Effects of HMRC & Making Tax Digital
The long-awaited Making Tax Digital (MTD) consultation documents have been released. They contain many of the changes we expected along with some unexpected and rather challenging implications.
What you will find when you read the report (we have provided a copy to everyone who has registered to receive this report) is the exclusion of any reference to Agents and the part they might play in the process of Making Tax Digital.
What is clear is that MTD is going to happen within the lifetime of this Parliament and you can
be sure that the £1.3 billion investment made available by the government to transform tax
administration, will have to be accounted for.
What will it look like?
• Data will be collected digitally.
• The obvious place to collect this data will be via an App.
• The user (your client) will use this to submit the core information.
• The data is likely to be sources of income, outgoing expenses, mileage etc.
So it will be compulsory to capture data digitally, accurately, easily, and in a timely fashion to be able to comply with a quarterly system. That’s exactly what the MyFirmsApp platform achieves for you and your clients today and more than 200k clients of other firms are already using it for precisely those reasons.
It will also ensure that your firm remains at the centre of the relationship and gives you the ability to provide the tools and solutions that will become essential for your clients. A recent ICAEW report stated that of the UK’s c.4.9 million small businesses, 75% have no accounting software solution.
Helping your clients prepare
Some firms we engage with are concerned, worried even fearful of the change. In some Accounting Web posts we have read of accountancy firms wanting to quit their jobs. We hope in part this ebook has helped with some of these challenges. But what about your clients? How are they feeling about the looming changes ahead?
Ultimately the sooner you help your client swith this and the sooner they become accustomed to this way of capturing and managing data, the easier they’ll find the transition into MTD and quarterly reporting and be ready for April 2018. It will also remove the potential for shock or panic tempting them away to a firm who has already put a solution in place.
MyFirmsApp are already working in Australia where the ATO (their HMRC equivalent) have gone digital and this helps us serve our UK clients better. One of the challenges in any country is who gets this data. There is some excellent material, blog posts and thought leadership on accountancy firms doing less data admin and more consultative, advisory services. However, if the data gets to the HMRC before this takes place then this complicates things. If accountants and Tax Agents are effectively circumnavigated then how does this ‘interpretive’ work take place?
Our team is working directly with HMRC on a regular basis with a view to positioning the accountant in the middle of the data flow. So that rather than being avoided, data goes via an agent. And that agent needs to be you!
Access your free report today and become one of the very first to read this highly-informative guide exclusively for accountants.