Dr James, 0s:

Making tax digital is hot on the tongues of a lot of dentists out there and a lot of accountants too. And you know what? From what I've seen with my conversations with accountants, there's a real variety as to how dentisters are responding to this. Some people are just sticking their heads in the sand, some people are cracking on with it. We're here today to facilitate and aid people in making the right choice so that they understand how to un how to how to overcome the impending making tax digital changes. I'm joined today by expert accountants to dentist, Mr. David Hossiens. In this podcast today, we'll be covering what making tax digital is so that we can just ensure that everybody knows 100% how it affects them, what that means for dentists, who it affects and who it doesn't, and we're even going to be giving you actionable takeaways by the end of this podcast so that you will know exactly what to do. Looking forward to this one as ever. As ever, you can claim your CPD for this episode within the official Dentist Who Invest Smart Money Members Club. Smart Money Members Club also includes multiple mini courses and webinar series on finance for dentists, including how to become as tax efficient as possible, as well as understanding investing. All of this content counts as verifiable CPD, and you can download your certificates there and then on completion of each lesson. In addition to this, we also include a whopping 10% discount on your dental indemnity and a 5% discount on lab bills for dental principals, amongst other perks and discounts for members. Please use the link in the description to claim your verifiable CBD for this episode. David, this is of course the second time that we've sat down about making tax digital. At least the second time from memory, then was there three in there? Maybe did we do more public podcasts?

David, 1m 44s:

Yeah, it'd be the second one just on MTDB MTD, but we have touched on it in kind of previous ones. But I think we need it. Um it is coming up around the corner, and a lot of people are still asking questions on it, so still a lot of confusion, I think.

Dr James, 1m 58s:

Well, you know what? From memory, the last podcast that we did, David, we did it in maybe it was like August time, September, something like that, right? No, no, no, October, that's when it was, right? And you know what? Because of what had historically happened, HMRC had kicked the can down the road with this stuff. We were like, hmm, is it 100% gonna happen? But we're we're in, we're quite literally in March now, right? We're like a month out from the deadline, so we're it's pretty much official at this stage. So you know what? It might be good to do. It might just to be, it might just be a good idea to start from the start, David, and cover what making tax digital is, then we'll move on to who it affects.

David, 2m 39s:

Yeah, absolutely. And you're right. I think we were all secretly hoping HMRC would pull the plug on it because they did for um they have pulled the plug for companies, but for income tax, it is here, um, and it's it is around the corner. So definitely good to do an overview. Let's go over what it is, what it means. Um, a couple of updates since the last time we talked about it. Because in the budget there was a change that was announced, so I'll cover that as well.

Dr James, 3m 5s:

Nice.

David, 3m 6s:

Um, but just yeah, so just getting into it. So MTD, it stands for making tax digital. It is a new requirement for quarterly submissions for people who are affected uh via income tax. Um it only affects people who have self-employed income and rental property income. That is what is um assessed as your relevant income. And depending on how much that is, we'll determine if you have to do MTD. So we'll get into kind of the thresholds. Um, but I suppose a bit about why HMRC want to do this. So HMRC believes there is a tax gap of about 5 billion from poor record keeping. So the driver behind it is they think it's poor record keeping by taxpayers, specifically the self-employed, and this is their way of encouraging the self-employed to have better records. Now you have to have digital records and a software to manage that. So that's their purported reason for pushing it forward. Um, it has been around for a while for VAT, and this is the second phase to put the same regime over to income tax. Corporation tax and companies are not affected, they've formally taken it off the table because they've not been able to get the software right or the systems to do it.

Dr James, 4m 28s:

So just to be hyper clear, that's VAT when you're a sole trader, as in you're not incorporated.

David, 4m 34s:

No, VAT for anybody, yeah. So if you're a sole trader or a company and you do VAT, if you and you submit VAT returns, that has a separate MTD regime already. And most likely your accountants are doing that for you in the background if you do have a VAT registered business, um, which will be the same for income taxes, it's um yeah, over to your accountants again.

Dr James, 4m 55s:

Interesting, because okay, I guess that's well the reason why it doesn't affect a lot of Dennis is because they're not VAT registered, of course. But but yes, anyway, okay, no, that's fine. Anyway, back to what you were saying. Yep, no problem.

David, 5m 10s:

So um the first thing is the relevant income. So what what is the um the relevant income? The relevant income is solely, and I'll just talk on specifically with regard to dentists. So most dentists will be caught if they are an associate who is a sole trader, so not using a company, that means you have self-employment income. That is one category of relevant income. Um, if you are a practice owner and again you are not incorporated, the practice income is your relevant income for the purposes of MTD. On top of that, if you have buy-to-let properties that you rent out, that is also rental income that comes into the category of uh relevant income. So giving that again, so associates who are self-employed, your gross income from the practice. Um, as a principal, the practice gross income and any income you receive from buy-to-let's rental income. Okay, a commercial property also. So all of that is your relevant income. If the relevant income is over £50,000 based on 24-25 tax returns, the one you've just done, then from the 5th of April, you are required to be in the MTD regime. That drops to 30,000 from 2027 and 20,000 from 2028. So the government really wants to capture most self-employed and people with rental income, because if you think about it as being 20,000, just a couple of bite-lets I'll get you that. So it really is going after a lot of the um the self-employed uh uh taxpayers. So what does that mean? So there's a few things that need to be done. The first thing that needs to be done is you have to actually tell HMRC you are signing up for MTD, you need to get a government gateway ID, prove your identity, answer all the security questions, and say, yes, I am registering for MTD. Failure to do that could um result in a penalty point. I will come on to penalty points later because consequences of non-compliance is really why accountants we're talking about this, because we don't want people to have non-compliance, um, because there is a penalty regime, and I'll come on to that. So failing to register on time could result in a penalty point, and we'll pick up that a bit later. And to talk about thresholds. Um last time we did this, there were a lot of questions that surprised me because I thought that um it you know it made it obvious, but it's it's it is very confusing for people. So I want to go over this bit as well in terms of what does not qualify, so making it super clear for people what does not qualify for MTD. And these are things like if you're a partnership, so if you want to practice by a partnership, that is not caught by MTD. If you have a company, that does not caught by MTD. If you are employed, so if you have um, let's say you you are an associate self-employed, but you have um a hospital job that's by PAYE, the PAYE employment income does not count towards MTD. Dividends that you receive from a company also do not count towards MTD or benefits that you might receive. So making that super clear that that category there does not, it's just self-employment and rental income. That's that's the only thing that we're primarily concerned about MTD. So just making that really clear for people.

Dr James, 8m 36s:

Interesting. So just on that one example, employed income, 30,000 pounds a year, self-employed income is also 30,000 pounds a year. You wouldn't qualify because your self-employed income is not over 50,000 pounds, right? Exactly, exactly.

David, 8m 50s:

You are okay until it comes to you know the threshold gets lower.

Dr James, 8m 54s:

So not to be pedantic, but are we using the 50,000 pounds as shorthand for 50,270, which is the basic tax rate? No, it it is. Oh, it's literally 50k. Okay, there we go. Yeah, well, you just I thought I was being pedantic there, but it's good to it's good because people do that, don't they, all the time. They say, hey, uh basic tax rate ends at 50k, right? And what they mean is the 50,270, right?

David, 9m 20s:

Yeah, no, and it's a very good question. There's no there's no uh there's no wrong question, so anything that people have got we can ask, and yeah, good question. Good to clarify. I do have some examples to kind of make it clear. Um I think that when you get into it, like asking like that, it becomes clear what we're saying. So example number one self-employed dentist also has a part-time employment. Um, it is income, not profits, and that's the distinction. So um the associate has um associate fees of £52,000 from um the practice that he works at, but after his expenses, his profits are only £38,000, and he also has a salary of £10,000 at a hospital. Now we've got £52,000 income, 38,000 profit, 10,000 salary. So salary, don't need to think about profits of 38, it's not profits, it's income. So it's not after expenses, it's what the practice pays you. That's your income. So it's not after expenses. So most associates, you will be caught by this if you're not using a limited company. And and that's kind of one scenario there. Um, the second scenario is with rental profits. So in this situation, the dentist has um fee income, so works at a practice, gets £45,000 worth of income. After expenses, £36,000 profits, but we we're not considered profits, it's just income. So that was £45,000, but he has rental income of £12,000, and after his expenses on that, profits of eight, but it's not profits against income. So £45,000 income, 12,000 rental income, MTD is applicable. So again, most associates will definitely be corporate. Whether it's pan practice owners who are not incorporated. That's that I want to talk about um penalty regime as well, because this is this was the thing that changed actually. So when we spoke about this, a lot of accounts we are trying to get the message out there. Look, you have to deal with this, you have to deal with this because there's penalties involved. So I'll just talk a bit about what happens if you're not compliant. Um, so the first thing is you have to register by the sixth um 5th of April. You can either do it yourself. Um, for our practice, we are registering it for our clients um on their behalf because it's a lot easier, we can do it via our practice portal. We already have copy of your passport and proof of address because we check that anyway when you become a client. So most accounts will do that first before you, and that's the first thing to do to avoid a penalty point. Um the budget confirmed that they will not apply late submission penalties in the first year. So that's really good news. On the one hand, that this first 12-month period, if you are late, you won't get a penalty point. Now, that's important to say I'm not encouraging people not to be compliant because starting it with good habits will carry forward into the year after. And the penalties are 200 pounds if you get four penalty points. So if you get four penalty points, you get a 20-pound penalty, and you are trapped in the penalty system then. And the penalty system is hard to get out of because once you you triggered the four penalty points, you're in the system, and you only get out of it by having 24 months of compliance. So a scenario I could see happening is somebody registers late, they get a penalty, they miss a few submissions, and then they're in the four penalties, they get they get a financial cost of that 200 quid. And if they miss one penalty a year, say one submission a year, it's very hard to get out of you know this penalty system. So really want to just say yes, it is true that the first year they're not going to apply them, but get into good habits and good behaviors because that will have a compounding effect as we go into this. Um a really kind of unfortunate aspect of MTD is like coming in and out of us. So a question we had from a client recently was Um, What if I set up a company? Does that get me out of MTT? And the answer is yes, because you would have dividend income from the company, it's no longer self-employed income. And then the question was, okay, when do I need to deal with this by? And the answer is now, because um the way the system works is that £50,000 threshold is based on your last year's tax return. So if by the 5th of April you've not changed that status, you have to you have to enter into the system. And something that I think is really unfair, which are you know is in the rules, that once you're in the system, the only way to leave it is if you've got three consecutive years of not being eligible or sorry, not being required to yeah, three you're in it for three years. So if you if you join, you're in the system for three years. Now I think that's really unfair because for the VAT system, once you're in, you can make a declaration at any point. Actually, my qualifying income is below the threshold, I'm out of the VAT system. We can do that at any point, and you said that's a good faith thing that people predict their income. But for MTD, the current guidance is that once you're in, you're there for three years, even if you set up a company to get out of it, which I thought that's that's pretty unfair, but it is what it is. Now, whether the mechanics of that change um once we're into it could be, but I don't don't count on it. So please take it seriously, you've got to deal with this. If you're thinking of incorporating, do it quickly.

Dr James, 14m 54s:

And can I just actually refer back to the penalty point thing that you just said? So the submissions are quarterly, right? Yeah. So if you do no submissions over a period of 12 months, basic math is gonna tell us we get four penalty points, right? Yeah. So if you don't get your company sorted before the 5th of April and you don't do anything, you're gonna get your penalty points pretty fast, right? Because it's gonna be within the first year. So you lit yeah right. Just to just to really drive that home. If I got that right. UK Dentists, Dennists Who Invest now has an official platform where you can learn about finance and obtain UK compliant, verifiable CVD at the same time. The only platform that exists on which you can do both. The Smart Money Members Club has hundreds of hours of mini courses, webinar series, and live day recordings on all things finance slash tax efficiency for UK dentists. This includes complete courses on how tax works for UK dentists, finance so that you can invest and grow your own money, business so you can improve your profitability as an associate or principal, and for those out there that want it, there's also a mini course and how you can responsibly enter the crypto space using measured amounts of capital. I've gathered this content from the best of the best I could find in each respective area so that you know that this is how people at the forefront of each field advise their clients. The Smart Money Members Club also contains discounts on common things that UK dentists need to pay for on a regular basis. This includes a whopping 10% discount on dental indemnity, the offer to beat your income protection deal no matter what you're paying, and for the principals out there, 5% discount on lab bills and 10% discount on practice insurance. These are designed to offer hundreds, if not thousands, in annual savings. The purpose of this members club is to not only boost your monthly income but also manage your outgoings as much as possible and therefore create more profit. To celebrate the launch of the Smart Money Members Club, and given that the CPD deadline is coming up soon, I've decided to offer the first month of this platform entirely for free. This offer will end in the coming weeks as soon as the current CPD cycle is up. To collect your CPD for this podcast episode using the Smart Money Members Club, feel free to use the link in the description of this podcast.

David, 17m 13s:

That is how the current position is. Absolutely. Now I think that's really unfair and not consistent with VAT. And I would love to predict and say once we're into it, they'll update the the mechanics because there's a lot of software behind this. But that is the current position as I read the legislation, so I have to kind of say it as it is. So yeah, we are we are with that at the moment. So it is it it could be a nightmare if you just get in and then you incorporate, but you're still in the system, so you still have to do those nil submissions, which is just it's ridiculous, but it is what it is. That is the current position.

Dr James, 17m 48s:

Yikes. Well, listen, I'm really glad that you shared this stuff because we haven't went to this level of detail in any other podcast about MTD, that's for sure. But anyway, you were you're in full flow there. That question just came to me.

David, 17m 59s:

Yeah, no, no, no problems at all. Um, so we talked about the registration side of it. Um, once you've registered, you have to submit a digital. So it's four quarters. The first quarter will be um the 6th of April to the 5th of July. It's always the 5th to the 6th. So in practical terms, it's um April, May, June's revenue. So you have to declare your revenue and your expenses. The first submission that people need to do will be on the 7th of August. So like big thing is just get yourself registered quickly. So you know, talk to your accountant, ask them to register it for you, because then you get a bit of breathing space until August. So key takeaway for people is if you're stressed about it, you're not sure where to start, and your accountants contacted you, just ask them to register you for MTD, then you know, you can you can take a bit of a breather. From our side, that's how we're planning our workflow. And then once the first quarter's finished, so we've come to the end of June, we will be reaching out to people to get that um first return done. Um, how it's done is via digital software, and it's been such an interesting experience for us as a practice, just like seeing all those different software companies pop up and their pricing and how they're kind of you know dealing with it. Um, you do need to have a software for this. Um I did a slide, I know I'm not sharing it, but I just kind of because we get so many questions from people on what software to recommend. Now, the reality is that as long as it's compliant and HMRC has a list of software that are compliant, and most of them are, there's no real difference. They all do the job. Um, so what does that mean in terms of advising people? Most people want free software because it's it's very little added value. Um, so there are free software providers out there. I'll just find my slide on that, I've got a summary. Yeah. So free agent was the one that really started from the beginning as look, we're a free software to deal with MTD. So if you've got a qualifying bank account, Metal Network, RBS, and it's a business bank account, um, free agent will give you a free software. Now it does have to be for life. This is the this is the question. Now, if I was a cynical person, I would be predicting that a software company is a business and doesn't do things for free, and they might do it for a certain period of time, or they get incentives from the banks to kind of encourage people to open bank accounts. But it surprised me also that Sage, which is another accounting software, and it's it's one of the I don't want to call it a dinosaur because they'll sue me, but it's a very old kind of like yeah, it's a very like old-fashioned pioneer in the sector. So everybody used to use Sage when uh software came out for accountancy practice. Um, so it's it's one of the old old school ones. Dave launched a free version, and I only was made aware of that recently. But again, my thought process was is look, these these companies are businesses. Yes, they're saying it's free now. Could that change in the future? I think there's no guarantee that it's free today means free tomorrow. And if I was thinking commercially and I owned a company, I would probably incentivize people with a free version and it would come in across you know down the line because it's a business at the end of the day. Um, but where we ask where we are asked to provide um a recommendation, well, look, these two are free Sage and free agent are free. You have Zero, which is really, you know, pretty comfortable to say one of the market leaders in terms of what it can do as a software. It's got all sorts of open API integrations for complicated reporting. That's not really what MTD is about, but it's it it does also do that. That starts at about 16 pounds per month. QuickBooks starts at about 10 pounds a month, um, but there are free versions out there. Now, to share a bit of kind of our experience so far, because we've been doing a lot of work on this in February telling now, Clive. So you need to deal with this, we need to help you with this, we need to get you set up with the software. What would you like to do? Um, a common feedback that we got from clients was look, David, I'm really busy, and how can we make this as simple as possible? To which we were like, Well, you know, the free ones are free, but there is a time cost involved of subscribing, connecting, linking, refreshing. It is time to deal with these things. Um and we got asked this question enough to us to think as a practice, well, how do we make it as easy as possible for people? And kind of one thing that we've done, and I suspect uh other accounts have, but you might need to talk to them and kind of see if they can do this, is we we've invested in a bridging software that bridges from our um practice software, our portal and HMRC, some fancy spreadsheets in the background, but we we can do it now without software. So well, we can do it with our software, so it is possible to do it. So if so if you look at the software options and you go, look, I don't know where to start, I don't know the difference between free agent, I don't know what's needed from from me. Ask your account, can you use their bridging software? Because most accounts um should, I would I would say should have something like that. If we do, I expect other people do as well. Um, and that's been very well received by people. In the instead of having to go and log in the software and do all sorts of refreshes, they can just quarterly forward over the data to us and we deal with it at our side. So software options are kind of like that. So that that's interesting to know.

Dr James, 23m 32s:

Nice, interesting. I didn't I didn't know that was possible. So there you go. And uh all I can say is I mean, dentists slash business owners, sorry, sorry, let me backtrack on that. Well, no, it might it might affect some principles, I guess. You know what I mean? So there'll be a few business out there uh who this affects as well, um, in the sense that they have dental practice. They just they just don't have time, do they? Because we're so friggin' busy, and it's like it's good to know this stuff, but it's also good to make it really actionable as well. And we're actually going to do that at the end of this podcast, too. Uh, so heads up on that one. But yes, anyway.

David, 24m 12s:

Yeah, you're absolutely right. And it it has been very confusing for our clients as well. And so, well, what is it? You know, just getting that message across the what is it, what do I need to do? People are very confused about what they need to do, what are the consequences of not doing it, and it doesn't kind of help that I'm having to say it doesn't matter for the first year because it does. Like you get into habits, and you know, the first year is an amnesty because I think HMRC recognises there's a lot of work, and accountants and taxpayers are quite confused, and there's time involved in setting it up, and you want to set it up correctly. And I don't think there's a one size sorry.

Dr James, 24m 45s:

Go on, sorry, go on, sorry. I thought you were finished.

David, 24m 47s:

No, I was just gonna say I don't think there's a one size fits all as well. So I think that it's definitely a discussion about do I just want a quick solution to what is perceived by myself as I'm getting no value from this, I just want it dealt with some compliant, or actually I do want the software so I can track things and see what I'm up to. And that's um we've I think us as a business, we're guided by our clients and what they tell us. So we provide a menu of you know, these are your options. Do you want to book in a call to discourse? And but people have I think more people went down the route of just use your bridging software, I want it dealt with quickly with like less input, as little input for me as possible. That kind of surprised me, but it makes sense because people want a solution that's quick and easy, and I think great for us as well, because there is a lot of time that goes into setting up the software and refreshing it and connecting it, it's it's it's not very easy.

Dr James, 25m 39s:

Understood. And by way of the dentist's input in terms of what's expected from them when they have the bridging software, is they will just send you the spreadsheets of what they do. Is that is that right? Or how does that how does that work? What will they send you?

David, 25m 57s:

Yeah, so what the the interest of what's required to be declared, and that is income and expenses. So that can be as um straightforward as forwarding your payslips and your invoices, or if you've got a spreadsheet that you use yourself to track and some other clients do that, and if they don't, we can provide you one and you can forward that to us once you've put in your income, or we have some clients who are just downloading their bank statements once a quarter and just folding that over, and then we lift it from there. So I don't think there's one size fits all, and it is really people find different things, like people got different systems for themselves, and it's whatever works for you, really. We're quite, you know, flexible. I think to we're not prescriptive in that it has to be done this way, it's whatever's easiest for you.

Dr James, 26m 40s:

Nice, okay, understood. And am I right in saying just a few things that are floating around in my head before we move on that might be in the minds of the audience as well? Two things. First thing was let's say worst comes to worst and someone does miss the April thing, as in the April 6th deadline, and we're not encouraging that whatsoever. If they then register subsequently before April, May, June, July, if they register before July, will they incur only one penalty point?

David, 27m 11s:

Yes, if they then do the submission on time. That's that's my understanding.

Dr James, 27m 15s:

Fine. And then the second thing was you know, okay.

David, 27m 19s:

But that but that that one point stays for 24 months period. So if in the next 24 months you miss three others, you get the 200, and you're trapped in this cycle of you know, sure.

Dr James, 27m 31s:

And I definitely don't mean to diminish that we should miss you know the the the deadline or anything like that. I'm just kind of playing out the worst case scenario here. Uh so yes, that is that's a very good thing you mentioned, David. And then the second thing is when it comes to I know you've got your bridge and software, which is great. Is it fair to say that there's other advantages of having bookkeeping software anyway? Will there will be, won't there?

David, 27m 54s:

Yes, there definitely are. And if you are somebody who um will use it, then it can um be quite quite powerful. So this time of year, it's March, we get a lot of um requests for look, I'm getting to the end of the year, I need to check where my income is because I don't want to get caught in the 60% tax trap, and a lot of associates and um are caught with that. So if your income's over 100,000 up to 120, that chunk of your income is trapped at 60. Quick fixes for that, oh well, let me put some money into my pension that gets my uh income down, or I'm thinking of doing a course. Can I accelerate what I'm doing to kind of but if you've used the software accurately for you know when we've got we've had the data outside, we can jump into zero free, whatever it is, and say, yeah, based on what we can see now, this is where you are. And if you were putting money in, this is how much you'd have to put in, and that would give you you know a clearer um picture. So it can help you be more proactive with your tax, definitely.

Dr James, 28m 55s:

Nice, and you know what's a huge one that I see on that. Uh when you have a zero account, obviously it can connect to your bank account, right? So, or for example, just you know, I'm just I'm sure the other ones do as well, but I've seen zero firsthand, it can connect to your bank account, right? So when it's set up, what that means is you don't have to keep these spreadsheet records because the you can literally see the transactions just in zero, and then you can attribute them to uh if it's like a course, you can say, like, here's the invoice for the course or whatever, this is tax deductible, and things along those lines. So that's it's it's I guess it's a more on the fly way of keeping up to date with that, uh, just to really spell that out to people. Because I know there's lots of people out there who mightn't even have bookkeeping software as yet, so those would certainly be the advantages. Agree with that, David. I've got a I've got something more to add on top of that, which is interesting, and I'm sure you've seen that. But before we move on, is that fair to say?

David, 29m 55s:

Uh no, absolutely. I fully agree, and I think that my observation would be that clients who haven't done that, that it what's the barrier? Because there's a there is a benefit. There's a benefit to having your records kept digitally, having access to it, being able to see what your income is before you know you the end of the year finishes. Definitely the benefit of that. So, what's the barrier? And the barrier is people's time, and it's you know, is there a cost to the software? If I if I get it for free, I have to potentially open a new bank account and it has to be a business account. So applying for that and it's the setup time that I think is the barrier for most people. But to answer your question, there's definitely a benefit. There is definitely a benefit.

Dr James, 30m 34s:

Is it fair to say? I mean, from what I've heard of other accountants and even my own personal zero account, I'm sure there's things I could brush up on in there, but a lot of the time when people set it up on their own, they don't set it up properly. Would you say that that I've I've heard accountants say that? Would you agree? What are your thoughts on that?

David, 30m 52s:

For for bigger businesses, yes, if there's multiple bank accounts involved. Um, if it's for an associate with 12 pays coming in, I think the common thing that people get wrong is the start date, because you have to choose a date when the software activates. And if you're using a bank feed, you've got to get that date right, otherwise it will miss transactions, which is probably the biggest common um mistake we see we see. It's entirely fixable. So let's say you, you know, you do this, you set your bank, you set uh zero free up in June and you connect it and so it, but you choose June as your start date. So it didn't download April, May, or June, but then the first of the first part of June, that would be missing from the software. So if that was us, we would take a look and see, oh, well, just to let you know it's not connected from that day. Please give us those transactions manually via an Excel, you know, download from your bank statement, and we can upload it to plug the gap. But that's that's probably the most common setup error, is just getting the dates wrong.

Dr James, 31m 53s:

Nice. Okay, because that is I've had it before where the balance is just completely wrong in there. It's like way higher, way lower than it should be. So it sounds it sounds like that probably, and then my my accountant fixed it, so it sounds like that was what happened there, really.

David, 32m 9s:

So that's the setup side. Um, these softwares use what's called a screen scraping technology. So there's very like strict rules on what communication can happen between your bank and the software from a fraud pretension protect perspective. The banks don't want the software to talk to the bank because you know the banks have to deal with fraud, so it's only really one way one-way communication of data coming out of the bank, not the software telling the banks to make payments. So that's really one aspect to it. But because it's a screen scraping technology, um, it's a different level of accuracy and it it does miss transactions, so it can like miss a few things, and then then you look at it and you go, Oh, it's out by 10 grand because it's missed a transaction, and then what the team do we say, oh, we can see it's owl, let's uh get a natural copy of your bank statements in it. Excel, and we find out what's been missed, and we manually add it. So that's that that is a process that we have to deal with. So they're not perfect.

Dr James, 33m 7s:

Cool. Anyway, not to digress, because there's two really big things I'd love to cover before we wrap up this podcast. So the first thing is accountancy fees and how accountants have adapted to making tax digital. Is now a good time to move on to that, or is there anything more you wanted to say on making tax digital? No, no, that's absolutely fine. Yeah, we've we've covered most of it there. And um because just to share on that one, I've seen you see Pete posts on forums all the time, and Dennis are like, my accountant wants to charge me 1,500 now, and previously they were charging me 500 a year. Uh, is this correct? Is this right? What to do? What are your thoughts on that, David? Or how have accountants adapted to this change?

David, 33m 49s:

So to be fair to us all, it is um four times the work because it's four times the returns we have to do. So I think it's understandable that um accounts are putting the fees up to deal with it. Um, it is also worth saying that you can do it yourself. You you don't have to have an accountant to do it. So we we also give our clients the option that if you want to do it yourself, you can do it, but obviously if we're doing it, it's more work. Um we've tried to stay competitive, and I and I've seen the variety of quotes that you know people see on the forums as well. Um, but kind of our side, we've put it to a flat fee of £75 plus VAT per month. Um, so you know, 900 quid um a year plus the VAT. And that's I think where we've tried to be fair to people and that like it's not an added value to you. You can use our bridging software, which is free as well. So we've tried to keep it as competitive as possible, but also then just making sure you're compliant with that. Includes us registering you to start with, our bridging software if you want to use that. Um if you want to use a software, that's absolutely fine, and we'll give you time to set that up. That's also included in that. But then, as I say, it's that flat fee of £75 plus far per month going forward.

Dr James, 35m 2s:

Cool. All right, well, that certainly seems I mean, I've seen over a thousand quoted for this. Uh and um question for a question on your behalf, because what I've seen or what I've heard from murmurs of accountants saying is that the ones that have managed to keep the fee more equitable, shall we say, uh, have leveraged slightly outside of the box solutions like AI and everything along those lines. Is that part of your workflow?

David, 35m 29s:

No, no, we're not using AI. We've we've um I think for us, we are so we're a national firm. We've got a lot of clients throughout the UK, you know, as far as top of Scotland to London. Um but I think that we're a smaller firm, so we're a smaller independent practice, that we've not got massive overheads and multiple offices. Um, so you know, and I think we we we I think that just feels right to us when we look at it. We just kind of go, what's the work involved? What's the value being added here as well? And we didn't want to try quadruple our fees, but we thought that's a modest increase that recognises more work for us, and it it kind of gets the job done for everybody, and you know, but it's all it is a choice whether you you can do it yourself. And um, I don't think we've had anybody say they're doing it themselves yet. We have had some people who are still not responding to us, and we say, look, you need to deal with this, it's coming up, and that's kind of a bit more work out our side of telling and getting the message across, which is why it's really helpful to have these podcasts and get it out to people because a lot of people are unsure. Like, what is it, what does it mean, what do I have to do? It's it's very confusing for people.

Dr James, 36m 35s:

Boom. Okay, thank you for that. And then one final thing just to wrap up, because we did promise this at the very start. David, if we had some sort of actionable to-do list that basically summarizes this podcast, and then a dentist could just play back whenever they want to themselves and be like, right, I need to do this, this, this, this, and this, or even write it down if they wanted to. If we could condense it down to maybe three, four action points, how would that look?

David, 37m 3s:

Yeah, just so three three things. First thing is make sure you register for MTD before the 5th of April. Um, that'll save you one penalty point, and then you don't need to think about it until your first return. So, first thing is register for MTD or tell your accountant to do it for you. Um, number one. Second is make a decision on do you want a software to set up and manage, or do you want to just give it to your accountant for them to use their bridging software? And if you are going with the uh I want a software, put some time in the diary after, you know, well, as soon as possible, really. So we're we're offering people from now to do that setup because um it's a you know, usually March is a bit quiet for us, so just being mindful of when accounts are busy as well. Um once you've done that, your next kind of box to tick is before the 7th of August, you'll have to do your first return. So get your data over to your accountant before, well, hopefully in July at some point, and then get into good habits going forward of quarterly. So from our side, the practice uh manager will be you know contacting people quarter to say, Yeah, don't forget you need to do return, these are things we need, and you know, get into that habit going forward of once a quarter, you have to do this new return.

Dr James, 38m 13s:

Thank you so much. That is really useful. It's just really crystallize it. Shout out to Mr. David Hossein, who's been on this podcast today. David is, of course, available on the Facebook community if anybody's a member of that. Uh, and David represents his firm or two or two accountants. Thank you so much, as ever, David. We'll see each other very soon. Thanks, sounds good to catch up.