AAT members on their way to becoming MTD compliant

Making Tax Digital (MTD) is a huge upcoming change for the UK, and it continues to be a source of confusion and worry for many accountants as they focus on how to become MTD compliant.

With 1 April 2019 being the deadline for which businesses with VAT turnovers valued at £85,000 will be required to maintain digital records only, it seems as if a large number of businesses that this is applicable for could run the risk of missing the deadline.

However, according to a recent report released by the Association of Accounting Technicians (AAT), its members are fully on their way to becoming MTD compliant, with 63% claiming that they will be fully prepared for the MTD-VAT launch in six months’ time.

AAT stated: “[It is important to note that] businesses below the threshold can continue to keep their records from before and to submit VAT returns, using HMRC’s on filing product, but they can also voluntarily register for MTD-VAT. Other taxes, including income tax, will not be mandated until April 2020, at the earliest.”

Other figures AAT has released show that 31% of their members are fully prepared, “to the extent that they feel ready to join HMRC’s pilot, which is opening up into the public beta phase during October.”

Brian Palmer, tax policy expert for AAT, emphasised that “from where [they] were two years ago, these results represent a huge step change with regards to many accounting technicians being proactive and preparing themselves well for MTD.”

Although AAT members feel prepared, there is a clear divide of opinion when it comes to their clients. 14% of AAT members have reported that they believe none of their clients will be ready in time for the implementation of MTD in six months’ time. That being said, 34% of AAT members claimed that between 81-100% of their clients will be ready for MTD.

Palmer identified this as a cause for concern when he said: “While those in the accounting world itself are doing everything they can to be fully MTD compliant, there are still concerns as to whether the message about what needs to be done in preparation is truly filtering through to clients – especially those in smaller businesses.”

To bridge this gap of understanding in the accounting world, Brian Palmer added that “with AAT accountants and bookkeepers looking after the needs of some half a million businesses, there’s a role that professionals can play in ensuring they are not still receiving loose paper receipts from Easter onward.”

The first step to remedying this is to open up a dialogue that focuses solely on reinforcing the topic of the arrival of MTD and exactly what that means. However, despite information about MTD being regularly circulated, the actual implementation of change is just not happening at a fast enough rate.

One of the main issues in AAT’s report that seems to be behind the slow uptake of accounting software has been the issue of the software itself, the choosing of the right provider for their business. Only 27% of AAT members have finalised their software provider, whereas 30% have no idea which provider they will use.

Palmer concluded: “Currently, there are more than 50 software providers that already have recognised compliant software. This is some way short of the 150 providers who have said they will provide software that HMRC first suggested, but from my conversations with the department, I understand they remain wholly confident in adding to their current figures. However, accounting firms really can’t wait that much longer if they are to test the system in full.”

With only six months to go until MTD-VAT is implemented, it really is a race against the clock for businesses to make sure they are completely MTD compliant.