Making Tax Digital the changing landscape
Over the last 12 months we have regularly asked our customers about their thoughts on the Making Tax Digital initiative including the latest announcement from HMRC. Last month HMRC announced a further delay to the program. The ambition of having sole trades, partnerships and those with rental income above the VAT threshold to begin quarterly reporting their accounting data from April 2018, has been pushed back to at least April 2020 (read more here).
In our recent survey the vast majority (80%) of our customers feel that the delay in MTD is the right decision, however many (29%) are still wanting to get involved early to ensure that they get the process right for all their clients.
In all the changes the only constant element has been the requirement for businesses with a turnover above the VAT threshold (currently £85,000) having to keep digital records for VAT purposes and making quarterly submissions using the new platform from April 2019.
Our survey shows that 94% of customers complete VAT Returns on behalf of their clients, so most are going to be impacted by MTD as early as 2019. Getting the processes right now for VAT will help to ensure the process is much smoother when it is expanded for Income Tax and Corporation Tax.
Bookkeeping software seems to be the answer to making MTD easier. 40% of the customers who responded were convinced a receipt capture app would make life significantly easier for their clients with a further 32% willing to explore receipt capture to help their clients. There is a way to go here though as practices report that 60% of clients are not currently using any bookkeeping software.
Need for stability
What is needed now is a period of stability allowing practices the time to adopt new technologies, change their processes, and work closely with their clients to ensure they realise the benefits of the digital transformation so when MTD finally arrives clients, practices and HMRC are ready.
Survey dates: August 2 – 11 2017, Number of responses: 459, Follow up from March 2017 survey which generated 615, and Nov 2016 survey which generated 925 responses.