Making Tax Digital: Q&A with managing director of tax and accounting at Wolters Kluwer

Accountancy Age speaks to Claire Carter, managing director of tax and accounting at Wolters Kluwer about the digitalisation of the UK tax system

Making Tax Digital was removed from the Finance Bill in April ahead of the debate on the bill in the House of Commons. What does this mean for the digitalisation of tax?

Inevitably there will now be a delay but I view this as a good thing as it gives everyone more time to prepare for this significant change. There are many benefits that Making Tax Digital can deliver from an industry-wide perspective such as an increased opportunity to offer advice and guidance to ensure the best possible outcomes for accountants. From a Wolters Kluwer perspective, we believe that digitalisation is inevitable so it’s very much business as usual; there’s no pause for us in terms of the continued commitment to developing fully compliant solutions.

Has the government carried out sufficient consultation on MTD?

As with any process of change, there has to be a period of consultation with the industry that will be impacted by it. The changes will be significant, particularly for larger firms whose structures may be rather more complicated. As such, it stands to reason that the removal of MTD from the Finance Bill will allow all concerned to reflect and ensure that there is ample time to appropriately prepare. It will be extremely interesting to see how the pilot plays out and crucial to ensure that key learnings are taken into consideration.

Do you believe the government’s estimated costs to be accurate? Do these costs pose a real threat to a small business’ survival?

The headline cost estimate is merely that – an estimate. It is likely that there will be a number of factors that could cause the number to alter as MTD evolves. HMRC called out that estimates are not final and that there will be fluctuations depending on final software solutions, the availability of free software and individual providers’ pricing structures. With that in mind, it will be interesting to see whether any of the bookkeeping solutions do, in fact, offer free software when the initiative comes into force.

Would you support a proposal which would see MTD first applying to businesses with the highest turnovers, and then filtering down to SMEs?

Not necessarily. In many ways, whether your business is large or small, you simply need to set yourself up to succeed. I believe companies need to focus on three key areas – preparation, engagement and readiness. By preparation, we mean putting the foundational elements in place to guarantee success. Engagement is all about ensuring your clients are on the journey with you and readiness means making certain that you are fully ready as and when the Making Tax Digital requirements come into force. In one guise or another, Making Tax Digital is a reality so businesses must think about the clients within their portfolio, their profile and the processes that will best apply.

Should businesses see MTD as an opportunity to improve their efficiency and embrace the digital world in which we operate?

It’s absolutely an opportunity. If you look at predictions for the next decade, compliance is anticipated to grow at a modest 0-3% while growth for advisory services will be in the region of 20-30%. What this means is that we will start to see many more consultative conversations between accountants and their clients and this allows them to add real value and to identify additional areas for growth to their business. These conversations will be critical for the tax adviser of the future who will have to extend their existing skill sets in order to keep pace – it’s about quality conversations leading to best practice solutions.

What can businesses with little digital experience do to adapt to the measures?

As I mentioned earlier, the first critical step is preparation. This means understanding the profile of your clients. Are they cloud-ready? Do they currently use a bookkeeping solution? Are they providing receipts to you on a monthly basis? Once the answers to these and other questions have been determined, accounting firms can then decide on an approach for each group. And whether businesses ultimately opt to encourage certain clients to start using Excel, or others to deploy a bookkeeping solution, ultimately it’s the responsibility of industry vendors such as Wolters Kluwer to provide the expertise and advice that will achieve the best outcomes and ensure businesses are equipped for an increasingly digital world.

Do you think we’re still on track to become the most digitally advanced tax administration in the world by 2020?

I love the aspiration and would like to think so but there are some real obstacles. Delays always have an impact and depending on what we see from the government, while we will undoubtedly be much more advanced, we may not reach this goal by 2020.

What do you think the tax system looks like in 2030?

The future will be much more focused on advisory services. Effectively tax advisors will have to be the “virtual CFO” to every business that they support.

Interview by Alia Shoaib, reporter on Accountancy Age.