In December 2021 we undertook a survey of accountancy firms, to find out how many of their property rental clients and sole trader clients were using a spreadsheet as their main record-keeping format. HMRC have recently published their own findings from a 2021 survey taken directly with a sample of affected taxpayers. The results of these two surveys are shown below. Our survey was therefore of agents, HMRC's survey was of mostly unrepresented taxpayers.
We obtained the results from over 100 accountancy firms. The firm sizes were representative of the accountancy sector. We obtained our results by providing an anonymous survey advertised on Accountingweb.
The results obtained were on behalf of over 17,000 sole traders and 7,000 landlords. From our survey, we discovered that: 48% of sole traders were using a spreadsheet and 49% of landlords were using a spreadsheet for their record keeping. This showed that a spreadsheet was the number one piece of software used in 2021 for sole trader and landlord record-keeping.
HMRC had an IPSOS survey undertaken between February and August 2021, to obtain a range of ITSA MTD data relating to the affected taxpayer base of sole traders and landlords. Their survey was conducted with 2,200 taxpayers by telephone and a further 30 in-depth interviews.
HMRC found that: 45% were using paper; 41% were using spreadsheets; 17% were using other software. The percentages do not add up to 100%, but rather 103%. It is not clear why that is the case. Perhaps some tax payers gave two answers: spreadsheets and paper. HMRC's survey also showed that only 12% were represented by a tax agent.
There are many millions of taxpayers who are going to have to move away from paper, as over 4 million taxpayers in total are thought to require entry to MTD ITSA. Paper record-keeping taxpayers represent the largest grouping of taxpayers. If you have clients using paper that might struggle with online or desktop bookkeeping which in its present form is too complicated for many micro businesses, we provide clever but simple locked down spreadsheets for taxpayers to use to bring them into making tax digital. If you would like a copy of any spreadsheets, Click here for ITSA MTD Spreadsheets to add yourself to our ITSA MTD mailing list (just one e-mail a month, from which you can unsubscribe at any time). You will then be given a copy of the spreadsheets as they are completed and fully tested.