The accountancy profession could see that change was afoot when the UK government announced Making Tax Digital (MTD) back in 2015.
Her Majesty’s Revenue and Customs (HMRC) issued a series of six consultations in August 2016. Then, on Jan. 31, 2017, the response to these consultations was published. Despite delays and distractions (not least Brexit), this initiative for a “fully digital” tax system by 2020 is clearly full steam ahead.
So, on Feb. 9, some nine days after HMRC’s formal consultation response, Thomson Reuters hosted a webinar to present the key changes heralded by the new system. Over 500 accountants attended.
It’s clear that, regardless of what legislation actually makes it into the final version of MTD, there’s a general acceptance that major change is coming.
It’s all in the preparation
Accountants need to consider their role in this transformation and take steps to prepare for a digital future. The onus is on the accountancy profession to communicate to clients the ways in which MTD will affect those who pay for our services.
“Show [your clients] what they need to do and how you can help,” urged Swaran Sohal, owner, Sandwell Accountancy Services, during our many discussions with Thomson Reuters customers on the topic.
Indeed, as a profession, accountants have already benefited greatly from technology – not least by saving time and money, thanks to automation and reduction in manual errors.
As more and more firms look to technology providers to provide them with the tools to help service their clients more effectively, it follows that clients are demanding more, too. They are looking to accountants to provide the extra touches that technology cannot. Differentiating factors such as customer service and business growth advice are becoming increasingly important. And with change comes opportunity, which accountants need to identify and explore.
Accountants must become trusted advisors
With new systems taking the heavy lifting out of processing, firms should now be able to concentrate their resources on expanding their roles as trusted advisors. Accountants will need to ensure that they can add value to their clients’ businesses, above and beyond the routine matter of compliance.
In 2018, self-assessment – once the annual headache of most accountants – will start to disappear. Income for larger businesses is to be reported quarterly as four separate updates to HMRC’s system. This provides four opportunities a year to meet with clients and discuss potential tax planning opportunities, using real-time data from that quarter. In effect, accountants will be able to provide advice throughout the year.
Real-time data will be the cornerstone of tax planning, as Andrew Ferguson, former client services director at Birkett Ferguson, explained: “If we can have more regular contact and give more advice on a regular basis, that would create a much better outcome all around.”
It should go without saying that those who invest in systems and technology will cope better with the required changes than those who resist the tide. According to Ferguson, there’s “real freedom” for those who embrace the new ways of working.
So, we are at a moment of unique opportunity to build closer relationships with clients. It’s time to get more involved with their businesses – and this should improve loyalty to our profession at the same time.
Review your internal systems and services
Those firms that elevate themselves to become responsive, connected advisors will reap the benefits.
In the words of Jon Cooper, director at CooperFaure, “Some are investing in the right software and will be in the best position once they have got their heads around how things need to work.”
For others, such as Sohal, the range of services that firms will be able to offer off the back of new technology will be the key to a successful future: “Those who will do well will be those who … are on the ball and do the whole thing for the customer.”
So, through MTD, accountants have a unique opportunity to build closer relationships with their clients – hopefully widening their advisory remit to provide continuous tax and business planning throughout the year – as opposed to the annual Jan. 31 focal point.
The government’s new digital tax accounts bring together each taxpayer’s details in one place, just like an online bank account, so taxpayers can view their tax affairs in real time, update their information, register for news services, see at a glance how their tax is calculated and more.
This real-time data is going to be helpful for planning purposes, and the introduction of these digital tax accounts is a real opportunity to change how everyone works. It’s an exciting time to be an accountant, and future-facing professionals who embrace the imminent changes will gain ground in this new, technology-driven landscape.
Learn more about MTD
Visit our Making Tax Digital hub to find a wide range of resources for accountants and tax professionals, including MTD guides, webinars, videos and the latest MTD news.