Making Tax Digital: Why accountants are going to struggleby
Making Tax Digital (MTD) poses a number of significant challenges to businesses – but the new regime will create equally as much work for accountants as it will for their clients.
Managing client expectations
When it comes to MTD, accountants should note that most clients are going to expect a much more ‘hands-on’ approach from their advisers – and many are not to going to want to pay an extra fee for this level of service, despite the extra work and manpower MTD will inevitably create.
On top of their current workload, accountants are going to need to assist clients with making sure their books and records have been properly migrated online. They will also need to assist with accurate quarterly reporting – which effectively means full throttle tax planning and compliance for all clients, four times a year.
Preparing for MTD
With MTD being phased in for businesses earning above the £85,000 VAT threshold as soon as April 2019, accountants who are not already offering their clients support with cloud accounting software, or helping them get up to speed with online bookkeeping, need to start doing so ASAP.
It is important that advisers intervene to ensure their clients know where they stand and exactly what they should be doing ahead of MTD.
Managing the increased workload
All of this will inevitably create a much greater workload for accountants – and will weigh particularly heavily on smaller practices, or those who lack the appropriate staff and skill set to help their clients with the intricacies of MTD and cloud software as well as the intricacies of tax rules and regulations.
In many cases, this is not the type of work accountants are traditionally geared-up to do – but neglecting this area is sure to put a strain on accountant-client relationships.
Naturally, finding and recruiting the right experts is hard work and office space poses a problem, too, as this can often be limited for smaller firms.
In many instances, accountancy practices may have already begun using outsourced HR firms or outsourcing other administrative tasks elsewhere in order to free up more time to focus on tax.
On top of this, it might be worth practices considering outsourcing their bookkeeping to external professionals. This can enable them to provide the services their clients will be expecting without compromising the importance of delicate tax planning advice or having to recruit a whole new workforce – a sensible option for practices with limited resources.
Going forward, it is important that accountants keep on top of the latest HMRC announcements and updates regarding MTD – as these appear to be never-ending and sometimes contradictory.
Accountants should also take note of advancements regarding artificial intelligence and the various things innovative software firms are doing which could have an impact on streamlining the digital reporting process, such as developing programs capable of eliminating user errors.