Thomson Reuters and Sage end CT alliance

Two of the country's biggest tax and practice software suppliers have broken up over their shared corporation tax software relationship.

On Monday morning Thomson Reuters put out a statement explaining that it had terminated its deal allowing Sage to resell its ONESOURCE branded corporation tax programme on Sunday 7 September.

The CT application was originally developed by a team from Deloitte and was licenced to Sage under the name Abacus. This relationship caused some head-scratching and backroom diplomacy when Thomson Reuters acquired Abacus in 2009, but the resulting licence deal seemed to work. Until now.

The crossfire of tersely worded press releases suggests that the break-up has not been amicable. Sage emailed users last month about the availability of version 9.00 of Sage Corporation Tax (Powered by ONESOURCE), which includes updates designed to handle financial years ending up to 31 March 2015 and accommodating tax reporting changes made necessary by the introduction of FRS 102.

In what looks like a fairly aggressive play for customers, Thomson Reuters said it would continue to supply accountancy firms affected by the change with the software under the name “Digita Corporation Tax Advanced powered by ONESOURCE”.

Sage responded that it is planning to replace the ONESOURCE-powered product in its suite with a new, internally developed program called Sage Corporation Tax. Sage Accountants Division managing director Paul Tooth added that there is a one year run-off in place to allow existing customers to migrate to the new application.

“Customers will be offered the new Sage solution as their support contract comes up for renewal - and we guarantee no price increases over the next 12 months,” he said.

The CT relationship between Sage and Thomson Reuters has always been a delicate one that looked likely to end in tears. As he set to work last year revamping the Sage Practice Solution and reorienting it for the cloud environment, Tooth made it clear that he was keen to come up with a new generation of Sage practice applications. At some point, it was inevitable that this ambition would rub up against the existing CT deal.

AccountingWEB contacted both parties to get a clearer picture on their future product plans and timelines. Thomson Reuters confirmed that it had notified Sage around 18 months ago of its intention to end the relationship, and pointed out that it didn't have to continue putting money into supporting and developing a product for one of its rivals. The decision does mean, however, that it will force the current users of Sage Corporation Tax (Powered by ONESOURCE or "PBO", as it is referred to internally) to switch to a new program.

With Sage's own in-house product still a month or so away from hitting the streets, the announcement could hardly come at a more inconvenient time, with December year ends, tax season and the arrival of FRS 102 all looming on the horizon. The break could also trigger a flurry of internal software reviews and purchasing decisions - which could extend to other developers besides Digita and Sage.

Paul Tooth, the managing director of Sage’s Accountants Division confirmed that Thomson Reuters had announced its intention to terminate the contract last year. But the terms of that agreement prevented either party from revealing the details.

As noted earlier, Tooth wasn’t happy that Sage did not control a key piece in its overall practice suite and had put a new, in-house CT program on the development roadmap.

The 18-month countdown from Thomson Reuters about what Sage calls “PBO” (Powered by ONESOURCE) “galvanised what we wanted to do”, Tooth said.

“We wanted to be our own masters and be in control in our own destiny with our software rather than be reliant on a third party relationship. We were stuck between a rock and a hard place.”

Sage’s new in-house CT application is undergoing user testing and is slated to hit the streets in October. “My ideal situation would have been to bring Sage Corporation Tax to market as close to the time of the announcement as possible,” Tooth said.

He explained that the split with Thomson Reuters means that all the users of Sage’s version, effectively a “PBO lite” will have to migrate to a new program - and the switch would be as distruptive for those who choose the Digita or Thomson Reuters versions.

Sage has been training support staff for the switch and developing migration plans for users, and Tooth guaranteed there would be no price increases over the next 12 months.

 “My overriding concern is to ensure customers are not left in the lurch, but have an easy transition,” he said.