Making Tax Digital (MTD)
I am getting increasingly fed up reading articles about the delay in Making Tax Digital being a positive. The hint is in the word “delay”. Ok so some unpopular bits of MTD have been changed but that doesn’t mean it will never happen. HMRC have a target and a “big” budget to achieve this target so it will happen. We simply have an extra few years in which to be ready.
So does this mean accountants can just relax and say “great I don’t need to worry about this for another two years.” What??? Of course not. It takes time to train clients in using the cloud accounting software needed to cope with MTD and they also need time to practice. The accountants will need to cope with this extra work while still doing their everyday stuff.
I was speaking to a four partner practice recently who had not even started the process and they were blaming their staff for being unwilling to help but the truth is the partners have not given them the skills to cope. Certifying their accounts staff for both Xero and QuickBooks is surely a given but they are concerned about the lost chargeable hours that training their staff causes. They hadn’t even worked out that to be ready for 2020 they would need to transition a minimum of 35 clients every month from now to be ready.
So have HMRC now gone quiet on Making Tax Digital? No, in fact they have set out their possible options in charging penalties for failing to meet the deadlines. Would they be doing this if MTD is going away? I think not. So what are the options?
1. Penalty points for each late submission with a fine once the number of points goes over a certain number.
2. An annual review would take place and a fine levelled depending on the number of late submissions in that year.
3. A penalty would apply for each late submission but could be suspended if the submission is made within a further deadline.
The problem is that with quarterly reporting there are far more opportunities for HMRC to impose fines compared to the current penalty regime.
My final thought is that accountants are focussing on MTD when something far more important is happening below their radar. Xero and QuickBooks are transforming the accounting landscape with software using the benefits of machine learning and AI. The basic bookkeeping that accountants are doing today will all be done by software within five years with no human intervention. So it’s not a question of we need to go into the cloud to cope with MTD…we need to be in the cloud to still have a business in five years. How many accountants will look up from their desks in 2020 and say “what happened?”
As far as we were concerned we were going to be ready for 2018 so a delay to 2020 is a bit frustrating however as we had already done so much work to be ready we are now viewing it as an opportunity because so many accountants are not taking it seriously. If our competitors are not going to take this seriously then their clients will suffer and they will lose them to those practices who have got their act together.
Wood & Disney are a Real Time Accountant https://www.wood-disney.co.uk/index.php/what-s-in-it-for-you/what-is-a-real-time-accountant