Q&A: How will accountants benefit from Making Tax Digital?
Business Industry Accountants have to get on board the Making Tax Digital train. When they do it’ll revolutionise their business, says Sian Kelly, Managing Director of Inform Accounting.
What does Making Tax Digital (MTD) mean for the future of tax?
Making Tax Digital is going to affect VAT-registered companies first; but it will affect all businesses at some point. The deadline might move, but it is coming. And although it's not completely clear yet, it will mean quarterly reporting for everyone. In other words, it's going to force non-VAT-registered businesses to work like VAT-registered businesses. It's going to be a big cultural change for them.
What does MTD mean for accountants?
MTD is good for our business, because it's forcing our customers to be on the same digital path as us. Not all accountancy firms are ready for the change, though. I've asked some people if they've heard from their accountants about MTD and they said: 'No', which is worrying.
Does MTD mean the services that accountants offer their clients will have to change?
It depends. Most of our clients are already on our cloud-based accounting software platform, which is HMRC-compliant; so, they're all automated and ready to go. We'll just keep on doing what we're doing for our VAT-registered clients.
“With Making Tax Digital, we won't have to sift through shoeboxes full of receipts.”
The bigger change for us will come when personal tax and corporation tax goes quarterly. On the other hand, I suppose it will affect accountants who aren't using compliant software. They may have to pay for bridging software, which means they might increase their fees.
What are the benefits of MTD for accountants?
It's going to increase the volume of work for us as an industry, but I do wonder how firms who aren't ready for it are going to cope. There's always a volume of clients who will give us their self-assessment tax returns in December or January, making it a really busy time for us. Having them go digital means we'll be able to work with them through the year, we can see their numbers at a glance and give them more information and advice. MTD adds to the portfolio of services we offer clients, so I see it as a positive.
How does digitisation impact your way of working?
I've grown my business down the digital route. I've always been very 'tech-y' and I wanted efficient processes and good information from the very beginning; whereas businesses that were established on old desktop-based systems may find MTD a huge change.
We find the whole MTD process really easy. The software is very intuitive and all the young staff I have pick it up very easily because they're used to the digital/mobile era.
Has digital software increased your productivity and minimised mistakes?
Yes. With old accounting packages you'd have to sit there with printed bank statements, matching line items. Digital platforms link to bank feeds and everything is in one place — so we haven't got to mess around trying to get bank statements from the client and we don't have to sift through shoeboxes full of receipts. And because we can see everything online regularly, if there's a repeated error it's easier to pick up.
Visit Xero’s Making Tax Digital hub for more information on how to prepare for the new legislation.