Bookkeeping and accounting software developer VT Software announced that it will halt the development of VT Transaction+, its small business bookkeeping tool that often operates as a front end to its final accounts package.
The announcement was confirmed by a short announcement on VT’s website and pinned the reasons for its decison on Making Tax Digital: “VT have decided to do no further development work on VT's bookkeeping package, VT Transaction+.
“The government plans that all VAT returns for businesses with a turnover over the VAT registration threshold must be submitted via MTD from April 2019. As a consequence, VT Transaction+ will no longer be suitable for these businesses.”
The news was flagged up in Any Answers on Sunday by AccountingWEB member Jo Nokes, who had received an email from the developer.
“I love this product, and now I have to work out what to replace it with,” Nokes wrote.
VT's decision was met with a chorus of shock, grief and disappointment: “I do the vast majority of my clients bookkeeping and all through VT so will now need to either switch and pay for additional QuickBooks, Xero or other solutions,” commented Chris Ash.
As Ash suggests, the decision is an unforeseen consequence of the government's enthusiasm for online tax filing and record-keeping. Since MTD was first announced in March 2015, AccountingWEB's member surveys have revealed a startling shift towards cloud accounting platforms and expense capture tools, with more than four out of five practitioners reporting they now support clients on cloud accounting platforms, up 50% on last year.
Even with the current policy hiatus and adjusted timetable for introducing VAT for MTD, the dwindling core market presented an unsustainable future for VT’s desktop bookkeeping tool.
This was very much the view coming from other specialist tax and practice developers.
“I don't think it changes our situation,” said Sion Lewis, CEO of IRIS's accountancy division*. “I spent yesterday at IRIS World and this is an end-to-end journey we are taking accountants on. There is no compromise there - we’ve got to go digital. I think VT is the first casualty of that situation.
“You need deep pockets to innovate and transform technology nowadays.”
According to Steve Checkley, commercial director at TaxCalc, we might potentially see further disruptions like this in the accounting market "but not from the well-known brands" he said. "Niche products will need additional development and if these companies originate from other countries, they may feel that the cost of actively developing their products exceeds the benefits."
Ed Molyneux, CEO at FreeAgent added: "As the landscape changes, with MTD and GDPR coming along, accountants will need to make sure the software they are using is putting the right amount of investment into keeping their products up to date."