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TaxCalc, BTC, accountants in trouble?

FreeAgent and Xero now have accounts and CT submission functionality

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With bookkeeping software such as Xero and FreeAgent now having accounts and corporation tax submission functionality, are software providers like TaxCalc, BTC, etc in trouble over the next 10 years?

Also, presumably accountants will also be in trouble over the next 10 years as presumably this will further increase DIY.

Will a lot of work of the routine accountancy work get wiped out in the next 10 years? Is accountancy the next "Blockbuster" or "Kodak"?

Now I am being to realize why all the gurus out there are banging on about "advisory"!

Replies (46)

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By DaveyJonesLocker
17th Apr 2021 12:01

Xero etc will end up being jack of all trades, master of none. I will stick to standalone software.
And gurus are full of crap, always have been, always will be.

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By Matrix
17th Apr 2021 12:12

This is interesting since a company owner without an accountant can now submit their accounts on FreeAgent using this functionality. Which is not the same as FreeAgent told me, they said they were not cutting out accountants. They will get loads of queries so their support will be busy since they will get all the queries usually asked of an accountant and I thought they didn’t want this.

I am not too worried as any company owner who wants to optimise their tax and submit correct records will have an accountant. If Companies House and HMRC are happy to accept any old rubbish from unrepresented taxpayers that is up to them.

Going by the enquiries I get from FreeAgent users looking for an accountant, they look for the cheapest so they are not my ideal client anyway, so if they want to now submit themselves then it is not my loss.

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Replying to Matrix:
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By GR
17th Apr 2021 13:41

Many FreeAgent users are affected by IR35 and are now closing their limited company, and going PAYE with an umbrella company, agency or the actual end hirer.

Consequently FreeAgent may end up in a situation where they have spent £thousands on a functionality but not have many customers.

I think FreeAgent wants to partner with accountants as they see this as an important way to gaining more users quickly. But I ultimately see accountants going down the FreeAgent route as effectively slitting their own throats.

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By janewanless
17th Apr 2021 12:13

I remember the mid 90's, when all accountants would be losing work doe to everyone submitting their own returns, as it was "self assessment".

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Replying to janewanless:
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By carnmores
17th Apr 2021 16:27

That's the spirit. I was there lol

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By Calculatorboy
17th Apr 2021 12:34

I seem to recall freeagent said they had problem with o/d director a/c disclosure ,now being sorted ?. Due to complexities of co act disclosure , ct returns etc I think we'll see more problems. It will have to be highly editable formats, and for that you need trained accountants .
For example is it going to automate r&d claims , loss relief c/b etc , i think its just too complex to automate completely

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Replying to Calculatorboy:
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By GR
17th Apr 2021 13:50

I think FreeAgent are currently working on the directors loan account tax and carrying back losses. Potentially they may have it sorted later this year or next year.

I believe some of FreeAgent's user base are freelancers, consultants and contractors, i.e. 1 man bands who work for an 'employer' on 6 month long contracts. Consequently I don't see many FreeAgent users going R&D claims.

I guess the 'contractor' client base will be eroded away over the next 10 years just leaving actual small businesses who have employees, and more complex affairs.

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By DaveyJonesLocker
17th Apr 2021 12:56

Looking at the P&L Quickbooks generates from clients' own entries there's nothing to worry about....

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RLI
By lionofludesch
17th Apr 2021 13:40

I'm not worried at all.

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By Paul Crowley
17th Apr 2021 14:57

Not really
MTD ITSA will consume all spare time
We already do VAT, PAYE, co secretarial, CIS for so many companies
Cannot believe they would try CT all on their own

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By johnhemming
17th Apr 2021 16:08

Tech will be in a state of flux probably for ever. As the external world changes tech needs to change. Those companies that stay still will inevitably find their business fading away.

Companies like Amazon and Google are in fact technically very competent and are continually developing their offering.

My own view is that an integrated bookkeeping and tax record submitting system will over time win out over separated systems simply because of the reduction in effort.

Similarly accounting has been affected by tech and will continue to be affected by tech as are most areas of the economy. There will, however, continue to be a role for professional advisors.

Pretty well all of my MTD ITSA clients are end users and they are coping with it reasonably well. However, these are the sort of people who take to new things early, Those who are less confident will still look for assistance for which they will be willing to pay.

I know my way around accounts and tax, but I have had the same accountantants now for quite a long time. I am not sure of the top of my head how long, but I would think over 15 years.

The particular reason is for advice and there is always a benefit in having someone objective to consider an issue.

I would expect it to remain the case that having a qualified advisor advise means that any errors involve taking "reasonable care". I am expecting tax errors where people are not using the digital audit trail properly and MTD to flag up as at least "careless" and potentially "deliberate" or even "deliberate and concealed" which is where I am expecting the main enforcement of the digital audit trail to lie (not that HMRC have said this to me).

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Replying to johnhemming:
RLI
By lionofludesch
17th Apr 2021 16:18

johnhemming wrote:

Pretty well all of my MTD ITSA clients are end users .......

Any Domestic Reverse Charge problems ?

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Replying to lionofludesch:
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By johnhemming
17th Apr 2021 16:42

No problems. One person contacted me for help. They are only doing VAT at the moment although they will move on to ITSA. They also do CIS.

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By carnmores
17th Apr 2021 16:25

I hate to tell you 2 things
Taxfiler are not in trouble
Progress cannot be halted

There are many gains ayers on here re QB, I know who my money is on.

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Replying to carnmores:
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By DaveyJonesLocker
17th Apr 2021 23:11

Progress isn't the right phrase. Dumbing down perhaps.

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Replying to DaveyJonesLocker:
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By carnmores
18th Apr 2021 16:16

Did it pass you by?

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Replying to carnmores:
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By DaveyJonesLocker
18th Apr 2021 16:33

I don’t take part in The Emperor New Clothes fable and blindly worship rubbish products just because they glitter.

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Replying to DaveyJonesLocker:
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By carnmores
18th Apr 2021 16:45

Of course not far too interested in your own opinion but I quite like stridency

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Replying to carnmores:
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By DaveyJonesLocker
18th Apr 2021 21:48

Interested enough to keep replying it seems

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By adam.arca
17th Apr 2021 17:56

I think it’s still too early to say how this will pan out.

You would probably expect that, in the fullness of time, integrated software will win out because users are fundamentally lazy and will always prefer one stop shops as it means dealing with one software only.

The problem with that, though, is the dumbing-down effect of software which does several things, none of it well. I’ve no idea how difficult it is to produce competent software to do just one thing but I’m guessing the answer is ‘very.’ But the integrators have got to produce software which handles bookkeeping and final accounts and tax and can stand in for a real accountant as well. Will the market be prepared to hang around for the several years this is going to take whilst the software houses produce various versions of rubbish which fail to live up to the hype? Or would they just prefer to stick to what they’re best at and get their accounts done the old-fashioned way?

I don’t know the answer to that but, if I had to bet, I would say that the profession will still look very much the same in 10 years time.

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Replying to adam.arca:
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By johnhemming
17th Apr 2021 18:15

adam.arca wrote:

can stand in for a real accountant as well.


This is the hard part. Producing integrated software that handles the tax rules is not that difficult. However, there are questions of judgment which link also to court judgments.

For example whether a company is a investment company or not. A recent judgment on that changed the nature of that assessment.

In the end technology can be used to reduce the time taken by human beings to go from records to tax submissions and management information, but doing the assessments as to what things are in a legalistic sense is quite different.

I do think, however, that the process whereby accountants have supervisory accounts on cloud accounting systems will become the norm. If the accountants/bookkeepers do the primary record keeping doing that or the taxpayers do it is moot, but giving the accountant remote access to the primary records will be expected.

MTD ITSA has been set up with the concept of end of year adjustments by someone. ITSA differs from VAT in that quarterly submissions (or monthly ones if you do those) can be adjusted in that submission whereas VAT has to be adjusted in the next period.

However, there is also the possibility (but not requirement) of end of year adjustments.

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Replying to johnhemming:
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By adam.arca
19th Apr 2021 12:45

johnhemming wrote:

adam.arca wrote:

can stand in for a real accountant as well.

This is the hard part. Producing integrated software .... is not that difficult.

I do think, however, that the process whereby accountants have supervisory accounts on cloud accounting systems will become the norm.

You say it's not that difficult, John, yet there's no (as in, absolutely NIL) bookkeeping software out there which impresses me. And that's supposed to be the easy bit.

I think I can stratify my computerised clients into 4 tranches, ranging from "why do they even bother" at the bottom to a top (and very small) tranche where I pretty much trust them to get the bookkeeping right but only because I know from experience they'll stick to what they know and won't just post any old rubbish.

And if we have to go down the route of increased supervision, there's going to be a big cost implication in that for clients. Wasn't one of the original selling points of MTD that it would save money or at least not cost any?

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Tornado
By Tornado
17th Apr 2021 23:33

People have pretty much always been able to do their own Accounts and Tax Returns which many did and still do, but for the same reason that although I can plumb, build, maintain my car and myriad other talents, it pays me to get other people to do these jobs for me and many others have the same view.

Accountants & Tax Advisers will always be required. particularly as we get better at understanding the way tax works and HMRC, relying more and more on IT that does not work properly, seem to understand tax less, which gives us professionals the edge.

You need one hell of a software package to fully cover all 24,000 pages of the tax code and keep it updated.

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Replying to Tornado:
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By Rgab1947
22nd Apr 2021 10:11

And one hell of a superman who can learn and keep up with 24,000 pagers of tax code.

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By Refs1
18th Apr 2021 12:55

Not a chance. Every DIY software clients we have seen, have made a right mess of it, so not concerned about this.

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By Refs1
18th Apr 2021 12:55

Not a chance. Every DIY software clients we have seen, have made a right mess of it, so not concerned about this.

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Red Leader
By Red Leader
18th Apr 2021 19:40

No.

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By Wilco707
22nd Apr 2021 09:50

I am sure the onset of DIY in building (and the fact we can all go and get tools and materials from the likes of B&Q) was supposed to spell doom for tradesmen - in some cases it means more basic things are done by DIY enthusiasts (if they know how to use the tools - which is the saem for Xero, Freeagent etc) but there will always be more complex things that need doing and also things where a skill is a must. Same with accountancy. I don't think any accountant spent years qualifying and amassing experince to become high level bookkeepers anyway. There will always be a role.

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By mkowl
22nd Apr 2021 09:50

Well having a client on Freeagent that I looked at this week, the intuitive system had put 2 salary payments to sales not wages control. 5k error on profit 1k error on the corp tax.

The SISO method of accounting - Sh*t in equals sh*t out

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By minkie
22nd Apr 2021 09:59

I have a client using Freeagent who now wants to do everything himself but retain me "as back up" which I am not happy about as basically he will be looking to pay me next to nothing meaning that I will probably tell him to go elsewhere (not necessarily as politely as that). The worry is that this could become a trend !

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Replying to minkie:
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By DaveyJonesLocker
22nd Apr 2021 10:09

I would be telling them to Foxtrot Oscar

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By Duggimon
22nd Apr 2021 10:05

The software that exists can create the right outputs provided it is given the right input. No software in existence, or planned in the future, has solved the problem of how to get someone with no knowledge of tax and accounting to give the right input.

Every taxpayer/client/business is different and software is not flexible enough to allow for that and to wheedle the correct and necessary information from them in order to get to the starting point.

From that starting point, software is making it easier and easier, but it's not extending back any further to allow for the kind of rubbish input most people without an accountant will start with.

Software is making it easier for those clients with a good working knowledge of bookkeeping and tax rules and no need of planning advice, who only want their accountant for compliance purposes, to go it alone. How many of your clients does that apply to? 2% maybe? Probably 0% for me.

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By Rgab1947
22nd Apr 2021 10:09

Short answer, yes!

Timing is guesswork but I will go with 5 years.

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Replying to Rgab1947:
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By DaveyJonesLocker
22nd Apr 2021 10:10

Hilarious

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By SteveHa
22nd Apr 2021 10:11

My role is predominantly advisory anyway, so I'm not too concerned.

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By carnmores
22nd Apr 2021 10:12

it doesn't matter which software you or the client uses the initial entries are vital as most software will link a payment to an account as when first entered. accountants should be proactively setting up the computer software nominal chart of accounts and use of rules . its no use [***] after the horse has bolted . tell all clients that you should be contacted as a matter of urgency before using software. accountants took years to move from sage as it was literally the only software that they had used let alone heard about so much of the fault lies with us not them

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By rawa363
22nd Apr 2021 10:56

I'm not sure any of the software currently around will wipe out bookkeeping or accountancy in the short term. It is inevitable though that AI will end the bookkeeping and accountancy profession as we know it. Accountancy and bookkeeping is a prime example of a service that can be done effectively with AI so massive changes are inevitable in the the next decade. There will always be a demand for accountants more in an overseeing capacity but the need will be for many many fewer than now. Many of the current software providers will vanish too unless they morph into AI system providers.

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Replying to rawa363:
Tornado
By Tornado
22nd Apr 2021 11:19

What a load of tosh

The dream is that AI will be able to deal with everything eventually but the truth is that it can only deal with situations that it is programmed to deal with. There are billions of individual minds in the world, each one thinking differently to another and no program will ever be able to account for all of these differences, so the human brain will always outwit AI.

This is one reason why is MTD is such a bad idea because it seeks to depress free thinking and natural evolution in business and national development whereas we should be seriously encouraging the natural talents that the people of our country and the world possess.

AI is nothing more than electronic communism where there is only one way to think and heaven help you if you do not comply with that thinking. (Hong Kong and Mr Putin come to mind)

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Replying to Tornado:
A Putey FACA
By Arthur Putey
22nd Apr 2021 12:15

Tornado wrote:

There are billions of individual minds in the world, each one thinking differently to another

As you mention, some governments have a plan for that.

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By North East Accountant
22nd Apr 2021 11:04

They'll not be in trouble if they stay relevant, adapt, continue to invest in their software and make life easy for their users.

For example, for at least the top 3 Sage, Xero and QB) make the date flow back and forth in a seemless manner.

Blockbuster and Kodak went because they didn't evolve.

Other will go too if they don't make life easier for their customers (eg. Netflix makes it dead easy to pick up where you left off on a box set... Amazon Prime doesn't hence we watch Netflix 90% of the time).

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Pile of Stones
By Beach Accountancy
22nd Apr 2021 12:01

Have you actually looked at Xero's Accounts offering? It doesn't even cover the basics yet, so I won't be switching. In any case, not all of my clients on are on Xero so there's little time saving versus an import into Taxcalc.

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A Putey FACA
By Arthur Putey
22nd Apr 2021 12:13

I don't think this newfangled computerised accounting will catch on, I'm sticking with my Kalamazoo, as I like the girl there.

Anyway, no point worrying, we'll all be replaced by AI robots soon, and mankind will go the way of the dinosaur, unless we escape to Mars and start over.

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Replying to Arthur Putey:
Pile of Stones
By Beach Accountancy
22nd Apr 2021 13:33

One of my first temp jobs after qualifying still had a double A3 loose leaf manual cash book, with different coloured pens for debits and credits. However it was 1991...

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Replying to Beach Accountancy:
Tornado
By Tornado
22nd Apr 2021 14:05

In 1991 we had already been preparing all types of Accounts for 10 years on a business 'personal computer system'. We had also been producing reports and letters on the same system.

This enabled our clients to prosper and grow doing what they did best whilst we looked after the Accounts & Book-Keeping, and many of those clients are still clients, some of whom have done very well indeed without feeling the need to do the work that we do for them, themselves.

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By optimist
22nd Apr 2021 12:57

Until they come up with a computer chip that can be implanted into a client's brain and tell them how to use accounting software correctly, I think we'll be fine.

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Replying to optimist:
A Putey FACA
By Arthur Putey
23rd Apr 2021 10:02

That is coming, and will nclude a covid passport

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