Q&A: Making Tax Digital – and life easier for accountants
Business Industry Cloud-based technology will make life easier for accountants as the Making Tax Digital roll-out gets under way.
Q: How much of a change is Making Tax Digital (MTD) for accountants?
A: MTD is probably the most fundamental change to the tax system in a generation. The government's idea is to make it easier for businesses and individuals to get their tax right and to keep on top of their affairs. It applies to VAT-registered firms from this April but, ultimately, every business will be filing quarterly returns at some point. That means accountants are going to have to do four to five times more work for every client, which raises a question about how they can continue to make the kinds of profits they made previously. The answer hinges upon them embracing technology — and particularly cloud-based technology — as they move forward, giving them the freedom to scale up and down and access their working data from anywhere in the world.
Q: In your experience, are most accountants supportive of these new digital changes?
A: Forward-thinking accountants who embrace technology and are moving to cloud-based digital platforms are at ease with MTD. The ones who haven't embraced the cloud yet might be more apprehensive about it. But if they haven't done so already, now is the time for them to realise that technology is out there to help them deal with the digital future.
Q: How should accountants be preparing for Making Tax Digital?
A: Two things, first and foremost, accountants need to think about taking a whole product approach to software rather than a short-term bridging solution or VAT filer. By sourcing the right software to meet and address the needs of MTD it will introduce a smarter way of working in the long-term and reduce the expected congestion MTD will bring.
The second thing, start educating existing customers about the changes that will be taking place. That can be a positive thing, because if accountants are communicating the MTD message through their websites, newsletters, social media and webinars, etc, it'll show that they are MTD-ready and ahead of the curve. And that will give potential new customers confidence in their services.
Q: What are the benefits of cloud-based MTD software?
A: Our three core principles to software development have always been: Capture, Connect, Collaborate — a way of working that aims to make accountants' lives easier. So, if all of the major services that an accountant requires can be found on one system in the cloud, they'll be better able to connect and collaborate with their end customers on an ongoing basis — i.e. business owners — through that system.
Seamless integration between the accountant and their customers gives the accountant faster access to data, which speeds up their processes and saves them a lot of time. It also allows them to move away from a paper-based environment. And because the information is based in the cloud, they can access it on the go from anywhere in the world.
Q: Is it going to cost accountants more to move to digital?
A: There's a lot of scare-mongering going on within the industry about how much it will cost. It boils down to the accountant doing a deep dive into the software market to find out about the kind of technology available — and what the best options are for them and for their customers. In some cases, an unlucky few accountants may find themselves falling victim to archaic, rigid and costly cancellation clauses of up to 90 days, but short-term pain is still profitable in the long-run.
Q: Will the move to MTD help businesses?
A: Yes, because an accountant's customers will have real-time visibility over their own accounts and feel more connected to what's going on with their businesses. Also, the accountant has the ability to set up different access rights on the system and therefore tailor it to a business's individual expectations and needs. If MTD is implemented correctly, with robust and scalable software, it should streamline practice processes, increase profitability and create efficiencies.
Q: Are accountants concerned that technology such as AI and automation will ultimately put them out of business? Will MTD only exacerbate these concerns?
A: There will always be a requirement for accountants - they are the expert in their field and are the cornerstone for the SME, so the SME can concentrate on what they do best. AI and automation are strategies to help make tax digital but, ultimately, it is down to the expert to leverage these technologies and ensure continuing compliance.
Q: Do you think most accountants are ready for Making Tax Digital?
A: Towards the latter part of 2018, I think there was still an idea that it might not happen, what with Brexit around the corner and increased market uncertainty. But the government is beginning to roll it out. So, face it: MTD is here — and it's not going away.