MTD: Turning the compliance avalanche into an opportunity

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Mark Purdue warns that accountants need to communicate clearly to their clients and staff to help them get ahead of the mandatory deadlines.

2020 has now become the pinch point for accountants thanks to the introduction of HMRC’s Making Tax Digital (MTD) -- the impact of which to both accountancy practices and their clients is considerable.

A recent Digital Readiness survey carried out by Thomson Reuters found that the majority of accountants welcome the digital transformation of tax, which will enable them to offer a more proactive and advisory service to their clients.

However, the impact of MTD to both clients and practices is considerable and brings with it an increase in workload in the short-term. It could also cause potential confusion across clients and accounting staff, with a crossover of filing deadlines for those that are unprepared. The survey reported that 82% of respondents planned to continue with their preparations for MTD or to revisit them during this year.

Clients look to their accountants to understand the digital changes to tax and so taking time to understand, plan and assess different software options is of paramount importance to both the practices’ success in terms of meeting HMRC and client requirements.

While there has been a delay in the timeline, the majority of accountants recognise that the changes to behaviours are significant and need to be adapted as early as possible. The report found that 63% of accountants surveyed thought that quarterly reporting was inevitable for all businesses and therefore it was no surprise that almost half (48%) have already taken practical action.

The importance of briefing clients and ensuring accountancy firms have the right staff in place to support the change as well as deploying the right software has been recognised by many accountants.

Indeed, although 51% of respondents communicated formally with clients, others acknowledged that their staff were fielding questions during day-to-day interactions and having to clarify key details to provide clients with reassurance. There is no doubt that client communication and staff education should go hand-in-hand throughout this phase of digitalisation.

As one survey respondent commented, “sharing knowledge is an important part of having knowledge — I never want a situation where clients are getting the information from other practices. Getting in early, and keeping staff well informed, helps you understand and deal with issues and questions as they arise.”

Moving to digital recordkeeping is likely to be a requirement for all businesses over time but making this a reality could take a while. At the heart of a successful practice strategy accountants will need efficient processes for managing client data and regular filing.

67% reported promoting cloud-based bookkeeping software to their clients, so it’s clear that many firms are already well underway in moving clients onto cloud tools. There are many advantages to this position in a digitalised tax world. Not least, that clients, and accountants alike, gain a real-time view of data and can improve the quality of that data more regularly.

The majority of clients will look to their accountants to provide answers as to how and when they will be impacted and to have solutions to the compliance challenges they may face. If accountants communicate pre-emptively on what information they will need, what services and support will be provided then they can give clear advice and guidance to see their clients through this period of transition. In turn, accountants adopting this approach will see their reputations enhanced as trusted digital accountants through the process.

Furthermore, 40% of accountants reported already sending communications to clients through a secure online portal and 25% of accountants that reported not yet using client portals plan to implement them.

The use of portals and digital e-signatures will dramatically streamline the customer experience, as well as being more secure than traditional methods, such as post or email. The benefits of MTD speak for themselves but any clients or accountants concerned that they may be lagging behind should take action now.

There’s no doubt that MTD has encouraged and is still encouraging many firms to make changes — getting clients to send in their books early, moving them to digital records, taking steps to streamline processes, reviewing their fee structures and improving client education.

Now it’s time to turn the compliance avalanche into an opportunity to take stock of processes and technology to ensure that both clients and accountancy firms benefit from the inevitable changes to come.

About Mark Purdue

Me

Mark has spent over 25 years working in tax, beginning his career as a Revenue Officer at HMRC, and then becoming Tax Senior for a UK stockbroker. Mark joined Thomson Reuters in 2006 and now holds the position of Tax Product Manager. Mark was named AccountingWEB’s 2017 Software Excellence Pioneer for his commitment to the accounting profession and client satisfaction. He and the team are currently working closely with HMRC to develop software solutions for Making Tax Digital.

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22nd Mar 2019 07:36

All sounds very good but change the word "encouraged" to forced and that about sums up MTD.
Not one of my 150+ clients could give a flying fox about MTD and I am finding it hard to think of benefits they will find once they are all compliant .
Then telling them it is going to cost £X,s finally puts the nail in the MTD coffin
MTD is only good for software developers and HMRC.

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