Is it the responsibility of accountants to ensure that their clients are MTD for VAT ready? Richard Sergeant investigates.
In a recent Any Answers thread titled MTD and why is it our place to notify clients? AccountingWEB member Di gave further voice to a conversation on the fringes of the MTD debate: to what extent are accountants responsible for ensuring mandation is met from April 2019?
Speaking off the record over the past few months on this issue has elicited a range of responses, and reflects the approaches that firms have chosen to follow.
On one side, an accountant who chooses to remain anonymous said: “I’m fed up of the whole thing, the reality is that this is a mess of their own [HMRC] making, not mine. I will tell clients how it affects them, when it affects them, but it is ultimately their responsibility.”
While this may seem a little extreme, it does reflect a more general frustration that the rollout of MTD has been generally left to accountants, with up to now, no formal intervention by HMRC to those that will be impacted.
HMRC has been quiet
AccountingWEB member Gordon commented that “if someone needs new software and their accounting year straddles April 2019, they should have possibly already migrated. However, HMRC has not appraised them of this and if they only do so in the New Year, it may well be too late.”
And member John Stone suggested: “Bearing in mind some traders do not employ an accountant - this must leave quite a number potentially still in the dark. This should be quite troubling to the powers that be.”
A recent report from Rebecca Cave’s should come as a relief, then. “I have heard that HMRC is planning to write to all the VAT registered businesses who will have to enter MTD in 2019. Those letters are expected to be sent in September 2018,” she wrote.
However, with time ticking on, and as only the most optimistic (or should that be pessimistic?) are anticipating a delay, it is true that businesses need to be taking steps now to ensure they will be compliant.
So whose job is it anyway?
For some like practice owner Mark Telford, it is clearly the responsibility of the accountant. “The mission is to get the message to those who are 'offline' and make them aware. There are thousands of businesses unaware of what's coming,” he said.
This professional mission to inform clients seems to form the broad consensus: it is the almost-obvious obligation of the trusted adviser and guardian of compliance to inform clients of the changes that will impact them.
Glenn Martin, owner of Avery Martin, added emphasis to this: “We are tax advisers, this is a change to the tax system so who else would advise on it? Of course it's our responsibility.”
But does this imply that you must also ensure that clients make it over the line?
Information, advice and action?
Getting information out to clients is not always easy - and you can never be sure that general communications are actually read, understood and action taken. But to then follow up, and help everyone understand the options, make a transition, and provide training is no mean feat.
This is not the article to dwell on what firms have and haven’t done to date in detail; however, it would be a fair assessment that there has been a very broad response from those taking a light “inform and advise approach” to formal programs of ensuring compliance and even wholesale movement towards cloud solutions.
The picture is of firm’s interpreting for themselves the role they must play and making their own choices about what their ‘solution’ will be.
So, if HMRC is not responsible, and accountants can choose their own path, what about the software providers?
Is it the software providers’ responsibility?
Although they may disagree, the software providers have had good time to get their houses in order, and at least inform their customers if they will be ready. For any sane finance software vendor out there, preparing for MTD must surely have been a priority, but as there are no definitive lists it is impossible to tell.
As MTD is inherently reliant on technology, and an internet connection, those on cloud solutions are at a distinct advantage but even this cannot be taken for granted. While it would be commercial suicide to leave customers in the lurch, it would still be wise for clients to check that they will be OK. As an example, AccountingWEB member Legerman pointed out: “Those using bespoke software...could be left high and dry if their software vendor can't adapt their software in time.”
Software providers are expected to provide the technology, but they don’t have to make sure every client is OK. Companies like Sage and QuickBooks are in a similar situation for some of their clients on older editions of their desktop software and not on subscription.
Interestingly two of the software providers who provided input to this article, both take a similar view, and point towards reputational damage that could occur if accountants don’t take the lead.
As Intuit’s Alex Davis explained: “I spoke with a business owner friend last week and asked if his accountant has told him about MTD. He said no. When I told him about what is happening his first response was ‘time to find a new accountant’. The customer will go with who offers them the best advice.”
And Xero’s Glen Foster echoed these sentiments: “I’d say accountants have an obligation to inform their clients and advise on a solution. That doesn’t mean every client will take the advice. Having said that, every firm has the right to not, but I’m sure most people would want to be a client of the firm that did.”
Perhaps another way of saying: “It’s up to you!”
Larger clients are OK? Aren’t they?
As a useful aside, Matt Flanagan, BlueHub, also warned against presumption; for example, with larger or more complex clients: “With some firms I have engaged with they have contacted their larger clients and have found that it is only a small percentage that have something in place, and are much larger projects to become compliant. My advice is don’t assume any client is MTD ready.”
While appreciating that MTD is highly divisive, it does provide huge opportunities for some firms, and puts others (and their clients) in a more tricky situation.
It would seem that from both within and without, the presumption is that the accountant is best placed, and most professionally obligated - if not “responsible”.
Although not entirely useful, it is true to form that we can rely on entrepreneurial accountants such as Robert Stell from Bradbury Stell to (with a hint of irony) innovate, “We’re advising them to comply, a merger of two types of service ..’Complisory’!” You heard it here first.
About Richard Sergeant
Specialist insight and business development support for accountants and their vendors. Cloud advocate with a pragmatist eye.