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The Making Tax Digital Blog Series Part 3: Are Compliance Services Still Important To Businesses?

29th Jul 2016
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Guest blog by: Mark Purdue | Product Manager – Tax, Thomson Reuters

Every business needs to get the basics right to stay aware of and meet statutory obligations, and ensure that the correct level of tax is paid. However, it hardly sets the pulse racing.

The discipline around financial administration, however, creates value in terms of knowing where you are and being able to react to both challenges and opportunities.

The reliance upon this data being of good quality, in an accessible format and regularly produced will come into sharp relief to comply with proposed quarterly reporting via Digital Tax Accounts (DTA). Clients with the resources, time and skills to maintain their own bookkeeping and basic accounting may not be too fazed by the additional reporting requirements, but moving from an annual system to a quarterly one will generate a requirement for access to ‘live advice’, as well as the layering of expertise in the preparation of accounts and returns. This could be particularly true if there are complexities around accruals, stock and prepayments. Those without the internal resource or expertise will continue to benefit from more comprehensive outsourcing, helped by readily available technology (via their accountant), and include within that the necessary ongoing reporting. Regardless of what mix of services are needed, the additional financial administration will have to be handled effectively and in doing so should also increase engagement and transparency with their financial affairs. For most, the importance of compliance data and services shifts in this context from collation to insight and analysis. In effect, the value of compliance services will be in what it tells about the present and future rather than their past.

A NEW GENERATION PROVIDES NEW OPPORTUNITY

The rate of new businesses being created over recent years has accelerated, increasing the number of small and micro entities in the economy. Many firms experience these passionate entrepreneurs, who, while fuelled with belief and business sense, often need help in setting up financial systems, basic payroll, and the security and reassurance that fundamental compliance-based services can give. These are not just the tradesmen and freelancers, but small businesses across a large spectrum of disciplines and sectors, often marketing and trading online and used to doing things digitally. Working with online systems to manage their business affairs is increasingly the norm, so working with an accountant in a similar way is hardly alien. As the data collection piece is increasingly mediated through technology, the layering of expertise and guidance from an accountant could become what most of this group consider to be the compliance service itself. Finding ways to service this group presents a significant opportunity for firms of all sizes and locations.

About the Author
Mark Purdue | Product Manager – Tax, Thomson Reuters

Mark has spent over 25 years working in tax and specialises in Personal and Capital Gains Tax. After beginning his career as a Revenue Officer at HMRC, Mark worked for a number of years as a Tax Senior at an in-house tax department for a UK stockbroker, dealing primarily with high net worth individuals. He joined Digita in 2006, working on support and as a Business Analyst before becoming Product Owner for Digita's Personal Tax product. He now holds the position of Product Manager for Tax. He and the team are currently working closely with HMRC over the upcoming move to Making Tax Digital.

Let Mark know what you think of this article – Tweet him: @MarkPurdueTax

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