IT File – Death and tax grip market.

As if there is not enough to think about with the 31 January deadline looming, many self-assessment advisers are being forced to spend their busiest time of the year re-evaluating their choice of tax software.

The UK tax software market has changed significantly in the last 18 months with no fewer than three leading suppliers disappearing from the frame.

The first supplier to disappear was Taxsoft in 1999 after its acquisition by Sage, followed by CSM, also to Sage, in April of this year. Within a month, Sage announced one further acquisition after picking up Apex.

But the flurry of activity did not stop there. In September, Solution 6 announced its purchase of Viztopia and the publishing house. Wolters Kluwer bought the supplier FDS, known for its Taxpoint system.

The spate of recent acquisitions has created a highly competitive environment and has seen power change hands from the suppliers to the profession as the battle for customer loyalty begins.

Customer loyalty is being questioned following the moves in the sector which have included the shelving of several products. These include Sage’s announcement to drop both the CSM TaxMan and Taxsoft Personal Tax products – a move that took the profession by complete surprise.

With just three significant players left in the market, Sage, Transaction Technology and Solution 6, firms have started to question what is going on. A recent survey of practices revealed significant unrest as many firms discovered their software system was no longer going to be supported.

In many cases that means they are being forced to migrate to a system they may have previously rejected.

Indeed, many accountancy firms faced with holding a time consuming beauty parade of products before their software support licences expire have a difficult task ahead.

In a bid to capture the lion’s share of business, the three leading companies have been busy repositioning themselves.

Transaction Technology, developers of IRIS software recently announced Lloyds TSB had made a major investment in the company which would allow it to retain its independence and at the same time provide financial support to extend its range of products and services.

A Transaction Technology spokesman, said: ‘The recent spate of acquisitions has caused widespread confusion and many practices are concerned about what they should do for the best.’

Sage insists although its acquisition programme has been active, it may still buy more companies. It retains an upbeat mood centred on the belief next year it will step up its efforts in all areas and claw back custom it has lost after devoting much of this year to realigning itself.

It recently launched Sage24 – a package which enables accountants in practice to create their own professional website in under an hour – a product the company hopes may revolutionise the way they communicate with their clients.

The product uses internet technology to give accountancy practices a quick route to taking their business online.

Gavin May, general manager of Sage’s Professional Accountants Division said: ‘We now have the portfolio we wanted. Recent research has suggested our customers trust us and feel secure about Sage taking them into the e-business age.’

Solution 6 has suffered a difficult year due to a plummeting share price and a board restructuring. The company has adopted a ‘back to basics’ ethos and reduced its operation in the UK.

However, it too is confident next year will see positive aspects, including the launch in the first half of the year of its accounting/accounts product and a new statutory accounts report writer product.

But, whatever lies ahead, suppliers will have to wake up to the threats and opportunities of the new market place. To achieve customer loyalty, software providers need to get closer to their customers in order to understand their needs and requirements.

The profession may well choose to be loyal to the companies that they feel offer the most reliable software and tailored support with the backing to ensure continued long-term development of the products.

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