There are 1.1 million businesses which must be ready for the Making Tax Digital deadline in April.
At a time when only 20 percent of small businesses currently do their accounting online, the challenge is on.
Xero’s chief product and partner officer Anna Curzon told an audience at Xerocon that “this is a moment in time when we are seeing a lot of businesses moving from analogue to the digital world.
“This is a massive opportunity which we’ve never seen in our generation in the UK.”
A survey of 1,500 small businesses conducted by the cloud accounting firm found that 27 percent are looking for a new accountant or bookkeeper.
That means 300,000 businesses are switching as they seek someone who can provide proactive advice on a monthly basis.
Five things for accountants to do now
Anna Curzon laid out five things accountants should add to their to-do list before April.
- Develop a digital strategy for your client
- Let people know you are Making Tax Digital ready
- Demonstrate that you understand the business your clients operate in
- Immerse yourself in tools such as Hubdoc and Instafile
- 4 out of 5 businesses need help with core compliance
How Xero has prepared for Making Tax Digital
HMRC tax returns can now be filed directly from Xero, which is now faster and more stable. The VAT returns section has also been revamped, with a clearer navigation tool. A new Xero dashboard has been designed with the intention of making filing tax and other information easier.
Xero has acquired Instafile, a cloud-based accounts preparation and tax filing solution that connects UK accountants, bookkeepers and small businesses to UK compliance bodies including HMRC. With Instafile, Xero is planning ahead for 2020, the current expected date for mandatory MTD filing across all tax types.
The company has also created a cartoon character, Dexter the Digital Tax Advisor, who will help small businesses. A survey earlier this month found that one in four small businesses are still unaware of Making Tax Digital for VAT laws.
A series of short films featuring the animated character will be released in the lead-up to the April deadline.
Making Tax Digital for business begins on 1 April 2019 with MTD for VAT. From that date, VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software.