Making Tax Digital (MTD) has come as a shock to many practitioners, but there are some practical things you can do now to prepare for the change.
Speaking at the Practice Evolution conference in Manchester, Tony Margaritelli of the Institute of Certified Practising Accountants (ICPA) said now was the time to act.
“The die was cast from December 2015 and people hoped it [MTD] wouldn’t happen,” Margaritelli said, “but MTD is a done deal, we’ve got to make it work”.
To help overcome MTD, Margaritelli said the first step was to look at your clients and assess whether they’re digitally ready. A recent ICAEW survey revealed that up to 80% of practitioners’ clients were not.
“Check your client base for clients who don’t use a computer, or if they use spreadsheets. If they do then you could be in trouble”.
The MTD consultation documents do mention an exemption from the scheme for those with poor or inadequate internet, but in his keynote speech Margaritelli questioned what ‘poor or inadequate internet’ actually meant.
Accountants should then check for clients that use their own paid-for software and examine whether it is fully supported and up to date.
“Think of the time involved in relation to the MTD journey for each client – contact them and explain their new found dilemma. Then demo your proposed solution to their digital future,” he added.
“Set up the client on the new system tailored to them, explain and help reduce errors going forward.
“Review extensively the client’s early efforts - it’s a new system and you’re going to get a lot of questions.”
Margaritelli also warned about the potential dangers: “Pushing the send button will become very attractive for clients – why would clients send you anything and guarantee a bill. Are they going to ask you to check it?
“It’s about managing your clients – even the smallest client can be kept up to date,” he added.
Embracing bookkeeping is also important: “It’s all about bookkeeping, it’s predicated on it. If we don’t embrace bookkeeping and place it at the heart of what we do we are going to find it harder to get new clients and hold onto existing ones.”
The discussion we should be having, according to Margaritelli, is how much is this going to cost? Try and work out how much it is going to cost each client and your practice as a whole.
Steve Checkley of TaxCalc was also at the conference and gave a technical overview of Making Tax Digital.
Checkley ran through what every practitioner needs to know about MTD and explained what action accountants should be taking now.
His advice was:
- Prepare your clients as best you can for 2018
- Respond to the consultation documents
- Attend a consultation event
- Write to your professional bodies to voice your views
How are you preparing your practice and clients for the transition to Making Tax Digital?
About Robert Lovell
Business and finance journalist