Why so many businesses who think they are compliant with MTD need to think again

Why so many businesses who think they are compliant with MTD need to think again

QuickBooks' head of product Shaun Shirazian on how accountants can help small businesses prepare for MTD - and why many who think they are compliant are not

Why so many businesses who think they are compliant with MTD need to think again

Research from Intuit QuickBooks has revealed that awareness of Making Tax Digital has increased from 58 percent to 83 percent.

Awareness has been driven by a combined effort from HMRC and the accounting industry, with 26 percent of respondents finding out about MTD thanks to a communication from HMRC, and 27 percent following a communication from their accountant.

However, the survey found that some small businesses may need to check if they are compliant. The survey of 500 decision makers at UK small businesses with turnover above £85,000 showed that 57 percent of businesses thought they were compliant, but 58 percent of them in fact would have to change their processes to become compliant.

Shaun Shirazian, who is head of product at Intuit QuickBooks, answered some of our questions about this anomaly, and where accountants can help and even benefit from the transition to MTD and full digitalisation beyond that.

Why do so many businesses think they are compliant when in fact they are not?

The biggest confusion around MTD is the belief that businesses who submit taxes through the existing Government Gateway system are classified as MTD compliant. However, MTD compliance is more than submitting taxes ‘online’.

From April 1, HMRC will require all VAT-registered businesses to keep digital records and send returns using MTD-compatible software – through the use of cloud accounting or bridging software capable of securely sending and receiving data from the HMRC website with digital links.  It’s because there has been so much uncertainty around MTD that we’ve set up a dedicated free phone hotline to help answer individual questions and provide support on a personal level.

Can accountants do something to help?

Absolutely. it is important that accountants and software providers work together to communicate with business owners the options available to them, to make the transition as smooth as possible. In fact, we’ve created a series of free marketing materials, email templates and social posts for accountants to tailor with their own brand and send to their clients to help them educate and inform them about MTD and the changes ahead.

Cloud-based tools are now so intuitive and simple to use that many of the traditional and time-consuming bookkeeping methods have been revolutionised.  Clunky spreadsheets have been replaced by online software designed for purpose and this is allowing accountants to focus on other ways to add strategic value to their clients’ businesses and grow their practice profit margin.

Are some accountants reticent to help their clients with MTD, fearing that software will take away their jobs? If so, what can be done to reassure them?

On the contrary, adoption of MTD compliant software and cloud accounting solutions are there to make it easier for accounting professionals in the long term and, through automation, free up time that can be invested in growing their practice.

A rebalance of core services is nothing new to accountants, but the pace and change of technological advancements continues to super-charge the advisory and capacity opportunities. For example, many accountants may look to offer more consultative services or take on additional clients in the extra time they’re able to make for themselves.

The accountants and firms that thrive will be those that work in tandem with their clients, to deliver a personalised service and ensure that business owners are fully educated on regulatory changes – like MTD – and endeavour to transform tax administration so that it’s more effective, efficient and easier for businesses.

Has the message about the benefits of digitisation got through to small businesses, or do many see MTD as a tedious compliance issue?

It is important that all business owners recognise that MTD presents a fantastic opportunity to transition to dedicated software and realise the full benefits of digitalisation such as better cash flow management, significantly less time spent on admin and increased peace of mind about the financial health of their company.

Technology will continue to play an ever-increasing role in a business world that demands more flexibility and innovation. Businesses that embrace MTD to bring to the forefront real-time insights into how they operate, will be those that grow and evolve in an increasingly competitive landscape.

Is it too expensive for some smaller businesses to comply, even if they are above the £85k threshold?

We would encourage any business to look at the affordable cloud computing solutions available and take the time to work out what tools and support they need that will make their life easier and business run better in the long term.

We also know that change can be daunting, so it is important for business owners to think about the support they will get too; not only when they’re setting up and moving on to new software but ongoing and at those crucial filing moments throughout the year. At QuickBooks we offer free support to our customers and they can call and speak to someone about their specific concerns, without having to worry about receiving an invoice for the help.

What’s next after MTD?

There are a lot of companies that will be moving over to a new way of doing things because of their need to be MTD compliant. By adopting digital into their back-office systems we hope that small businesses and accounting professionals will be able to use this as a springboard to add value to their business in many different ways.

At QuickBooks we’ll continue to back small businesses, accountants and bookkeepers – to champion their successes and help them deliver the best for their clients and customers, be that through improved bookkeeping, cash flow, payroll or taxes.  We’re a tech company at our core, so we’ll continue to innovate and adopt new technologies such as AI, machine learning and automation to enable us to achieve this.

For us, significant milestones on our roadmap will be preparation for the next phases of MTD, once the VAT phase is complete, and of course we’re looking toward open banking changes later this year.

 

 

 

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