Say goodbye to busy season: New approaches to tax
Be careful what you wish for. Those who’d like to see the end of busy season will soon be dealing with something a little more persistent.
In the aftermath of January’s self assessment deadline, many practitioners look back at the preceding weeks of stress and overwork and vow that the annual ritual has to change.
To adapt a well-worn phrase, accountants won’t have tax season to kick them around much longer, but if the government follows through on its promise to introduce quarterly income tax updates and payments, the yearly self assessment slog will very shortly give way to a more fluid, persistent state of preparation work - and all that entails in liaising with clients to ensure their records are up to date.
These issues came to a head in AccountingWEB’s spring survey with Thomson Reuters to examine how busy season affects accounting practices, and what measures they were planning to rationalise their tax work.
The survey mood was downbeat. After nearly 20 years, self assessment work remains a growing burden for many practices.
This January, over a third (34%) of respondents found busy season worse than last year. This figure has more than doubled since AccountingWEB conducted similar surveys in 2013 and 2014.
Another third (32%) said the 2016 tax season was the same as it always was, but this figure has also deteriorated since 2014.
Lazy or late clients are the main culprits for the heavier January workload, cited by 85% of survey respondents.
This measure has worsened noticeably in recent years, in spite of considerable efforts to chase, discipline, manage and bribe clients to deliver their information earlier.
|Compared to last year||2016||2014||14-16|
|Worse than last year||34%||13%||+161%|
|Same as ever||32%||51%||-37%|
|System improvements helped||13%||15%||-13%|
|Client management made a difference||12%||13%||-8%|
|SA workload dropped||6%||8%||-25%|
The theme of the spring survey was “What would you do differently?” and the most popular measures to counter slow clients and workload bulges from this and previous years are set out here (multiple answers allowed):
|Chase clients early||46%||42%||11%||+10%|
|Organise staff better||32%||27%||5%||+19%|
|Introduce cloud portal||12%||13%||-||+39%|
The persistence of the slow client problem is evident from the increasing numbers looking to chase clients earlier (46% in 2016). Over the long term, however, increasing fees is a less popular strategy now than in 2013.
Three years ago sacking clients was almost unheard of; now nearly a third of practices are planning to do this. This is a major culture change for the profession - suggesting that many accountants are losing patience with deadbeat clients.
Among respondents planning to implement new practice systems in the next year, electronic authorisations (24%), automated client chasing (20%) and self-service client portals (14%) emerged as the favourite options for smoothing the workload next year. In the words of one participant in the conversation on AccountingWEB this February, e-signatures and portals can be a “godsend” during deadline season.
The 14% claiming that things ran smoothly this January closely matches previous AccountingWEB findings about the proportion of our members managing to get on top of compliance so that they can focus more on providing the advisory services that clients want.
One of the purposes of the webinar is to share some of the ideas that help these pathfinder firms stay on top of their tax work.
Look to the future
The What Would You Do Differently? survey is a useful reminder of the practical challenges and tax season and some practical responses. But HMRC has called time on this episode in its online strategy. The new idea of quarterly reporting is based on the assumption that taxpayers and their advisers will no longer gather up a collection of paper records every year, but will instead switch to online, electronic record-keeping systems that will communicate directly with HMRC every three months.
The idea is still very much a gleam in the Chancellor’s eye, but HMRC is beginning to flesh out its approach, which will be based around smartphone apps and online accounting systems.
With some justification, tax advisers are concerned about how the new regime will affect their client relationships; whether the mooted tools will be robust enough to ensure that taxpayers file accurate numbers; and the extent to which the new digital tax regime will impose more administrative burdens on both clients and practitioners.
Making tax digital will challenge current practice and taxpayer behaviour. Individual quarterly tax deadlines, possibly tied to VAT registration and return filing dates, will demand even more persistent and nuanced deadline monitoring. But advisers will also need to ensure that non-standard reliefs and expenses are captured by the rudimentary record-keeping tools being touted as the vehicle for quarterly reporting.
Quarterly reporting may well impose an extra burden on clients and create friction for the accountant, but practitioners are going to have to get used to the idea within the next couple of years. And proponents of the new regime argue there are benefits from adopting the new approach. Instead of the intense tax bubble that builds towards the end of January, quarterly submissions will spread the workload throughout the year and encourage clients to stay on top of their income and expenses.
The Prepare your firm for the digital tax future webinar on 13 April will explore all these aspects in more detail. Join us at 11am to find out more about how you can apply the lessons of self assessment season to your preparations for quarterly reporting.
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