AccountingWEB’s consultant tax editor Rebecca Cave nearly caused an earthquake of anxiety with her recent article “Digital accounting records to be compulsory”.
Cave’s article reported on the revelation that under the auspices of Making Tax Digital, the government expects every business to keep its accounting records in digital form.
“Each business and landlord will have to use some form of accounting software which has a capability to communicate with HMRC’s systems,” wrote Cave. “However, moving to a commercial software package will mean extra costs and data transfer problems for many businesses who have created their own bespoke accounting software, or who rely on Excel spreadsheets.”
The user Ireallyshouldknowthis neatly summed up AccountingWEB members’ reactions: “Mr Gauke has got his head up his backside on this one, no doubt the hard lobbying from the software companies about how great all of this is paying off.”
This comment could be seen as indicative of the scepticism held by our members towards the initiative. But what are software companies saying and thinking about Making Tax Digital? We spoke to a few key players to find out.
Ed Molyneux, founder and CEO of FreeAgent:
“We believe HMRC’s tax digitisation agenda is encouragingly farsighted - it would have been far easier and less controversial to allow the status quo to continue indefinitely. But that’s not on the cards, and anyway it's simply unsustainable for HMRC.
“We must always remember the punishingly disproportionate cost of compliance for small businesses, not just in the obvious areas of fees and software costs but in the time taken to manage ledgers, spreadsheets and bits of paper. Handwritten ledger books, shoeboxes of invoices and home-made spreadsheets are simply not good enough, and should be consigned to the dustbin. And what is the cost in business failure of business owners with no idea about what's happening until their accountant pulls it all together once a year? Why, as an industry supposedly striving to help businesses succeed, do we defend this?
To read the rest of Ed's (and others) thoughts on Making Tax Digital, sign up for free or log-in.
About Francois Badenhorst
I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter.