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Digital scheme widens but many firms still frozen out

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The government has expanded access to its Help to Grow: Digital scheme, offering discounts of up to £5,000 on digital technology, but questions remain about the exclusion of small unincorporated businesses and the limited number of participating vendors.

27th Jul 2022
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From 25 July 2022, incorporated businesses with at least one employee could be eligible for the government’s Help to Grow: Digital scheme, which offers discounts for small businesses looking to adopt digital accounting, CRM or eCommerce tools for the first time.

Previously, only businesses with more than five employees were eligible for the scheme – a restriction that campaigners from the accountancy, tech and small business world felt had undermined its performance.

The move hikes the number of eligible businesses by 760,000 to 1.24m, and while some commentators welcomed the move, others felt the expansion had missed an opportunity to help the UK’s smallest businesses, particularly with the upcoming mandation of Making Tax Digital for income tax self assessment (MTD ITSA). 

The Institute of Chartered Accountants in England and Wales (ICAEW) welcomed the government’s actions as a “positive step that will allow the smallest businesses to receive much-needed help in harnessing technology to improve productivity”. 

“We look forward to continuing to work with the government to further improve the scheme to address additional business needs, particularly around providing help for costs beyond licensing, and further increasing the scope of approved software and vendors,” commented its head of tech policy, Esther Mallowah.

Unincorporated businesses

Paul Aplin, tax expert and Office of Tax Simplification (OTS) board member, commented it was: “Good to see the Help to Grow scheme widened, but sadly still restricted to businesses registered at Companies House – small unincorporated businesses remain out of scope.”

“Unincorporated businesses are being forced to buy software to comply with MTD ITSA, but no help for them,” added tax writer Rebecca Cave.

To qualify for the discount, businesses from any business sector, but must meet all four of the following criteria:

  • be a business based in the United Kingdom registered with Companies House or a registered society on the FCA Mutuals Register
  • have at least one employee who is not an owner, up to a maximum of 249 employees
  • have been actively trading for over 12 months and have an incorporation date of at least 365 days prior to application, and
  • be purchasing the approved software for the first time.

Eligible businesses receive a one-time financial discount towards the purchase of one approved software product up to a maximum of £5,000 that covers 12 months’ worth of “core costs”. 

Businesses can choose to apply the discount in one of the following software product categories: digital accounting, customer relationship management (CRM) or eCommerce – the latter of which is a new category added to the scheme this week. AccountingWEB understands that the discount is a one-time only offer, with the ability to mix and match licences from different categories not available.

Red tape

At the time of writing, only three vendors appear in the digital accounting software section of the scheme’s product pages: Sage, QuickBooks Online and Crunch, with other software houses in the industry complaining privately about red tape, an unwieldy procurement process and opaque selection criteria imposed by the government.

“The poor selection of suggested business tools for CRM, accountancy and e-comm solutions is a major inhibitor for any accountant worth their salt to actually get onboard with this scheme,” commented John Toon, tech strategy lead at accountants Beever and Struthers. “The ethical conundrum is thus – take free money and provide bad advice, or provide appropriate, reasonable advice for a fee.”

The government also announced that a one-to-one advice service for SMEs on how best they can adopt digital technology will be made available later in the year. Applications for advice platforms to partner with the scheme are open from today and the advice service will go live in the latter part of 2022.

No figures have been made publicly available about the take-up of the digital scheme. AccountingWEB recently asked how many discount vouchers had been applied for and approved, but the department for Business, Energy and Industrial Strategy (BEIS) stated it would not provide the figures at the moment citing a “public interest exemption”. Information will apparently be available on the gov.uk site later this year.

The digital scheme’s sister course, Help to Grow: Management, was launched back in August 2021 but by February 2022 had only enrolled approximately 2,500 people, a tenth of its target of 30,000.

Replies (11)

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By Paul Crowley
27th Jul 2022 23:43

Why not Xero. I think of Xero as one of the big three. All others are comparatively less influential.

Very limited options and only available to companies that have been around for a year and coped without such software
Probably not able to confirm take-up as so few have done so
Sounds to me like a pointless initiative unless new traders and start ups can partake

Thanks (6)
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By Hugo Fair
28th Jul 2022 00:28

So underwhelmed that I can't be bothered to research more details ... but what does this mean:
"Eligible businesses receive a one-time financial discount towards the purchase of one approved software product up to a maximum of £5,000 that covers 12 months’ worth of 'core costs'"

* 'purchase'? I thought almost all of these were only available via annual subscription?
* 'core costs'? Any services in addition to the software licence (implementation/data transfer/etc)?
* 'one-time financial discount'? Is there another kind of discount? And what happens in year 2?

Thanks (5)
By SteveHa
28th Jul 2022 09:27

Seems to me this is just a government sponsored, "first year free" deal to lock people in to a particular product where profits will be made in year two onwards.

Not something Gvt should be getting involved with in any way, shape or measure IMO.

Thanks (4)
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By Aprid
28th Jul 2022 09:43

These schemes generally seem to be just money makers for the middle firms administrating them. Cynically I would suggest run by pals of those who are "lobbied" into introducing them.

When we started we got £1000 "grant" toward broadband. Great but in terms of state aid we were notified the overall cost was almost £4k so someone had done very nicely out of the (at the time ) EU taxpayers.

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By Floating Point
28th Jul 2022 10:39

We sell SaaS reservation software for restaurants , simpleER.com, that is eminently affordable but we were turned down as suppliers.

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Replying to Floating Point:
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By Paul Crowley
28th Jul 2022 12:40

Your own fault for being too inexpensive
The middleman wants high costs to be able to rook the state aid grant system

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Glenn Martin
By Glenn Martin
28th Jul 2022 10:52

Badly thought out scheme, pointless offering £5000 for a £20 per month subscription. Offer £5000 to implement digital systems ie, pay us to do it and you would get some traction.

If they want MTD to go ahead as its is so key to closing tax black hole, offer £1000 towards the cost of setting up for small business and you might get some takers.

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Morph
By kevinringer
28th Jul 2022 11:35

It is ironic that the businesses that must comply with MTD ITSA are 100% excluded from this scheme and the businesses that can apply for this scheme are not (and never will be) required to comply with MTD ITSA.

Thanks (4)
Tornado
By Tornado
28th Jul 2022 12:43

It is probably better to offer £5,000 payments to people to part cover the costs of an Accountant to assist them with choosing, setting up and using Accounting and other Financial Software as well as providing valuable advice on taxation, running a business and other specialist services that Accountants excel at.

So far I have not seen one penny offered as an incentive to Accountants to assist with the introduction of MTD, yet it seems we are key to its success?

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By Accountant101A
28th Jul 2022 13:04

I looked at this sceme when it first came out and it was vistually impossible to spend £5000 because all the software is SAS subscription based. It would be difficult for a small business to spend £500 pa!

I was so annoyed that I offered to take part in feedback but all they wanted to know about is the design of their website. They must have thought the poor takeup was because people couldn't navigate the website rather than the scheme itself. My comments fell on very deaf ears.

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Replying to Accountant101A:
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By flightdeck
29th Jul 2022 13:39

Totally! It was designed by someone who last worked in the 90's.

Also, a shame they did not take you up on their offer - they badly need external, independent advice from people with their feet on the ground.

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