ICPA chairman Tony Margaritelli opened his organisation’s Practice Evolution conference with a Wild West-themed keynote, pitching the small practice accountant in a shootout against HMRC.
Speaking yesterday in Manchester, Margaritelli outlined how accountants can overcome Making Tax Digital (MTD) and thrive, and challenged the “anti-accountant rhetoric” he feels has accompanied the government’s digital tax plans thus far.
Margaritelli’s speech, entitled ‘HMRC & MTD: The Good, the Bad and the downright ugly’, was intended to act as a reset for accountants who had taken their eye off MTD after its scope was stripped back earlier this summer.
The Sergio Leone-inspired metaphor underpinned the tussle accountants have felt in their relationship with HMRC since the inception of the tax authority’s digitalisation plans.
The western comparison was used to encapsulate the situation in which many accountants find themselves: the idea of being cast in a Clint Eastwood role – the professional gunslinger trying to find the gold but often thwarted by HMRC.
But Margaritelli was confident MTD wasn’t going to change the role of the accountant. “If HMRC’s systems continue to be so poor, I expect more employed taxpayers will need our help”.
Confident in the resiliency of small practice accountants, he added: “We made self-assessment work. We made RTI work. Because we spent hours of unpaid work helping clients, while our clients were used for the testing.”
Meanwhile, the ICPA chairman cast HMRC in the Western’s traditional villain role.
“You can choose to believe HMRC that the delay was because it listened,” he said. “MTD will not go away. APIs have been rolled out to software developers. Software developers are still spending millions.
“So don’t think the £10,000 threshold has gone forever. I believe it will be back because MTD is predicated on the tax gap of small business clients. To ignore it is silly.”
That said Margaritelli believes accountants can still succeed if they use this MTD “breathing space” wisely.
“If you accept small digital record keeping is inevitable it could bring an end to the January 31st workload,” he said.
“Instead of immediately thinking negative thoughts, think for a minute how much easier your lives, your Christmas, your January would be better off if all your small business clients operated in this way.”
To do this, he said the only logical way forward is for the bulk of larger clients to get to grips with technology, the cloud and automation such as bank feeds.
However, according to Margaritelli those clients HMRC deems as ‘straightforward taxpayers’ (the non-VAT, non-corporate clients) are anything but. For the classic shoebox client, he said that there was no obvious answer.
“You don’t want to stick automation on their private bank account and neither would you want to train or explain bookkeeping to them”, he said.
All good Westerns climax with a showdown, and Margaritelli’s speech concluded with shots being fired at HMRC’s attitude towards accountants, as typified by Jim Harra’s 2016 Hardman lecture speech and his “anti-accountant rhetoric”.
In one example used by Margaritelli, Harra said: “I want to remind you that half the tax gap is attributed to small businesses, despite the fact that the vast majority of them pay a tax agent to help them.”
HMRC’s reluctance to engage with the tax profession was clearly felt in the conference room. As further examples, Margaritelli reeled off a number of recent announcements that seem to cut advisers out of the three-way relationship between HMRC, the taxpayer and the accountant. When Margaritelli asked the delegates to stand if they believe HMRC values the work accountants do, nobody left their seat.
Capturing the irritation felt by delegates over the implication that accountants are the problem, Margaritelli said: “If we get tax wrong, we are responsible to them [our clients], our institute, and simply saying sorry in our world doesn’t cut it.”
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.