The big questions on value pricing ... answered!
Gordon Gilchrist, speaker and writer at 2020 Innovation Training was presenting in Manchester recently and a number of delegates approached him on the subject of value pricing, questioning how best to value price coud based services with their clients...
If you review accountancy firms’ websites and see how cloud-based services are being priced, you will see a number of firms are fixing a Bronze, Silver and Gold tiered service level at varying prices.
What is interesting is that, from a clients’ perspective, the service range looks very similar although the price range is incredible! Prices go from as low as £42 per month up to £8,000 per month, for what appears to be the same service.
This suggests that the client will more likely accept the price that an accountant quotes because the client trusts accountants more than any other professional adviser.
Because accountants have always behaved with the utmost integrity and honesty, we know that clients do accept their analysis and estimate of the fee.
Monthly subscription
The smartest firms seem to be those that are not fixing a fee from the outset for their cloud-based services (whether Bronze, Silver or Gold) but are inviting clients to run the service for three or four months and after that period, there is a monthly subscription quote that is transparent and acceptable to all parties.
Once the process has been run with individual clients for three or four months, the price will vary depending on the clients’ ability to capture data, organise their bookkeeping etc.
More and more firms are now taking their pricing models for their cloud based services off their websites. This is because it is almost impossible to adopt a fixed fee “one price to suit all” pricing policy for this type of service.
2020 have written a Value Pricing Guide to help educate and train accountants on this important subject.
Find out what 2020 has to offer and the benefits of membership
2020 Innovation provides innovative training and marketing solutions for progressive accountants and tax professionals. Members receive support in Business Advisory, Practice Development, marketing, Making Tax Digital, and new technologies, plus comprehensive CPD training in audit, accounts and tax related subjects. 2020’s priority is to help firms grow their client base, expand their service offerings and prosper in the changing environment.
Implementing the AE contribution increases
Back in April 2018, all employers were required to increase minimum contributions for auto enrolment. This is known as ‘phasing’, and up until April 2018, employer contributions were 1%, as were employees’, making a total minimum contribution of 2%. But then the employer’s minimum contributions increased to 2% and the employees’ increased to 3% for a total of 5%. To complicate things further, (which the Pension Regulator never normally do) during the next phasing in April 2019 the employer’s minimum contributions increase to 3% and employees’ to 5% for a total minimum contribution of 8%. Confused yet? Of course you are! Welcome to the automatic enrolment club!
As an employer, you need to make sure that you understand how these changes will affect you, your clients and your employees. We’ve talked already about what the minimum contributions will increase to but not how this will be done. It would be nice to think that in this technological age that this update might be installed automatically on your payroll software. Guess what, you can on BrightPay, where you will be able to seamlessly handle the respective increases, with various options depending on the different scenarios. BrightPay will automatically uplift these workplace pension contributions to the minimum due, with no action required in BrightPay by the employer or payroll bureau. Other scenarios are listed here.
Be aware that some other payroll systems may require you to adjust the rates manually. To remain as a qualifying scheme, all automatic enrolment pension schemes must cater to the new minimum contribution higher rates. If you do not do this in line with the legal requirements, your pension scheme will no longer be a qualifying scheme for existing members and cannot be used for automatic enrolment.
It's also possible that the increases will take place in the middle of a worker’s payroll period. So say your employee has a pay period from the 1st to the 30th of April with the increase effective from 6th April. In such an instance the contributions for the pay reference up to April would be calculated based on old rates, and the contributions after April 6th being based on the new rates. And employees can choose to pay more than the minimum contribution which would mean separate calculations for each one. Yes, don’t worry, I have a thumping headache and feel like I might cry too. But, we’re not done yet.
So would I be in breach of legal requirements if I don’t adjust my rates correctly to reflect the ever-changing and shifting tides of auto enrolment? But kind Sir, my only crime is being really bad at maths; how can I avoid this reproach? Well you have 3 ways of keeping up with legal auto enrolment requirements:
- You can do the calculations manually - Believe it or not there are still people in the world that decide to waste hours of their lives by manually calculating these adjustments for each individual employee each payroll. Hey, each to their own - but I can think of better ways to spend a weekend.
- You can use HMRC Basic PAYE Tools and the AE Toolkit to do the calculations - Now now, the AE Toolkit is a very useful spreadsheet if you know how to use it and don’t mind wasting a few hours. It won’t do the calculations for you but it will give you a basis of where to start and some directions on what to do.
- You could use a payroll software to do it all for you - Yes folks, there are things called computers nowadays that do the hard work for us! A dedicated payroll software will be ready to cater for the increased contributions on April 2019 and will automatically calculate the correct minimum contributions and save you from being non-compliant.
I know which option I’d pick! Remember this is mandatory and if you’re not compliant you can have action brought against you. So, if the only reason you haven’t invested in payroll software yet is that you’re trying to save some money, well then you better watch out as all those savings could quickly disappear if you’re hit with a big fat fine.
BrightPay is a dedicated payroll product that handles your auto enrolment duties automatically for you. BrightPay 2019/20 will be able to seamlessly handle the respective increases, with various options depending on the different situations. Head to https://www.brightpay.co.uk/pages/MinimumContributionIncreasesPhasing/ to see for yourself all the hassle you’ll be saving yourself from.
Small business minister focuses on MTD at QuickBooks
Intuit QuickBooks today hosted 100 small business owners and government minister for small business, Kelly Tolhurst MP, at its London HQ.
As part of its commitment to champion and back the UK’s small businesses, the event was arranged to connect small businesses to government and discuss upcoming changes in the small business sector.
The event, open to SMEs from across the UK, saw Tolhurst share her vision for UK small businesses and her role in helping them navigate this period of change. Topics included Brexit, the imminent introduction of Making Tax Digital (MTD) for VAT and pressures around cash flow and payment terms.
Kelly said : “Small businesses are the backbone of our economy and central to our modern Industrial Strategy, and events like today are invaluable to be able to speak to small business owners and hear directly from them on their priorities and challenges.
"We’re introducing changes that will better protect small businesses and improve efficiency, including our new making tax digital plan.
"We know this is a big change which is why we’ve phased the implementation in order to give businesses more time to prepare, and with the right support, the right training and the backing of companies like QuickBooks I’m confident that these changes will lead to huge benefits for each business.”
Following her opening remarks, Tolhurst participated in a ‘fireside’ chat with Chris Evans, VP and country manager at Intuit QuickBooks, where they discussed the big opportunities for small business and the part digital can play in achieving them, before taking questions direct from the audience.
As part of her preparation for the event today, the Minister last week joined the team operating the ‘MTD Hotline’ at QuickBooks, to help answer questions from small business owners calling in to the free phone helpline.
Chris Evans reflects on the day; “Today was a great way for us to help amplify the voice of small businesses across the UK and give them the platform to be heard by the decision makers at the heart of Government. Our mission at QuickBooks is to continuously back small businesses by championing the things that matter to them such as improved cash flow, greater control of their data and better work-life balance. We believe that we can do this by working in partnership with our customers to develop solutions that solve their problems through our award winning products, customer care, training and events like today.”
Intuit QuickBooks is the global leader in cloud accounting solutions and is dedicated to backing UK small business through the transition to digital bookkeeping with its award winning customer support, range of integrated readiness tools and a suite of MTD compatible products, more details available at www.quickbooks.co.uk.
David Oliver joins British Accounting Marketing Awards judging panel
David Oliver is joining the high calibre judging panel of this year’s British Accounting Marketing Awards.
David, who is a member of the Executive team at MyFirmsApp, an author of 14 books and an international keynote speaker, will join a panel of seven judges that includes experts and influencers from across the accounting, marketing and entrepreneurial world.
This is the second year of the awards, and the programme is designed to maximise the visibility of accounting practices that have found new and successful ways to address the perennial challenge of marketing.
This year’s winners will be announced at Accountex, the UK’s leading exhibition for the accounting profession on May 1-2 at ExCel in London.
The judges will be looking to celebrate the great marketing that is being done by accounting firms throughout the UK and will be looking for those that are excelling in categories that include Best Event Marketing Campaign, Best Content Marketing Campaign, Best brand Building Campaign, Best Rising Star and Best Personal Branding Campaign. Last year, the Wow Company, RandddUK, AC Cloud and Falcon Accountancy were all award winners. Entries are encouraged from both practices and also industry suppliers and the deadline is midnight on March 15.
David Oliver commented: “There is a natural synergy between MyFirmsApp and the Awards programme and I am delighted to have been asked to join the judging panel. Today’s successful practices recognise the value in building great connections with clients and their prospects and nurturing those relationships to make the value proposition the best it can possibly be. Achieving a ‘MDSA’ or measurable difference and specific advantage in every firm’s marketing and client experience is key to success in today’s highly competitive climate.”
“Winning an award can open doors in getting contracts, attracting staff and boosting morale,” says Amanda C Watts, Founder of TwentyTwo Agency and whose brainchild the Awards are.
“The effect that great marketing can have on an accounting firm is significant. It attracts high quality clients that you enjoy working with and value what you do. It attracts high quality staff who thrive on working together and delivering a great service to your clients. It attracts attention, for you, the partners and their team, and for the industry as a whole.”
www.BritishAccountingMarketingAwards.co.uk
What do accountants think of Theresa May and Brexit?
Research reveals that a huge majority of accountants reject Theresa May’s Brexit strategy.
The survey, by Accountex, found that 96% of respondents favoured alternatives to the prime minister's proposed EU exit deal.
- Almost half (48%) of accountants want the UK to remain in the EU… but more than one fifth (21%) want a ‘no deal’ Brexit
- Only 4% of accounting professionals back the Prime Minister’s deal
- Three quarters (74%) of accountants are concerned about ‘no deal’ and 59% think it should be avoided at all costs
- 88% think they have inadequate information about Brexit to advise their clients
Almost half (48%) of the 260 UK accounting professionals surveyed stated that their preferred outcome of Brexit is to remain in the EU.
However, more than one fifth of respondents to the questions (21%) said they want the UK to leave the EU with ‘no deal’ and trade on WTO terms. Only 4% back the PM’s withdrawal agreement as their preferred EU exit route.
A Canada-style free trade deal was the preference of a further 9%, while a Norway plus option, with the UK joining the EEA and the addition of a customs union, was supported by 8% of respondents. Only 5% backed the call for a second referendum and just 4% favoured extending the Brexit deadline to give more time for negotiations.
With just over two weeks remaining until the UK is due to leave the EU and a deal yet to be agreed, the poll also revealed that almost three quarters (74%) of accounting professionals are concerned about a ‘no deal’ Brexit and a further 59% think that ‘no deal’ should be avoided at all costs.
Of those surveyed, 59% of accounting professionals think that a ‘no deal’ Brexit will have a negative impact on their business and 58% of accountants in practice believe ‘no deal’ will have a negative impact on their clients’ businesses.
Ian Moss, editor at Accounting Insight News, commented:
“We surveyed over 260 professionals from the accounting and finance sector and the sentiment was very clear: much like the MPs in parliament, an overwhelming majority reject Theresa May’s Brexit plan.
The sector also showed little support for a second referendum or delaying Brexit – it’s apparent that decisive action and clarity is what’s desired. What form that action should take is less clear cut, with almost half wanting the UK to remain in the EU and the rest split between ‘no deal’ and various trade deal options.”
The research also revealed that one third (33%) of accountants in practice have seen an increase in the number of clients turning to them to analyse the risk posed by Brexit and provide advice in recent months.
However, when asked whether the government and HMRC has provided sufficient information about Brexit to enable them to provide the desired strategic guidance to their clients or businesses, 88% of accounting professionals stated it has been inadequate.
Ian Moss continued:
“Technological advances mean that the role of accountants is moving from compliance towards advisory – and in 2019 that often takes the form of advising businesses regarding Brexit planning. With the 29th March deadline drawing ever closer, it’s no surprise that one third of respondents to our survey have reported an increase in the number of clients turning to them to provide guidance about Brexit in recent months. However, it’s concerning that a majority of accounting professionals felt that they had inadequate information to allow them to give their clients and businesses the desired support.
From March the UK could be facing changes to tariffs and quotas on EU imports and exports, as well as all the VAT implications, but it’s not yet clear what form these will take – or whether they will happen at all. Clarity is urgently needed to enable UK businesses and the finance professionals who advise them to put in place effective contingency plans.”
In terms of the impact that Brexit has had on businesses so far, 40% of respondents said that Brexit had already impacted their business’s financial planning decisions.
Of those, almost one fifth (19%) said that they had made less ambitious revenue forecasts for the year ahead and 17% said they had held off from investment. Only 16% reported that they had begun contingency planning for a ‘no deal’ scenario and 15% had assessed the risk for each potential outcome of Brexit.
The survey:
The survey was conducted in January 2019 and is based on responses from 264 accounting and finance professionals from businesses across the UK.
The research was undertaken by Accountex – the leading trade show in Europe for the accounting and finance profession – which will take place on 1-2 May 2019 at ExCeL London.
For further information about the event, or to register to attend, please visit: https://www.accountex.co.uk/london/
The results:
Which is your preferred outcome of Brexit?
- Remaining in the EU – 48.02%
- Leaving the EU with no deal and trading on WTO terms – 21.43%
- A Canada style free trade deal with the EU – 9.13%
- A Norway plus style deal, with the UK joining the EEA with the addition of a customs union – 7.54%
- A second referendum on the UK's membership of the EU – 5.16%
- Extending Article 50 and delaying Brexit to give more time for negotiations – 4.37%
- Renegotiating the terms of Theresa May's Withdrawal Agreement – 4.37%
How concerned are you about a 'no deal' Brexit?
- Very concerned – 52.59%
- Somewhat concerned – 21.12%
- Not concerned at all – 26.29%
Do you believe that a 'no deal' Brexit should be avoided at all costs?
- Yes – 59.13%
- No – 40.87%
Do you think that a 'no deal' Brexit would have a positive or negative impact on your business?
- Positive – 9.96%
- Negative – 58.92%
- No impact – 31.12%
Do you think that a 'no deal' Brexit would have a positive or negative impact on your clients' businesses? (Accountants in practice only)
- Positive – 8.24%
- Negative – 58.24%
- No impact – 33.53%
In recent months, have you seen an increase in the number of clients turning to you to analyse the risk posed by Brexit and provide advice? (Accountants in practice only)
- Yes – 33.14%
- No – 66.86%
Do you feel that the government and HMRC have provided adequate information to enable you to give the desired strategic guidance?
- Yes – 12.45%
- No – 87.55%
Has Brexit impacted your business's financial planning decisions so far?
- Yes – 39.51%
- No – 60.49%
If yes: How has Brexit impacted your business's financial planning decisions so far? (Select all that apply)
- Less ambitious revenue forecasting for the year ahead – 18.09%
- Holding off from investment – 17.41%
- Contingency planning for a ‘no deal’ Brexit – 15.70%
- Risk assessing for each potential outcome of Brexit – 15.02%
- Shifting to short-term financial planning – 10.92%
- Moving business to locations outside of the UK – 9.90%
- Holding off from hiring new staff – 9.56%
In terms of job roles, 73% of participants are accountants in practice and 27% are accountants in business. Of the accountants in practice, 29% are directors, 27% are sole practitioners, 14% are senior managers, 13% are qualified accountants, 11% are partners, 4% are trainee accountants, 2% junior managers and 1% are bookkeepers. Of the accountants in business, 23% are finance directors, 19% are finance managers, 17% are consultants, 14% are financial controllers, 14% are CFOs, 10% are CEOs and 3% are IT directors.
100 years since women broke the accountancy mould
Following the centenary celebrations in 2018 of voting rights for women, 2019 marks 100 years since the next step towards female equality - the opening of the professions.
The 1919 Act
While some bodies had started to admit women in the months before 1919, it was not until the Sex Disqualification (Removal) Act 1919 that all professional accountancy bodies were forced to admit women.
Before that, bodies such as the Institute of Chartered Accountants of England and Wales (ICAEW) would not allow women to take articles (effectively enter a training contract).
The impact of World War One
The question of admitting women had been a recurring issue for the various professional accountancy bodies which had begun to establish themselves in the 1800s.
But it was not until towards the end of World War One after women had replaced men called to the front in offices and practices, that the profession finally started to take active steps towards admitting women.
One Scottish accountancy body began by allowing women entry to their bookkeeping classes in 1916, while the Society of Incorporated Accountants and Auditors (which merged with ICAEW in the 1950s), agreed to admit women in October 1918.
The first woman admitted to the ICAEW
After the 1919 Act, the first woman admitted to the ICAEW was Mary Harris Smith.
Aged 72, and having had her own practice for much of her adult life, she was finally admitted as a fellow some 30 years after the rejection of her first application on the grounds of her gender.
The first woman admitted on equal terms
After 1919 and Mary Harris Smith, there was a delay of a few years as newly articled women started the process of sitting exams and completing their minimum three or five-year period of training. (The training depended on their previous level of education.)
The first to complete all these requirements was Ethel Watts, who was admitted to the ICAEW in February 1924.
Who was Ethel Watts?
Ethel was the eldest daughter of a Metropolitan police officer. She attended Bedford college and then Royal Holloway before signing up for her articles in August 1920.
In later life she recorded that it was Sir Harry Peat (whose father Sir William Peat is the P in KMPG) who suggested that she should try accountancy as a career.
A practice of her own
After qualifying, Ethel worked for Sir Harry for a year before setting up in practice on her own account. After a short period in partnership with another lady accountant, she ran her own practice until she retired in July 1961.
Contributing to the ICAEW
Having established her practice, Ethel began to get increasingly involved with the ICAEW.
Her papers held at the Women’s library at the London School of Economics show her writing in 1934 to inquire why female students were still being seated separately from the men in examination halls.
By the 1940s it was Ethel that the ICAEW turned to when they needed a female perspective on equal pay.
In the 1950s she was the first woman elected to the committee of the London and District Society of the ICAEW as well as becoming involved in the Chartered Accountants' Benevolent Association (CABA).
In 1962 Ethel represented the ICAEW at the Eighth International Congress of Accountants in New York.
Female networks
Ethel understood the importance of networking and was instrumental in setting up the Women’s Chartered Accountants Dining society in 1945.
This enabled women in the profession to meet and network at a time when, as one member put it: "Women accountants feel rather isolated, like mermaids sitting on a rock."
The world beyond accounting
Ethel didn’t restrict herself to accountancy. She was active in the Labour movement, and also campaigned for equal pay and the separate taxation of men and women. For many years she was chair of the Fawcett Society.
The march of the women
In the decades following the Act, the number of women in the profession increased slowly. By 1949, the ICAEW had only 125 female members compared to around 15,000 men.
By the time Ethel died in 1963, a total of 433 women had been admitted to the ICAEW, with a further 120 women articled as clerks - representing around 4 per cent of the total student body.
Where are we now?
One hundred years later, there are tens of thousands of female professional accountants in the UK. Representation does though vary between the professional bodies.
Figures published annually by the Financial Reporting Council show that, as at 31 December 2017, the Association of Chartered Certified Accountants (ACCA) has the highest percentage of female members at 46 per cent. The ICAEW reported the lowest percentage of female members at 28 per cent.
On average, over all seven major UK accountancy bodies included in the report, 36% of members were female.
The position for tax
The future
How the gender balance in accountancy will evolve in the future can best be predicted from the student body.
Over the past 20 years the percentage of female students has gradually increased for all seven bodies, ranging from 43 per cent for ICAEW up to 57 per cent for ACCA.
Overall, by 2017 the seven bodies combined reported that 49 per cent of their combined student body were female.
It therefore seems not inconceivable that in 2019, 100 years after the way into the professions was opened, the student body of future accountants could finally represent both genders equally.
Times a changin' for Class 2 NICs
Class 2 NIC is finally being abolished from 6 April 2019, which means that self-employed people with losses or low profits who want to protect their state pension contribution record will have to pay Class 3 contributions, which are considerably more expensive. Will there be any alternatives?
At the same time that Class 2 NIC is being abolished, changes will be made to Class 4 NIC that may be of assistance – but not in all cases. We have no legislation as yet and so the following comments are based on the information available but may be subject to change.
Class 2 NIC currently gives entitlement to state pension, maternity allowance, bereavement benefits and the employment & support allowance. From 6 April 2019, payment of Class 4 NIC will give entitlement to these benefits.
For 2018/19, Class 2 NIC is payable at £2.95 per week or £153.40 a year, whereas Class 3 is payable at £14.65pw or £761.80pa. Class 2 NIC is payable where profits exceed the ‘Small Profit Threshold’ of £6,205, but the legislation allows the self-employed with profits below this to pay Class 2 NIC voluntarily.
From 2019/20, it has been announced that Class 2 NIC will be abolished but that for those self-employed persons with profits that fall between a new Class 4 NIC Small Profits Limit and the Class 4 NIC Lower Profits Limit will be deemed to have paid Class 4 NIC, thereby giving the person a qualifying year for benefit entitlement purposes. The Small Profits Limit will be set at 52 weeks times the Class 1 NIC Lower Earnings Limit – currently £116pw or £6,032pa.
Using 2018/19 rates as an illustration this gives the following effects:
- Profits below £6,032: No Class 4 NIC Payable
- Profits between £6032 and £8,423: Class 4 NIC deemed to have been paid
- Profits between £8,424 and £46,350: Class 4 NIC payable @ 9 per cent
- Excess of Profits over £46,350: Class 4 NIC payable @ 2 per cent
The 2019/20 rates will of course differ but the principle involved is clear.
As the question points out, it is not only those self-employed individuals with continuously low profits that will be affected, but also those traders who occasionally make losses or whose profits occasionally fall below the new Small Profits Limit.
Consideration will need to be given to a particular individual’s contributory record for various benefits, which will affect the decision whether to partially reduce available capital allowances claims to ensure profits reach the Small Profits Limit – something that will not be possible for those using the Cash Basis of assessment.
It would also appear that the averaging of profits (available to farmers and creators of literary or artistic works) will add to the complications.
- Thanks to CronerTaxwise for this article
Free webinar with top accountancy adviser Steve Pipe
BrightPay are co-presenting a webinar with the world’s most highly rated adviser to accountants, Steve Pipe.
This fast-paced session on Wednesday, 6 March, at 11am, will show you how to earn enough extra money from payroll to pay off an average size mortgage in five years.
For the first time ever, this brand-new workshop will show you how to make payroll one of your most profitable and strategically important service lines.
It will also give you – completely free of charge - a powerful new step-by-step system for using payroll to win really high-quality new clients and get many more of your existing clients buying payroll services from you.
And it will give you all the other insights you need to make payroll really fly in your practice.
When you attend you will:
- Discover how to make payroll one of your most profitable and strategically important services
- Get a complete step-by-step system for making a lot more money from payroll
- Learn where you can get all the other free tools, resources, training and support you need to transform your reputation, profits and work-life balance
A dynamic speaker, former UK Entrepreneur of The Year and founder of the “Get and Give A Million” movement, Steve’s books including “The world’s most inspiring accountants”, have been described as “masterpieces”, “ground-breaking” and “desperately needed”.
BrightPay: Cloud innovation will be central to the future of payroll services
During the webinar, BrightPay will discuss cloud innovation and how it will be central to the future of payroll services. Be ready to offer a new level of payroll and HR related services by embracing cloud innovation. Find out how to use automation tools to become more efficient, comply with new GDPR legislation and grow your practice.
View webinar agenda | Register for webinar
Intuit QuickBooks expands its MTD universe
It's today. It's exactly one month until every UK business with an £85k-plus annual turnover needs to be signed up for HMRC's making tax digital for VAT. Anything is possible!
Unsurprising then that one of the world's leading accounting software groups, Intuit QuickBooks, has been polishing its MTD narrative to near-perfection.
The story goes like this: Intuit has got the backs of the UK's biggest driver of economic success, small business. And, yes, you guessed it: Anything is possible!
QuickBooks provides entrepreneurs with all the technology necessary to do their books accurately, easily and digitally. From capturing receipts and tracking mileage to complying with the government's digital tax policy. Intuit can even make Excel spreadsheets digital-friendly.
Small business dynamos
Plus, it links the UK's legion of small business dynamos via an online network to the best business advisers in town, the accountants.
It's a win win... the business owner can get on with being entrepreneurial and the accountant no longer gets bogged down in number crunching.
But that's not all.
QuickBooks has partnered with a group of economists to prepare a report laying out the knock-on benefits of MTD. And they are not insignificant.
Physics genius
All this came to light this week at QuickBooks Connect, Intuit's coolly impressive annual London expo, which this year (at Old Billingsgate) had the group's latest product innovations sharing the stage with physics genius/presenter/author Brian Cox.
It proved a compelling mix and, alongside some weirdly warm February weather, had scores of small business folk and accountants scratching their heads, looking forward to the future and removing their winter coats in equal measure.
Brian is very Twitter-vocal on Brexit but he chose to stick with the simpler subject of explaining the universe at QB Connect...
Anyway, back to the report. The Productivity Payout: UK Small Businesses and the Digital Economy basically charts a digital roadmap that could "catalyse up to a £57bn productivity payout for UK SMEs over five years".
Net gains in turnover
According to the authors: "Making Tax Digital, the digitisation of VAT in April 2019 will immediately yield an annual benefit of £6.9bn, or £46bn over five years in net gains in turnover and growth for the UK economy."
The report by Volterra, an independent economic consultancy in association with Intuit QuickBooks, is basd on an economic model – based on predicted behaviours of small business owners as a result of social and financial drivers.
It demonstrates that once businesses integrate technology to become MTD compliant, a "digital snowball"effect is likely to occur as they experience so-called spill-over benefits.
Digital-led approach
Chris Evans, UK chief at QuickBooks, says: “Now is the time for small businesses to embrace digital with unabated optimism. Today’s report highlights that a digital-led approach will be transformational for small businesses, who are the backbone of the UK economy.
“For those businesses, the transition to digital will not be without stumbling blocks. However, it presents a huge opportunity to streamline operations, drive efficiencies and simplify tax. It will enhance cashflow management and allow them to get paid faster and access capital to grow, powering prosperity across the UK.”
The model predicts the largest productivity benefit of digital adoption will be felt by London and the south-east.
Review and experiment
Peter Jarman, of PJCO Accountants, Sussex, adds: “Using new technology and software was in the first place new to us, but we hired a new graduate workforce who were able to review and experiment with the software before coming back to us with a suite of software that served our needs. I then felt confident in our ability to use it to help our clients.
“The benefits of getting stuck in and using online software has been almost endless. No longer do I need to contact clients for their records and can review their books at any time from anywhere. I can even integrate other business apps seamlessly to save time and money.
“I can see how that one small nudge from something like MTD will be a pivotal moment in the digital revolution for businesses in the south-east. I’d encourage all small businesses to take on all the support offered and tackle the hurdles – the benefits are more than worth it.”