VAT represented the biggest change in accountancy since iXBRL. From record keeping to making quarterly submissions and payments. However, this is just the beginning. In the coming months MTD for VAT will become business as usual, and the focus will move to Income Tax and Corporation Tax.
In advance of her Accountex Tax Theatre seminar on 2 May at 10:15am, Jenny Strudwick, Senior Product Manager for IRIS Software Group shares her thoughts as to where next for MTD for VAT.
MTD has arrived
We’ve made it. From initial discussions, concerns, interim solutions and technology changes, MTD is now in place and the move to a digital economy is evident. In 2015, Companies House received 9.04 million submissions, of which 86.5% were electronic. Skip to 2018 and 90.7% of the 11.4 million submissions were completed online.
Some accountancy practices have fully embraced the digital revolution, while others are cautiously observing the industry and Government to see if there will be any further changes before they step into the MTD water.
Much as this is logical, we also need to be mindful of more digital changes over the coming years including the move to Income Tax and Corporation Tax.
Beyond MTD
The MTD journey starts by profiling clients; understanding which of them need to file into the HMRC VAT portal and who will be first in line to make quarterly submissions after April 2019. However, there is far more to gain from client profiling which will help inform the strategic direction of their business, so it’s worth adding both Income and Corporate Tax to the analysis of the client base.
Understanding your clients’ needs makes it far easier to incorporate changes, especially when the practice knows where the client’s business is heading. Talk to them about the big picture – what will their business look like in the next three years? What digital platforms do they anticipate using? Explore other areas of the business such as CRM and database systems, as integration to financial systems will be key to efficiency and productivity gains in the future.
Use practice data to shape your future
The advent of MTD has compelled practices to look at their structure and systems to ensure they have the right skill sets and services for the next decade. With more legislation around the corner, it’s worth creating capacity and skill for Income and Corporation Tax services, not just MTD. This doesn’t mean to say you must structure your practice for these services but understand (just as we did with MTD) staff experience, profit margins and capacity. Depending on the outcome of your investigation and decision, consider partnerships with other firms who can offer complementary or outsourced services for your clients.
Digital connectivity
The technology choices available to support clients to meet their obligations without using excess budget and team skills on routine processing is of course, front of mind. Connectivity solutions are available for bookkeeping, file sharing and client communication, so you should consider what’s best for the practice and clients.
The wonderful world of ‘big data’ has provided businesses with more data than they can cope with. In fact, they don’t know what to do with it. And here lies the opportunity for accountancy professionals. Using real-time technology tools, you – as their trusted advisor, can bring it to life and provide the intelligence to help them thrive in the digital economy.
Lifelong learning
Enabling the practice to be ready for MTD has required staff training, client training and a whole-practice approach. But the learning doesn’t stop there. Consider the additional advice clients will require for Income Tax and Corporation Tax, as well as other changes that could occur in the future. For example, accountancy professionals could be the new breed of bank manager, helping to develop business plans and obtain funding for start-ups or clients requiring more investment.
Structure training around the strategy for your business. The opportunities to broaden service provision are not only available today but are likely to be endless in the future.
Taking the lead
At Accountex 2020, I expect MTD to be ‘business as usual’. We will have submitted electronic quarterly returns for a full financial year. Firms will see increased practice efficiency and productivity and depending on the desired vision and strategy, new services will be in place to create strategic partnerships with clients.
This time last year, MTD perception across the industry was comparable to eating an elephant. It’s long trunk; large, floppy ears and wide, thick legs looked too daunting to eat in one go. However, with strategic planning and a little change management, we’ve seen the industry evolve into an exciting, critical service for UK Plc. As we ask ourselves ‘where next for MTD’ we should also seriously consider how our expertise can shape the future digital economy.