The Excelephant in the room
HMRC thinks that Excel bridging software could allow Making Tax Digital submissions from spreadsheets. However, we’re yet to see solutions hit the market - and businesses above the VAT threshold are running out of time.
A key concern for accountants and bookkeepers is whether without such a solution they will be left to pick up both the data entry required by, and the cost of, cloud-based online accounting software.
Three clear categories of MTD transition clients
Clients can be grouped into three financial management categories; hands-on, actively involved, or hands-off businesses. At one end of the spectrum you have hands-on clients willing to pay for and use cloud-based accounting software to issue invoices, reconcile receipts and track expenses. At the other end, clients keep paper records because they lack the financial capability or time required to manage financial records.
What to do with Actively Involved or Hands-Off clients who are reluctant to move online
Clear Books is the only provider to have developed a spreadsheet-style interface for clients who are dedicated to Excel or reluctant to use new technologies. The online spreadsheet, known as Clear Books Micro, allows clients to enter expenses, invoices and receipts without having to learn a new system. All the entered information then appears in the Clear Books Practice Edition interface - a feature-rich online accounting software for accountants and bookkeepers.
The cost of accounting software - the true Exelephant in the room
Many accounting firms have already spent £109 per computer buying Excel, and given Excel will still be used once MTD comes in, online accounting software has become a grudge purchase for many!
A number of providers are putting in place temporary deep discounts to get firms on board without the upfront cost, however given the average life of software sits between 6 and 8 years, that strategy could prove costly once the special offer expires. For example, a firm paying £5 per month over 4 years at full price would invest £200 in the service. A firm paying £1 for two years and then reverting to a £9.99 a month price point on offer expiry would pay £304 - almost 30% more.
We’re yet to see whether a true Excel to HMRC bridging solution will be developed, however time is running out for firms who have large numbers of VAT threshold clients still working with paper or spreadsheet records to get online. With 10 months until Making Tax Digital, and September, December and January peak season for accountants and bookkeepers, the 7 months available to migrate clients are sure to be busy.