BTCSoftware has published a new white paper following a survey of small and medium sized accountancy firms, and those firms’ current attitudes to Making Tax Digital (MTD).
These accountancy practices support thousands of the UK’s entrepreneurs and SMEs (small and medium-sized enterprises) – the very businesses HMRC was keen to move over to Digital Accounting.
Why the survey
Following the announcement in the summer of MTD’s new rollout timetable, BTCSoftware canvassed the opinions of small and medium-sized accountancy practices as to what they thought of MTD going forward. In particular we wanted to uncover.
- What accountancy firms thought to be the benefits of MTD for their practice
- What did they consider the benefits of MTD to be for their customers
- We also asked them about what drawbacks they envisaged MTD would bring to their practice
- Given the optional element to MTD, when they would intend to move over their practice systems, software and clients over to a MTD compliant solution
Download the White Paper
Scepticism and frustration
Despite the changed timetable, the overall sentiment towards MTD from the accountancy practices was one of deep scepticism and frustration.
- Whilst 37% of responses thought MTD would help them streamline new processes in their practice, 25% of responses couldn’t see any benefits of MTD for their practice and their clients
- Over 63% of responses felt MTD would lead to greater tax-related errors, which accountants would then have to resolve
- 44% of the respondents surveyed would wait until MTD became mandatory before implementing a MTD-compliant solution – they wouldn’t voluntary move over to MTD before then.
Efficiency and effectiveness?
The UK prides itself on its entrepreneurial spirit. SMEs played a significant part keeping the economy moving forward in the last recession. From our research, accountancy firms clearly worry that MTD will not enhance SME efficiency and effectiveness as HMRC hopes.
The accountancy practices surveyed have substantial reservations about Making Tax Digital (MTD). Many feel it will have a detrimental impact on their clients’ businesses (small and medium-sized businesses) and their own.
Summary
If HMRC wants to improve the digitisation of the UK tax system and bring SMEs over to digital accounting, it would be wise to listen to these concerns. It would also be sensible if it engages more with the SME community and their advisers to ensure the MTD learning curve and transition period doesn’t put those businesses at a significant commercial loss.
BTCSoftware are continuing to work closely with HMRC on its Digital Accounts projects so that when Making Tax Digital (MTD) becomes completely mandatory (and we believe it will), our software is ready, easy to use and aids our customers migrating their clients over to MTD seamlessly and as effortlessly as possible. Our software is already MTD-compliant with the API’s HMRC has released prior to the end of October 2017.
HMRC will need to engage more with the SME business community and their advisers, if it wants a seamless and positive adoption of MTD. In particular, it will need to identify and communicate distinct benefits to MTD. We hope sharing these accountancy firms’ views will aid that process.
