MTD software: What does free mean?
The tax and accounting software industry is showing some reluctance to buy into HMRC’s vision for free software to help the smallest businesses comply with quarterly reporting under the proposed Making Tax Digital regime. Richard Hattersley and John Stokdyk report.
In AccountingWEB’s recent Practice Excellence Live MTD webinar HMRC’s Clare Sheehan referred to the free software initiative and commented: “We’ve been having some really positive discussions with software developers about that.”
But Xero’s Gary Turner poured cold water on the idea at the New Zealand developer’s roadshow in Bristol last Tuesday. “We don’t think you can give a great experience without charging for it,” he said.
Turner explained that Xero’s philosophy is “not to do it for free” and added: “Our lowest price plan has to be worth something.”
Since former Chancellor George Osborne and HMRC committed the industry to coming up with free tools earlier this year, the idea met resistance and is currently bogged down in discussions with the software trade body BASDA over what exactly HMRC means by free.
Also in AccountingWEB’s live broadcast, Mark Purdue from Thomson Reuters explained that in its MTD consultations, the government effectively said: “We are looking to software developers to provide free software. Discuss.”
Both sides agree that if someone is charging others to file returns on their behalf, they should be prepared to pay for professional software and spread the cost across their own client base.
Purdue said that if you are an unrepresented, small business, HMRC wants there to be free apps available for you to record expenses and send them into the tax department. “They don’t view agents as falling into that group,” he added.
Rob Ellis, director of BTCSoftware, told AccountingWEB: “We have already told HMRC that we will not be providing free software. They were fine with that, but only because we do not sell to individuals, just agents.”
On behalf of Sage, accountant cloud apps product director Fabiola Stein said the company was was closely monitoring developments in this area.
“As always, we are committed to supporting the 5m small businesses across the UK and we will support them through the transition,” she said.
It has already developed Sage Expenses, which is available free of charge to small business users. Stein said “the iPhone expenses app would likely form part of Sage's MTD strategy alongside some of our other apps for business”.
“Sage Expenses is not our answer to MTD, but it addresses three key pain points for businesses with accounting software: complexity, time and expense. It is a change they can make today and start getting ready for the digital transformation. We want to make it super easy now so it is not a painful change,” she said.
“The challenge we face is the same one every developer has - we still don’t have details on what’s required.”
Clearbooks director Tim Fouracre said the company was working on a package tailored for accountants with lots of clients on Excel or desktop software, “but it won't be free”.
He continued: “We're creating an MTD package that will let accountants bring on their clients in bulk for those not currently using cloud software. It won't be free but it will be at a discounted rate to our typical package.”
During Practice Excellence Live, HMRC’s Clare Sheehan and Digital Advisory Group chair Rebecca Benneyworth both spoke about the memorandum of understanding that is currently being thrashed out with BASDA that will cover future relations with the industry, cybersecurity and the free software issue.
AccountingWEB approached BASDA representatives for comment, but has not yet heard back. Perhaps they are too tied up in negotiations with HMRC.