Today’s Daily Insight focuses on some insighful industry Making Tax Digital statistics. MTD is the No.1 problem for VAT-registered small business owners as they undergo technological transition. The education role for accountants is clear.
Research by online accounting software provider Intuit QuickBooks finds that 76 cent say understanding digital is a chief concern, followed by finding the tools to help them comply (70), finding time (66), managing additional work (64) and choosing the right cloud-based software (63).
MTD is part of HMRC’s plans to become a digitally advanced tax administration. The aim is to implement digital record keeping and introduce quarterly updating for all but the smallest businesses.
Digital record of transactions
It encompasses the self-employed and landlords who pay income tax on their profits. VAT-registered groups have to keep a digital record of their VAT transactions and submit their returns using MTD-compliant software.
That 41 per cent of small business owners are still unaware of MTD, and 22 per cent are aware of what it is but plan to file taxes digitally only if they were to incur financial penalties, reinforces the need for learning somewhat.
Accountants say client education is a top concern for them in the lead up to MTD (29 per cent), as well as adapting their own practice to comply with MTD (27 per cent), and training clients on online software (27 per cent).
Prime opportunity for accountants
“Making Tax Digital is a prime opportunity for accountants to harness the power of cloud technology and assume an advisory role with their clients, especially considering three-quarters of small business owners struggle to grasp the legislation and its implications,” said Nick Williams, QB’s head of business development, accountants.
“Embracing the forthcoming legislation as an opportunity to educate and empower clients is an excellent way for accountants to reinforce their value. Change is never easy, but the time to initiate these conversations is now.”
Educating clients
Though educating clients on MTD is a priority for accountants, the research reveals that many still need to expand their own knowledge of the new regulation. While nearly half (44 per cent) feel they know a lot or everything about MTD, just under a third (30 per cent) feel they know little or nothing.
It is in accountants’ interest to move their clients to MTD-ready software, with two in three recognising that it will contribute to less stress on year-end tax (64 per cent), provide an opportunity to grow their practice (62 per cent), enable streamlined processes (61 per cent)) and allow for a more consultative approach to servicing clients (59 per cent)).
QuickBooks has successfully submitted MTD for VAT filings to HMRC as part of its beta programme.