By Janita Kapoor
The 20th and 21st of September saw the return of the Accountex Summit North exhibition and the hot topic was Making Tax Digital (MTD).
For those of you who have been living under a rock in the accounting world, MTD is a government plan to shift paper-based tax reporting online, meaning the end of form-filling for millions of UK businesses. There will be changes affecting value added tax (VAT), income tax and corporation tax are being introduced over time, this means that a growing number of businesses will need to look and get an understanding of the software and tech to better facilitate this change.
As per the HMRC; “MTD is a key part in the governments plans to make it easier for individuals and businesses to get their tax right and keep on top of affairs” – This would then in theory make the tax administration “more effective”, “more efficient” and “easier for taxpayers to get their tax right”.
For more information please see following link here; Overview of Making Tax Digital – GOV.UK
However, there had been a development just days after the Accountex Summit North exhibition where the HMRC announced a push back of MTD for ITSA to 2024.
Lucy Frazer, Financial Secretary to the Treasury, said;
“we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.”
So, with being given a little more breathing space, it may allow more time for investigating into technology and software available in the market.
Getting a business or individual to change and adopt new processes or technology can be a struggle especially if they are not fully aware of the potential benefits down the road. But the reality is, the change will need to happen for many in the new year and if businesses are not on board and not meeting filing deadlines, there will be penalties.
Due to COVID-19 we have seen a super acceleration in digitalization in customer service, retail of product and internal processes. But for many businesses will the new digital tax requirements be too big a shock?
“The proportion of businesses using software and/or apps in record keeping has increased from 72% of businesses prior to the introduction of Making Tax Digital to 87% currently. Since moving to Making Tax Digital 18%1 of businesses that weren’t using software or apps have started to do so.”
The pressures on accounting firms will be high as we move closer toward the MTD timelines, and it will be a time to review software and tech.
So how do you select the right tools for your practice? When you look for a piece of tech, do you find yourself deciding based on price, ratings, or features?
There is so much technology available to research, test and understand. We understand that a lot of firms can feel overwhelmed and confused about which is the best tool for them and often, they end up choosing based on price.
Tech has evolved a lot over the last 20 years. Our team have used multiple tools and have, at times, spent longer than expected trying to understand which app is the best for our clients. We strongly believe the investigation and selection of the right tools is best left to us so that firms, such as yourself, can leverage the technology and outsourcing/ offshoring to deliver timely information and reports, enabling clients to make informed decisions.
Accountants can assume the role of advisor to the client on the back of tech-powered reporting tools, delivered cost effectively.
Gone are the days when a client would wait for months to get their management or year-end accounts. With the popularity of cloud-based software, clients expect accountants to be on top of their numbers. Accountants, in a way, then feel obliged to provide that service on a real-time basis. I see lots of firms offering a comprehensive service to their clients, including real time bookkeeping, Periodic Management reports, and some even extend rolling cash flow forecasts.
Technology has enabled accountants to be lot more involved in their clients’ business and in turn, are able to provide a more advisory role, as the compliance work is more commoditised.
Technological enhancement has empowered accountants with access to real-time data which is a very powerful tool and I see a lot of clients pushing accountants for real-time information. This is a trend I can see going up.
There is now a mass of tech and software to choose from, so it would be advisable to research the user feedback available to you and choose the best applicable option from your findings. You can also work with professionals who have the required experience and expertise.
Watch our Tech Development at dot video here.