Accountant vs. Tax Software ‒ When to use each option

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With new Making Tax Digital (MTD) rules from HMRC soon to come into effect, landlords and any other self-employed individuals will have to submit their accounts directly to HMRC via recognised software. The changes will create a sudden demand for tax software, inspiring a number of developers to create MTD-ready software.

Yet, if everyone is required to use MTD tax software, you may wonder what happens to accountants. Do you simply replace your accountant or is there still opportunity for them to add value?

While MTD tax software does, effectively, replace your accountant, things aren’t always that straightforward. While you may receive advice and updates from your software provider, there may still be some situations where contacting your accountant is preferable.

When should I use an accountant?

As a landlord, you’ll know that accountants don’t come cheap. Even the most cost-effective accountants still charge hundreds of pounds. While the received logic is that accountants should save you more money than they cost, it doesn’t always work out like that. In fact, as technology has improved and the tax system has become simpler, accountants are adding less value than ever, especially for relatively simple accounts.

Tax software, however, can’t give you specific advice – not until AI gets a lot better, anyway. If you need someone to investigate your tax situation or it’s particularly complex, an accountant is probably the best way to go. They can provide personalised advice that can prove really valuable.

Here are some situations where an accountant may be the best option:

  1. Complex, multi-level tax affairs
    Earning income from a variety of sources, such as property, capital gains or inheritance, can develop a large and complex tax portfolio. When there is lots of complexity and money involved, you may find more peace of mind having a dedicated accountant looking after your tax affairs. They may also be able to find more tax efficiencies using some creative thinking that, at the moment, software lacks.
  1. Creating long-term tax plans
    Software is designed to keep you on top of your current tax situation – not plan or prepare you for the long-term. Tax software might, for example, show you a real-time estimate of your tax liability but won’t show you how to plan for the following year or make suggestions on how to make the most of your allowances. If you want a long-term tax plan, it’s best to speak to an accountant who can understand your needs and take you through the process.
  1. Difficulty keeping organised
    Some of us are more organised than others. Keeping accurate and up-to-date account information isn’t always easy, especially when you are busy or have a lot of paperwork. As a result, many of us leave it until the last minute to complete our tax returns. If that sounds like you, an accountant may be an easier solution. It may be a pricey solution but you can rest easy knowing your accountant will take care of all the paperwork on your behalf.
  1. Great relationship with your accountant
    If you’ve used the same accountant for a number of years, you’ll likely have built up quite the rapport. Even if you could reduce your accountancy fees, you may value that relationship more than the difference in cost. One way to keep costs down while maintaining the relationship with your accountant is by using software to do most of the heavy lifting, getting your accountant to add value and create tax plans.

When should I use tax software?

For the majority of landlords, your tax portfolio will be fairly straightforward and could be better managed with tax software. While software can’t give you advice or find ways to save, it will reduce your accounting fees and make it quick and easy to submit your tax returns.

By using tax software, you will also prepare your business for the coming MTD regulations, putting you more in control of your tax affairs.

It may be better to use tax software if…

  1. Tax self-assessment is something new
    If you haven’t submitted a self-assessment tax return in the past, it can seem a bit daunting and expensive. Tax software not only walks you through the information you are required to provide, but it will also do all the calculations for you and submit your tax return directly to HMRC – all without the need for an accountant.
  1. Saving for your tax bill is difficult
    Putting aside the right amount of money to pay your tax bill come January isn’t always easy. You may have fallen on hard times this year, for example, due to the coronavirus, and needed to dip into your savings. Without completing a tax return, it is hard to know how much you would owe at the end of the year. Tax software can provide a real-time estimate of your tax based on the current information, helping you put aside just the right amount and avoid nasty surprises in January.
  1. You are short on time
    While your accounts may be straightforward, it can still take a large amount of time to prepare your accounts. You need to download bank statements, find receipts, identify relevant transactions and then sit down and complete all the paperwork. Some tax software, such as APARI, allows you to simply upload your bank statements and tag the relevant transactions, completing all the calculations and paperwork for you.
  1. You are short on money
    Being a good landlord requires some upfront costs which can leave you struggling financially at times. Accountants, on the other hand, are notoriously well-paid. The great thing about MTD tax software is that many providers offer a basic plan for free. Only if you need a particular service, such as a conversion to the old style self-assessment tax return or some specific accounting advice, would you need to pay anything!
  1. You’re know what you’re doing
    Some landlords like to keep financial records for their own benefit. If you have fairly good records then your accountant may not be adding much value – only working out a few basic percentages, putting it into the correct format, and submitting. Tax software can provide an easier way to keep track of financial information as well as completing all the work usually done by your accountant, saving you time and money.

Regardless of what your tax affairs look like, you will be facing a transition to MTD tax software in the next few years anyway. So, even if you have a complicated tax situation and an accountant you get on well with, you will still need to start using software soon.

By adopting tax software now, you will be able to better organise your taxes in digital format, saving you time and money now, and stress later. The worst that can happen is that you will find the new approach difficult and ask your accountant to step in, potentially saving time and money anyway. So, why not start now and simplify your tax?

Get started with a free MTD account from APARI.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Accountant vs. Tax Software ‒ When to use each option | LandlordZONE.

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EXCLUSIVE: Rent Smart Wales rebuffs NRLA criticism of its performance

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Landlord registration and licencing authority Rent Smart Wales has rebutted criticism of its performance contained within a report published by the National Residential Landlords Association (NRLA) earlier this week.

Rent Smart Wales has told LandlordZONE that it is “recognised by many stakeholders as being a success”. It also says the NRLA’s report is not independent and has relied on ‘outdated information’ and minority views from its local membership.

The NRLA’s report criticised the organisation for lacking transparency, accountability and for creating unnecessary duplication of effort between itself and local councils.

In response, a Rent Smart Wales says: “The NRLA itself concludes that the scheme has been successful in meeting its targets.

Five years on

“Five years on, 106,936 landlords have registered, 48,986 landlords have become licensed, 5,149 agents are licensed and 215,241 properties across Wales have been registered.

“Education and availability of information is key to securing long-term improvements to the private rented sector.

“More than 57,000 landlords and agents have completed training to become licensed with the vast majority reporting that it has helped them to better manage their businesses; while tenants of licensed landlords can be reassured that their property managers are fit to manage and well informed of their responsibilities.”

Long waits

But Rent Smart Wales does admit that landlords faced long waits when applying to be registered when its scheme first opened for applications in late 2016.

It claims that consultations with stakeholders including the NRLA led to improvements to processes, communication and its website.

“We are always looking to improve our service and a review of the NRLA report will be undertaken with this in mind…we are pleased that the NRLA has acknowledged the considerable work already achieved and the potential for a wider Rent Smart Wales role in the future.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Rent Smart Wales rebuffs NRLA criticism of its performance | LandlordZONE.

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LATEST: Government clarifies position on evictions for landlords

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The ministry of housing has clarified the current rules for landlords waiting to evict tenants in England following growing confusion within the sector.

Several landlords have been in touch to ask LandlordZONE what the current position is following three lockdowns over the past 10 months during which there have been several changes to the evictions regulations including this week when the ban on evictions taking place in most cases was extended to 21st February and potentially, beyond.

And one official at a London county court last week appeared confused by it all too, conflating a Section 21 notice and a bailiff’s 14-day N54 Notice of Eviction.

This is because although landlords are able to give tenants a notice seeking possession (known as ‘notices of eviction’), possession hearings are continuing within the court system and possession orders are being granted. It is bailiffs that have been told not to proceed including the serving of any 14-day notice of evictions.

So when can landlords evict a tenant?

We approached the Ministry of Housing, Communities and Local Government and the High Court Enforcement Officers Association (HCEOA) for clarification, and they have now both confirmed this:

  • In most cases Landlords must still give six months’ notice on notices seeking possession, which means when tenants are given notice now a court claim cannot begin until mid-July. MHCLG says this gives tenants ample time to find alternative support or accommodation and is “an important protection to all tenants”.
  • Bailiffs cannot serve any notices of eviction or undertake evictions until 21st February except under certain exemptions including now where tenants are more than six months in arrears.

“[But] you can only use the six months’ arrears exception if your original order was based on rent arrears,” says Andrew Wilson, Chairman of the HCEO.

“A further application to court is required to take advantage of the exception and a copy of the order allowing it must be supplied to either the bailiff office or the HCEO – if permission is granted to transfer the matter to high court for enforcement purposes – before the bailiff or HCEO is permitted to move to eviction.”

  • Landlords cannot enforce evictions for possession orders granted under section 21 of the Housing Act 1988, or in other words ‘no fault’ evictions, until after 21st February.

“Although on the face of it the reduction in rent arrears being owed to six months seems a positive move for landlords, requiring an application to be made for the court to be satisfied that an exemption exists is another costly procedural step,” says Tim Frome (pictured) of Landlord Action.

“It is not clear when the six months rent arrears should be calculated from, there has been some commentary that it should be when the warrant for possession was either granted or is applied for.

“The other unknown is whether a hearing would be called by the Court to deal with the matter or whether it can be undertaken by a judge on the papers of the application.”

MHCLG also yesterday updated its advice on evictions for landlords and has also told LandlordZONE that it “will review whether an extension to this measure is needed and provide more detail on this in due course taking into account public health advice.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Government clarifies position on evictions for landlords | LandlordZONE.

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The Madness of Housing

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Those who have read Douglas Murray’s recent fascinating book, The Madness of Crowds may have been struck by the parallel with Housing.

Whilst Murray explains the Social justice movement effect on Gay, Feminist, Race and Transgender issues, the effects are far more reaching. 

The post The Madness of Housing appeared first on Property118.

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Covid: Why must landlords renew EPCs during the current lockdown?

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Landlord groups have expressed their frustration at being expected to obtain Energy Performance Certificates (EPC) during the pandemic – despite fines being handed out to the general public for minor breaches of lockdown rules.

Updated government advice for landlords and letting agents reiterates the need to arrange for an accredited assessor when selling or letting a property, despite it not being essential safety work.

Its guidance for England and Wales states that if they can’t arrange an energy assessment, it should be rescheduled, adding: “If all reasonable efforts have been made to obtain a valid EPC but this has not been possible, a further 21 days are allowed as a grace period. After this period, enforcement action can be taken.”

Giles Inman, EMPO’s business development director, says it’s particularly frustrating that the government expects landlords to do this work as well as shoulder other repair obligations, while local authorities haven’t been doing any inspections since last March.

However, he tells LandlordZONE that landlords can protect themselves if they’re unable to access a property: “We tell our members that written evidence is key – if they can get a tenant to either send a text or email them to explain why they don’t want to admit them to the property, this will cover a landlord.”

The National Residential Landlords Association has called for delays or an extension to the expiry date of non-urgent inspections, just as the government has allowed for vehicle MOTs.

selective licensing

John Stewart (pictured), deputy policy director, tells LandlordZONE: “The impact of extending EPC renewals would affect relatively small numbers as they are valid for 10 years, and at worst this would mean a few non-compliant properties will be let for a short period.”

Read more news about EPCs.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Covid: Why must landlords renew EPCs during the current lockdown? | LandlordZONE.

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Entire housing sector backs UPRNs in open letter to housing secretary

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An open letter from 53 organisations operating within the housing market has been published calling on the government to roll-out Unique Property Reference Numbers (UPRNs)

Addressed to housing secretary Robert Jenrick, the letter says UPRNs will offer many benefits including the elimination of rogue landlords, increased protection for tenants, better enforcement of housing standards and faster and simpler house sales.

Organised by The Lettings Industry Council (TLIC) and the Institute of Residential Property Management (IRMP), the letter is also backed by many leading estate agents and industry organisations including the Property Redress Scheme, the NRLA, RICS, Savills, Foxtons and Countrywide.

The PRS’ Head of Redress Sean Hooker says he backs UPRNs because it will help bring greater transparency to the private rental market and links a huge amount of property information to a single, easily-used number.

Andrew Bulmer, CEO of the IRPM says a UPRN is like attaching a number plate to a car. “Instead, we attach a unique number of up to 12 digits to all things related to properties including fittings, fixtures, paperwork and surveys so that each property can be uniquely identified with unparalleled accuracy,” he says.

tllic uprns

Theresa Wallace (pictured), Founder of TLIC, notes that, “widespread adoption of UPRN’s could revolutionise the property market, this is a really exciting initiative which has industry support and we now need the Government to add theirs.”

The letter details the benefits of widespread market adoption of the UPRN to society, the economy and property sector. These include:

  • Improved building, consumer and market safety.
  • More targeted enforcement of legislation.
  • Increased protection for tenants from rogue landlords.
  • Faster conveyancing and transparency in home buying and selling.

UPRNs are backed by National Trading Standards, which says that the “widespread use of UPRNs has the potential to deliver many benefits across the residential property market.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Entire housing sector backs UPRNs in open letter to housing secretary | LandlordZONE.

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