Accountants not ready for Making Tax Digital

A recent survey* of accountants shows that 90% of advisers do not have a solution in place to offer their clients ready for the looming Making Tax Digital deadline in April 2019. In brief, Making Tax Digital (MTD) requires businesses to submit their VAT return information directly from their book keeping software to HMRC, with effect from 1^st April.

This poses a particular problem for businesses who currently maintain fully or partially manual records and even those using spreadsheets. The solution is a compliant book keeping / accounting package which can submit this information directly to HMRC. However, not all software is compliant and older versions of established packages will no longer be sufficient. Similarly, bespoke financial packages for larger organisations are likely to require redevelopment in order to comply with this new legislation.

In general, the Accountancy profession appears to have adopted a passive approach to MTD… hoping it won’t happen in the end. It’s easy to see why – HMRC have shifted the goalposts repeatedly, changing the timeline and the scope of taxes that will be affected. HMRC have only recently (November 2018) started to communicate the changes to businesses, but the deadline is coming and advisers need to be ready to assist their clients.

In fact we started our preparations for MTD over two years ago, by assessing the available products based on their functionality, but also their ability to adapt to changing HMRC requirements. The results of this research showed that Xero, a cloud based accounting package with over 355,000 subscribers, is an ideal fit for most businesses. Although we won’t push you to use this package if it isn’t right for you, we are experts and are proud to say we have the largest number of businesses using a cloud based accounting system in the UK.

Selecting the right solution for your business isn’t straight forward and many business owners are choosing to take this opportunity to overhaul their financial record keeping, to improve their ability to make prompt financial decisions and increase the level of control over their finances.