Next year will be yet another year of upheaval for the UK’s small businesses. April 1st marks the new Making Tax Digital for VAT (MTD) deadline for all businesses with revenues below £85,000 – equating to more than one million businesses across the UK.
Non-compliance will cost. After the uncertainty and struggle of the last two years, this is not an option. In the final months until deadline day, and especially as the busy Christmas season takes up business owners’ already limited time, it’s accounting professionals who are stepping up to the plate.
Making Tax Digital is giving accountants the opportunity – emphasis on the word opportunity – to play every role necessary for their clients, from advisor to teacher, technologist to therapist.
This is undoubtedly a good thing – for individual practices, and for the future of the industry. So how can accountants help their small business clients to comply, and the UK to become a leading light in digital tax, while prioritising their own business goals?
Intuit QuickBooks, the global technology platform, recently commissioned research into the impact of Making Tax Digital compliance on small business owners and the accountants helping them on their journey.
Accountants and bookkeepers across the UK are already investing a lot of time into getting their clients compliant – an average of 7 working days, or 55 hours, per client. No wonder, as 62% said their clients are resistant to following the rules around MTD.
The driving force for accountants to fight this uphill battle is the understanding that Making Tax Digital is a positive, long-awaited step forward. Three-quarters said that the new MTD rules are certain to save them time and reduce errors in clients’ tax returns – if they aren’t already.
This will free up accountants’ time to focus on the strategic advisory work that is critical to the future of their business, helping clients navigate major business challenges beyond just tax. This way, they can become the ‘one stop shop’ their SMB clients rely on to succeed, creating opportunities for business growth.
We’re already seeing this happen in the field, and the research backs this up: three-quarters said that MTD will benefit or is already benefitting their business. Crucially, the same amount say they can already see that the benefits outweigh the time they’ve taken to get clients up to speed. Accountants’ investment of time and resource is certainly paying off.
Keeping up with the pace
But neither SMBs nor accountants will be able to achieve compliance without the right tools at their disposal. To see MTD come to fruition, accountants need to embrace the digital technologies that make compliance possible – after all, the clue is in the name.
This is how we can ensure our services remain relevant to the small business economy – and not just relevant, but integral to its success. Taking these steps forward in terms of digital tax is actually about something much bigger than that. It’s about teaching small businesses to be more financially savvy and forward-thinking, to support the UK economy, and to support their businesses’ futures. It follows that we as accountants must take these lessons onboard ourselves too.
But this whole process – from reaching out about the need to be compliant to getting them set up on the software they’ll need to achieve it – isn’t just costing accountants’ time. It’s also causing stress. As less than half of accountants said their SMB clients are up to date with MTD, the next few months could be a serious uphill climb.
That said, 89% are confident that they have the skills and means to help clients achieve compliance. Clearly, the majority of accountants are turning to technology, and reaping the rewards for their business.
For too long, our industry’s reputation has been seen as old-hat and behind-the-times. In some cases, accountancy firms are even seen to be falling behind their own clients when it comes to adopting new technologies. Making Tax Digital is changing that – it’s now accountants who understand just how critical technology is to success, and who understand the processes enough to recommend which platforms are right for the job.
With the figures suggesting that more than half a million UK small businesses are still not compliant, it’s important that accountants understand how critical our role is in making MTD a reality.
Above all else, it’s an opportunity to make our mark: to deliver the best service in achieving compliance and ensure SMBs have the digital tools they need to build on this. What’s more, this will also enhance and protect the reputation of the accountancy profession – and ensure we are the go-to advisor for the UK’s millions of small businesses.
You can read more about QuickBooks’ research here: https://quickbooks.intuit.com/uk/accountants/mtd/mtd-saves-accountants-time/