TechnologyMTDMaking Tax Digital: Q&A with product manager of tax products at Thomson Reuters

Making Tax Digital: Q&A with product manager of tax products at Thomson Reuters

Accountancy Age speaks to Mark Purdue, product manager of tax products at Thomson Reuters, about what the future holds for the government's digital agenda

Making Tax Digital: Q&A with product manager of tax products at Thomson Reuters

Accountancy Age speaks to Mark Purdue, product manager of tax products at Thomson Reuters, on what the future holds for the government’s digital agenda

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?

I can fully understand that there is uncertainty at the moment, as with the election everything has gone quiet. The legislation being removed from the Finance Bill hasn’t impacted on HMRC developers doing the work that they’re still doing, or the pilot that we are taking part in – that’s still ongoing

That said, the election and the period of purdah which goes along with it does appear to have caused some slight delays in the pilot insofar as they’re not allowed to give fresh information or advice in any way. I think that it is still on track, but I do appreciate that the big question that we still don’t know is: when is the go live date? Is it likely to be April 2018, or is it likely to be later?

Do you believe that the government’s proposed timeframe is realistic?

I think it was. I think without the election and without the delay to the legislation, yes, there’s no reason why HMRC and software providers couldn’t be ready by April 2018.

Realistically, a new Finance Act isn’t going to be the new government’s top priority as soon as they get in – they’ve probably got higher priorities to worry about.

It does call into question that if we don’t get the legislation, how everything else is going to fit. We’re still working towards the go live date of April 2018, and I think from our perspective and from HMRC’s perspective, policy aside, that the date would still be achievable. But, with the legislation process holding us back, it is becoming increasingly unlikely that it’s going to be April 2018.

That said, I think it’s important for accountants to still stay focused on April 2018 and still assume their clients are going to take part then until we find out any different.

How can software providers help businesses comply with MTD?                       

Whether people like it or not technology is going to play a key role in Making Tax Digital. It’s all about the digital record keeping for those who can. So, unless a business falls within the definition of digitally excluded or into one of the few exceptions, all business owners are going to need to use technology to keep their records.

That means all business owners are going to have a relationship of some kind with software providers, and software providers will be playing a key role. I think that a key challenge is going to be software users who perhaps haven’t been using software – it’s really important that software is easy to use.

One of the key roles for software providers is the education part. It’s not just about providing a piece of software and walking away, it’s the educating and hand holding of the business to help them through.

Have you collaborated with HMRC on MTD software?

Since day one, when MTD was first announced, Thomson Reuters has been involved with HMRC. At developer level we’ve been involved in every meeting, we’ve even made our software users available to them for questioning and designing software, and thrashing out their requirements.

We’ve been taking part in the pilot. Our first user signed up on 3 April so we are also engaged on a one-to-one basis with HMRC around the pilot and the users of our software who have been taking part in the pilot.

Will you be providing clients with any training initiatives on MTD software?

Yes, definitely. It’s a key role for software providers. I think that there are some people who believe that the education point lies solely with HMRC, and that it’s their role to teach businesses what MTD is, but I think it’s a joint responsibility between HMRC, the accounting professionals and software providers. The responsibility of training and educating the business owners lies with all of us.

We’re already doing it to some extent. We are already offering free webinars on education of Making Tax Digital aimed at the accountant, e.g. how it’s going to impact on their clients, and what sort of software they’re likely to need. So far well over 1,000 accountants have listened and taken part in those webinars.

Should businesses see MTD as an opportunity to improve efficiency and embrace the digital world?

I think so. Going digital is going to offer efficiency to businesses, particularly if they are maintaining their records by paper for example – that’s quite a drawn-out process.

I think going digital we need to start thinking about bank feeds and seamless integration of data – it is just going to be a lot easier and a lot more efficient to be digital. I think that the accounting profession shouldn’t be overlooked when we talk about the benefits because for an accountant acting for clients, if the client is able to embrace digital then the practice itself is going to become far more efficient, and it’s going to free up time in the relationship with the client to offer additional services.

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

The change of view on spreadsheets – spreadsheets were out initially for record keeping but now they’re back in – is a very welcome change, particularly for a business owner who maybe doesn’t have the software today and would be completely overwhelmed by a traditional bookkeeping product that’s maybe a bit complex for what their needs are.

I can see in the future a simple spreadsheet template, maybe designed by the accountant or software provider that allows a client to be compliant with their requirements for digital record keeping, but equally they’re storing their data digitally so that the accountant can interact with that data.

I think simple spreadsheets are going to become something very important in the future and that they will help those who are struggling to adapt to digital.


With tax shifting to digital, are there any concerns surrounding cybersecurity that you’re mindful of as a software company?

Yes, data security is always a hot topic. I think the weakest link in data security is always the software user themselves, and the password they use. I googled the most used password in 2016 and it was still 123456, so it doesn’t matter how secure the data is if you’ve still got a software user who’s using that as a password – that’s your security risk.

Processes such as two factor authentication are going to become key, and it’s going to become a requirement that in order to interact with HMRC, they need to be able to identify you as an individual and not just the password, so two factor authentication is going to make a huge step in terms of data security.

 

Interview by Alia Shoaib, reporter on Accountancy Age.

 

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