Survey reveals how Making Tax Digital is seen as a cost burden
Despite hiccoughs along the way, the general direction of Making Tax Digital (MTD) remains unchanged. VAT registered businesses will be mandated into HMRC's plans for quarterly bookkeeping and reporting from 2019 and even the smallest of businesses will have to provide data in a digital format to HMRC from 2020.
As the accountancy profession takes stock, it is clear from the findings of a survey run by MyFirmsApp that accountants believe the new regime will have cost implications both for businesses and for the accountant.
82 per cent of those that took part in the survey believe that the Government should offer financial support to businesses that need to invest in new IT, software or training for MTD purposes. The response was sizeable with 271 taking part in the research.
74 per cent think their clients will incur costs
The move to the new regime is expected to attract costs of between £100 and £1000 for businesses with almost half – 46 per cent of respondents - estimating that their clients will incur costs of between £101 - £500 and 28 per cent believe that this figure could be higher and end up between £501 and £1000.
These cost implications are based on the transition to the use of software to manage their businesses’ accounts with these results suggesting that over half of SME business clients are not currently using any software at all.
36 per cent of the accountants surveyed believe that they will need to spend an additional 5-10 hours to get this particular group of their clients ready for quarterly financial reporting and 28 per cent believe this could take in the region of 10 – 20 hours with 7 per cent estimating that this figure could be in excess of 50 hours. This is a sizeable requirement and something that hasn’t been talked about widely in terms of the preparation for MTD.
Regardless of the size of business, 61 per cent recommend a move to digital record keeping
72 per cent believe that businesses under the VAT threshold should not be mandated into MTD but despite this, interestingly over half of those polled (61%) said they will be recommending to their clients, regardless of size, that they move to digital record keeping sooner rather than later.
When we speak to our customers about MTD, they tell us that they are most concerned about their smallest clients; the ones that still bring their records into the office in shoeboxes and keep notebooks. For this group, MTD represents a sea change in the way they manage their finances and it is down to the accountant to consider how best to help them make this transition to digital record keeping.
Search is on for a simpler solution to MTD
The findings from our survey suggest that accountants are in favour of a simpler solution for this group with 43 per cent of respondents supportive of the introduction of a low cost, simple to operate bookkeeping App as a sensible solution to the MTD challenge.
Working with accountants and practitioners around the world in a software business that focuses on mobile technology, we know that it is the new digital world in which we all live and work that can solve the challenge of MTD. There can be no doubt that the move to digital technology has become a mobile-first experience with over 900 billion hours spent on Apps last year (Research by App Annie 2016 retrospective), and the number of Smartphone users expected to reach 48.26 million (Statista forecast 2017) in the UK this year. The business world is changing because of the rate of mobile adoption and mobile devices such as Smartphones and tablets are used for all kinds of business activity: for talking to customers, for raising quotes, creating invoices or capturing receipts and for searching for information that is relevant to their business; all with the help of Apps.
By providing business clients with a single simple App, it is possible to record all the necessary information needed for MTD by using the in-built camera on their Smartphones and Tablets to photograph receipts and allocate them to the relevant account and by taking photographs of their invoices. If the client does not want to use the camera, the other option is to simply enter a daily cash value so that income is recorded with the same fuss free method.
Through an App that connects the practitioner and the client in real time, it will become crushingly simple to check entries and take over the regular filings for the client and in doing so, place the accountant right at the centre of the digital tax initiative. With built-in intelligence that utilises the latest technology to understand what data has been uploaded for the summary return and what may be missing, the App will use a ‘push notification’ messaging capability to alert the client that information is still required.
Window of opportunity
We believe that there is huge potential for accountants to help businesses make the leap into this digital world. With new digital tools and Apps to smooth the passage of MTD, there is a compelling window of opportunity to change current offerings and offer a range of very different services.
The debate around the implications of MTD will undoubtedly take centre stage over the coming months and there will be a whole range of views on the options available. One thing we can be certain about, it is gearing up to be a fascinating period for the profession and businesses alike.
Full results are available to download at https://www.myfirmsapp.co.uk/docs/mtd-survey-results.pdf