Making Tax Digital will happen, regardless of who wins the General Election. Businesses will be required to keep digital financial records and there will be, indeed already are, a range of MTD-ready software options to choose from.
In some ways this off-the-peg approach should make it much easier for clients to adapt to the new regime, but the number of options available is of varying quality which is causing some concern within the accounting profession.
Accountants are likely to recommend a particular package to their clients, having researched the market. But that doesn’t mean that clients will buy it or, if they do, they may not use it, particularly if they can’t understand its various functions. Many clients will opt for free software, perhaps in the form of an app, or they will not appreciate the need to use a system which is compliant with their accountant’s requirements. Some will keep their accounts in more than one electronic format in the same way that they kept their written records in a variety of carrier bags.
The fear among accountants is that accounts will be presented on a variety of different electronic spreadsheets with requests to access extra information on apps. And this will happen four times a year rather than the annual submission of paper bags as at present!
Accountants are being advised that now is the time to assess their clients’ ability to cope with MTD. Assuming that a client is able to make the transition from manual recording to a spreadsheet or app, consider:
- what controls you could put in place to limit the amount of missing data each quarter and the data you will need to make ‘repairs’
- what controls you have in place to reduce the number of sources clients use. You’ll have to think through how you get across your own needs while recognising that business owners are good at what they do, but that doesn’t mean they understand accounting procedures.
Having decided your policy, are you in a position to police it with existing clients and what will your approach be to new clients?
All this is extra work, but not thinking through the impact of MTD on your clients will only add to your own frustrations as well the businesses with whom you work.