The government has recently rolled back its plans for its Making Tax Digital (MTD) grand scheme. Originally it had planned sweeping changes to way that businesses reported to HMRC to be implemented within the next couple of years. Now, however, it has now announced that only businesses that are VAT registered will need to report under the new regulations from 1 April 2019.
Despite this change, and the restriction of the scope of the new reporting landscape, there is still much consternation within the accounting profession of what effect this movement will have on their own businesses.
Some have sounded the death-knell of the accountant as a required intercessor between taxpayer and government. If businesses are able to file quarterly returns directly from their accounting software, then surely there is no need for an expensive middle-man? Right?
This view appears to be somewhat overly-dramatic viewpoint, as those with longer memories will remember that the accounting profession has faced similar apparent existential crises in the past; most notably the changeover to self-assessment income tax in 1997. At the time plenty of commentators saw this as the end of the need for an accountant for all except the most complex tax cases. However, history has proved this not to have been the case. As many more taxpayers were drawn into the self-assessment system, so the need for reliable, professional advice grew.
We are likely to see something similar occur with MTD. Even though its initially ambitious scope has been scaled back recently, it is still the governments objective to enable all tax returns to be made digitally, and more frequently, in the near future.
Accountants will need to rise to this new challenge and equip themselves for a future whereby their clients will be relying on them even more to ensure that their reporting and compliance obligations are maintained. A recent report by cloud-accounting software firm Xero (https://www.xero.com/uk/campaigns/digital-or-die-report/) revealed that only 17% of accounting firms are prepared for MTD, and a staggering 25% are not aware of it at all.
At AFP, our clients know that as we are operating as their finance department, they are already in a prime position to move seamlessly into the new MTD world. We are confident that, with the support of our software partners, we will be able to continue providing the same high level of service that our clients value us for, whilst meeting the challenges that the changing reporting environment will bring.