All posts by Barry Collins

Is it time to drop Dropbox?

Barry Collins

23 Jul, 2019

Like the 20-goal-a-season striker who turns up in the manager’s office asking for a new contract, Dropbox is good – and it knows it. That’s why it’s turning the screw on free users, enforcing significant price rises on subscribers and doing its level best to turn the red ink on its profit-and-loss sheet to black.

The warning signs literally started appearing in March, when free users suddenly received alerts that they couldn’t install Dropbox on new devices because the company had imposed a strict three-device limit. Any devices you had linked to Dropbox prior to March would remain so, but if you subsequently tried to add a new one, you couldn’t just swap one of the old devices out – you had to reduce the number of devices on your account to two and then add the new one.

Want the freedom to install Dropbox on as many devices as you like again? Well, step right over here and take out one of Dropbox’s subscription plans, from the bargain price of £5.99 per month. Except that price didn’t last long. Last month, Dropbox imposed 20% price rises across the board, meaning the cheapest subscription plan now costs just shy of £100 a year, or £7.99 per month. If you don’t want to pay a year’s subscription in advance, that’s hiked up to £9.99 per month or £120 a year.

To be fair to Dropbox, it has increased the amount of storage available to paid-for subscribers. Plus users have seen their storage quota double from 1TB to 2TB, and the service has rolled out several new features, including the ability to “rewind” your entire Dropbox should ransomware encrypt all your files and demand you immediately shuttle £500 to Sergei in Moscow to get them back.

That Dropbox is brilliant is not in question. I’ve used it for personal and business files for years and I can count on the fingers of one hand the number of times it’s let me down. And because I’ve managed to harvest chunks of extra storage by recommending Dropbox to friends and buying certain devices over the years, I’ve not had to pay for it.

But now I feel like I’m being boxed in by Dropbox. The three-device limit will eventually bite me (I currently have it installed on no fewer than 21 devices, although a good chunk of them are sitting unused in my kit cupboard) and Dropbox is so firmly integrated into my work and personal life that I’d struggle to get by without it. Almost any app or productivity software you can think of integrates with Dropbox – no other service offers the same carefree file syncing.

So at some point soon I’m going to be faced with a choice. Do I pay up and tether myself to Dropbox and its price rises for the foreseeable future? Or jump ship before I’m in too deep? You might reasonably argue that I’ve had a good run on a free service, and I should be prepared to pay for something that’s so valuable to my business. But there’s something about being strong-armed into subscribing that leaves a bad taste. It’s nowhere near as malicious as the ransomware it guards against, but it’s not entirely dissimilar, either: it’s got my data, now it wants my money.

Making tax digital: What does it mean for your tax returns?

Barry Collins

11 Jul, 2019

Making Tax Digital is the woefully abject name for the government’s latest attempt to modernise the way we submit our taxes. It’s not as if we’ve been filing with quill and parchment until now, after all.

However, stale branding isn’t the only problem with the new system. Parts of Making Tax Digital have predictably fallen behind schedule, while even the parts that have been introduced this spring have been fudged. Still calculating your VAT returns in spreadsheets? You might get away with it for a little bit longer.

Whether you’re a small business owner or just filing your own income tax return, you’ll eventually be forced to defer to the government’s desire to do everything via accountancy software. Not much to fear there for the average reader, perhaps, although HMRC has plenty to gain when it comes to avoiding costly errors and detecting tax fraud.

There’s also an upside for small business owners. With the software doing the drudge work that your accountant used to spend hours poring over and billing you for – they can now concentrate on helping you grow your business.

We find out what the recent changes mean for your business, evaluate the software that can help you submit your taxes and find out what it all means for business owners.

VAT’s the way to do it

The Making Tax Digital (MTD) programme set out with a bold timetable. However, as with most government IT projects, things haven’t quite gone to plan. “The timeline changes a lot because of HMRC getting behind on the building of the software,” said Chris Barnard, tax manager at accountancy firm UHY Hacker Young. “Originally it was meant to be VAT for everyone next year and then the year after that was going to be self-assessment, but that seems unlikely now. I can see that being three, four years away now.”

VAT has at least made it out of the starting blocks, although only businesses with a taxable turnover of more than £85,000 are required to keep their records digitally and submit their VAT returns using MTD-compatible software.

Filing online isn’t new, of course. Anyone running a VAT-registered business will be familiar with logging on to the HMRC website once a quarter and filling in the nine different boxes that confirm the amount of VAT you’ve charged on sales, the amount of VAT you’re reclaiming on purchases and so forth. Well, now you need a piece of government-approved software to fill those boxes for you.

You might be surprised to learn that’s all the information the government wants – at least for the time being. Although software such as Xero, QuickBooks or Sage will have all the detailed transaction data on every sale you’ve made that quarter, none of that info is currently being passed to HMRC. Instead, the software will simply populate the VAT return figures automatically, rather than you having to enter the figures by hand or copy and paste them out of your accountancy software.

That might sound like a lot of fuss about nothing, but Ed Molyneux, CEO of accountancy software provider FreeAgent, told us that simply preventing copy and paste errors will be make a big difference to the Revenue. “Where errors tend to occur is in transcribing one thing to another,” said Molyneux. “You know what it’s like, it’s easy to swap digits or miss a digit here and there. [MTD] is better than people fat-fingering numbers into a form.”

But it’s not just about cutting out the typos. “One of the other parts of the rules is those nine [VAT return] boxes have to be digitally linked to the underlying accounting record,” said Barnard.

If you were already submitting your VAT returns using accountancy software, that was already the case, but as Barnard said: “There are tens of thousands of businesses that are just using Excel sheets to do their accounting records, but when HMRC want to do an inquiry, they don’t have the confidence that the numbers they’ve got actually mean anything.”

Xero’s director of partner and product, Damon Anderson, also believes the new legislation will prevent other familiar tax problems for both business owners and the Revenue. “This new legislation enables taxes to be filed digitally and quarterly with greater accuracy and speed,” Anderson said. “As a result, this prevents the end-of-year scramble to harmonise Excel spreadsheets or find paper receipts, making businesses more efficient and more transparent to business partners and to HMRC.”

Wither Excel?

Does that mean Excel is no longer an acceptable means of keeping your company’s books? Not quite. Companies that want to continue to manage their accounts in spreadsheets can do so for the time being, but they will need a piece of “bridging software” to submit the return. Most of the big accountancy software firms are already offering this. “As Excel spreadsheets cannot interact with MTD software, Xero has also developed a bridging software solution to ease the transition for those that aren’t fully online and are worried about looming deadlines,” said Anderson.

The bridging software basically takes the calculated figures from your spreadsheet and populates the VAT return, but the operative word here is “calculated”. You can’t just type figures into a spreadsheet and have them uploaded to HMRC: the Revenue wants to see that you’re doing your sums properly, even if you don’t have to upload the transaction data itself.

“At first, they [HMRC] didn’t want to have spreadsheets at all, but after consultations it was decided that as a compromise, the use of spreadsheets would still be allowed for a limited amount of time,” said Barnard. “If you have a tab for sales, the total sales figure will have to digitally link to the VAT return. You upload the spreadsheet to whatever bridging software you’re using and then you put a cell reference into the bridging software, and that picks a number up from the spreadsheet.”

Eventually, however, businesses will need to migrate to approved accountancy packages.

The bigger picture

Many businesses have been reluctant to move to Making Tax Digital because they fear the Revenue will have access to all their transaction data, according to Barnard. As we explained earlier, that’s not yet the case — MTD only requires the same, sparse VAT data that you were forced to submit previously.

However, there’s no doubt that the long-term goal is to gain access to granular detail of companies’ accounts. That will, of course, provide an enormous fillip for the Revenue’s efforts to clamp down on tax fraud. “Down the road, what is now voluntary information – individual invoice transactions or expenses – will at some point be mandatory parts of the legislation,” said Barnard. “That’s probably two to five years away.

“HMRC is looking to be smarter in the way they do inquiries. In the past it was a random exercise, and they spent a lot of money going out to businesses to do inspections and realising there was a typo on the VAT return or it was absolutely fine. They want to move to artificial intelligence systems like the banks have used to spot trends. If there’s a certain business and their submission falls out of the normal criteria of what that business should be submitting, it will flag up an alert.”

Demanding that businesses use accountancy software instead of Excel spreadsheets has another advantage – there’s an online invoice trail. Whereas businesses might sometimes offer to do a “cash job” and not bother to report the work for VAT purposes, “it’s more difficult now not to record those transactions in the system,” said Barnard. “A lot of the time, a client will want an invoice. That invoice will be sent from Xero or whatever and once it’s in the system that invoice automatically goes on the VAT return.”

Benefits for businesses?

Clearly the government is set to benefit from Making Tax Digital, and it must be good news for the accountancy software firms too: tens of thousands of businesses are now being practically mandated to use their software.

What business owners are probably asking themselves is: what’s in it for us? With accountancy software costing hundreds of pounds a year in subscriptions fees and all the hassle of learning how to use it, is there any advantage to being forced to do your books in this fashion, instead of dumping a pile of paper invoices and receipts in your accountant’s lap once a year and leaving them to get on with it?

Because almost all of the major software packages do a lot of the accountant’s legwork for them – such as automatically creating VAT returns, balance sheets and end-of-year corporation tax calculations – your accountancy fees should (in theory) be reduced, as your accountant doesn’t have to spend as much time doing all that work themselves.

Of course, if there’s one thing accountants are pretty good at, it’s making money, so even if your fees don’t go down, “your accountant should be able to provide a better service”, according to Barnard. “When I first started training, you’d talk to your client about once a year at the end of their accounting year and you were always working with data that was about 18 months old. The client didn’t know what was going on right here, right now. With cloud accounting, they can get management accounts from the software right away. The accountant can explain what the management accounts mean, in detail, and provide recommendations off that, provide more tax advice, and tax planning. There’s a lot more services accountants should be providing now”.

Molyneux agrees that the software should free accountants to make a more meaningful difference to firms. FreeAgent recently surveyed accountants and found that the worst parts of their job were “chasing clients for data, having to fix errors in clients’ data, transcribing stuff into [different] systems and filing tax returns,” according to Molyneux. “The bit they don’t get to spend enough time with their clients on is how to make the business more successful.”

Molyneux says many sole traders and small business owners are spending “hundreds, if not thousands of pounds a year, just to pull together a set of numbers to file a tax return and stay out of prison”.

“Accountants are saying ‘I can’t sell advisory services to people who bring me a shoebox of receipts every year. But I can sell them those services if we can basically assume the numbers are taken care of,” Molyneux added.

And talking of staying out of prison, Molyneux adds that using accountancy software may in fact indicate to the authorities that you’re running your accounts properly, lowering the risk of the dreaded tax inspection. “Just the knowledge that the data has come from a trusted source, like a bank transaction feed, and has not just been keyed into a system… with plenty of scope for distortion is a big step in the right direction for them [HMRC] being able to trust that data. If you’ve got a system that meets certain criteria in its trustability or auditability, you might even get a bit of a green light through the filing system.”

How the cloud cooled my phone’s meltdown

Barry Collins

24 Jul, 2018

Technology is a pain in the posterior. It waits until you’re at the very precipice of breaking point and then breaks. Hence, last week, in the midst of a deadline cataclysm, my phone decided to have a meltdown. Almost literally.

I first realised something was up when I felt a warm sensation in the trouser region. Given that I’m not quite yet of the age when ‘little accidents’ occur, I concluded it must be the phone in my pocket. And given that phone is a Samsung Galaxy, I got it out pretty sharpish.

I tried all the usual overheating remedies: killed all the open apps, restarted the phone, scoured the settings for battery hogs, but nothing was working. A deep dive into the settings revealed that ‘Google Services’ was thrashing my phone’s processor, but with literally no more information to go on, and a phone that was chomping through battery at a rate of a 10% every 30 minutes, I had no option but to thrash it and start afresh.

This gave me flashbacks to the days of Windows XP. Remember when you used to have to reinstall the operating system every year or two because your computer accumulated so much cruft it took 10 minutes to do anything? Well, smartphones have now reached that stage. Once in a while, you need to manually chuck out the rubbish they’re incapable of clearing out for themselves.

I wasn’t too concerned about factory-resetting my phone because I had two backups of all my data. Google keeps a backup of all Android handsets by default and Samsung practically insists on taking a backup of its own for good measure. The last time I moved handsets, the Google backup reinstalled all my old apps on the new phone within minutes. It was like moving home and finding the removal men had put all your furniture back in the right place and made you a cup of tea to boot.

Sadly, things didn’t go quite so smoothly this time. Google didn’t even offer to restore my data during the phone’s setup. And although Samsung stepped into the breach, offering to restore all my apps, photos, contacts and the like, attempts to restore from its backup where plagued with ‘server errors’. I could only restore parts of my data.

At first, the language in Chez Collins was a tad fruity. I was preparing to rip a branch off a nearby tree, go the full Basil Fawlty and give my obstinate Galaxy S7 a ‘damned good thrashing’. But after I’d calmed down and started reinstalling apps manually, I realised this wasn’t such a disaster after all.

Unlike the days of Windows XP, when all our data was stored on the device and a faulty backup was very bad news indeed, these days everything is stored in the cloud. Email, photos, social-media accounts, documents – all you need do is reinstall the app and enter your login details, and everything is basically back to how it was. We don’t look after our own data these days. We get Dropbox or Google or OneDrive or Facebook or whoever to take care of it for us.

My phone’s now running like new with battery life back to almost two days. That mini-meltdown might be the best thing that ever happened to it.

Image: Shutterstock

Hey, you, get me off of your cloud (it’s way too expensive)

Barry Collins

3 Mar, 2018

Regular readers (hello, mum) aren’t used to finding nuance in this column. I heartily subscribe to the Danny Baker maxim: sometimes right, sometimes wrong, always certain. But I’ve been batting this issue around in my head for days and I’m still not sure whether I want to commit to another year’s subscription for Adobe’s Creative Cloud or pick up the phone and let someone in the Adobe call centre have it. So, I’m going full stream of consciousness on the page and hopefully I’ll reach a conclusion by the end of it. Strap in.

Adobe has gradually tightened its grip on my metaphorical testicles over the years. After getting hooked on the gateway drug of Lightroom, I was persuaded to part with a tenner a month for the Photography pack so that I could also get Photoshop. Then I reached the point in my journalism work where having access to InDesign was unavoidable, so I stumped up an extra £20 per month to add that to my portfolio. Then Adobe did something cunning…

Around this time last year, it offered me an unbelievably good deal. I could have the entire Creative Suite for a one-year-only special price of £26.68 per month – cheaper than what I was paying for the Photography pack and InDesign separately, plus throwing in Illustrator, Acrobat and the dozen or so other apps that make up the full Creative Suite compendium. I’ll take it for a year, I told myself, then go back to the original configuration when they shove the price up to the regular £50 a month in a year’s time.

In the meantime, of course, I’ve grown faintly addicted to Acrobat, not only for the brilliant mark-up tools that allow me to proof pages of this magazine digitally, but for the way it autofills the endless stream of PDFs I have to wade through as a director of the mighty Lewes FC. And though I don’t use many of the other Creative Suite apps a lot, I love playing with Audition, Muse and Dreamweaver, and I’m planning to redesign my business site using Portfolio.

So, there I was, ready to sell one of the kids to Angelina Jolie and commit to the full £50-a-month package when Adobe did something that got me very irritated. It laced my gateway drug, the one that hooked me on Creative Cloud to begin with: Lightroom.

Now we have two versions of Lightroom: a more lightweight, tablet-friendly, cloud-oriented version called Lightroom CC and an ominously named rebrand of the desktop app to Lightroom Classic CC. Adobe insists it has no plans to do away with Lightroom Classic, but supporting two versions of the same app is rarely sustainable, and a deeper dive into Adobe’s new pricing suggests that it’s incentivising customers to cut off Classic.

Look at the revamped Photography packs, for example. There are now two versions priced at a tenner a month: one that includes Lightroom CC and a whopping 1TB of online storage for your photos; one that includes Lightroom CC, Classic and Photoshop but only a meagre 20GB of storage. It’s gapingly obvious that Adobe wants photographers to chuck all their photos onto its cloud, instead of storing them locally. That’s the whole “edit anywhere” ethos of Lightroom CC. And once Adobe has your photo collection, it’s got you, in the same way Google has you by holding ten years of your Gmail archive.

I’ve always been a software subscriptions sceptic. Given the dearth of game-changing features over recent years, I’m still struggling to comprehend why I’m paying Microsoft £8 a month for Office 365. Adobe got me because a tenner a month was far more affordable than several hundred quid up front for the standalone applications. Now that’s not even an option – the latest versions of the apps are only available on subscription.

It’s a dangerous time for Adobe to be railroading customers. It’s had the luxury of no discernible competition in several of its key markets for yonks. That’s beginning to change with the emergence of credible rivals such as Serif’s Affinity Photo and Designer. They’re very decent, direct hits on Photoshop and Illustrator respectively, and they both cost less outright than a single month of a full Creative Cloud subscription.

Reluctantly, I suspect I’ll cave in and hand my £50 a month to Adobe for Creative Cloud. But Adobe would be ill advised to think it can whack customers in the keep net indefinitely. Adobe’s move to subscription software “riled a lot of people,” according to Serif’s Ashley Hewson. I’m not sure about that, but pulling stunts such as changing the entire nature of the much-loved Lightroom will. Adobe has to be careful that it doesn’t airbrush itself out of the market.

Main image credit: Shutterstock