreeAgent or anyone else)?  However, call me cynical, but I rather suspect that the free software (if it exists) will be very basic indeed and the software companies will be doing their (understandable) best to persuade me and millions of other self-employed people to use their kit as opposed to their competitors’ systems.

One final thought… 

When I studied economics, I recall the basic laws of supply and demand and the effect a rise in demand has on prices.  Given that the government is going to create a demand for cloud accounting software, what do you think is likely to happen to the price of said software?  XERO has already put up its prices last year and there are rumours that they and others might do so again.  If so, the mooted savings (HMRC and the government are quoting hundreds of millions of pounds per annum) may be total hogwash.

Watch this space…

Alastair Blair, thePotentMix