Latest News

Why accountants are key to the long-term success of Making Tax Digital

The next stage of the most significant change to the tax system in decades is almost upon us. From next month, all VAT registered businesses (regardless of turnover) must sign up for Making Tax Digital for VAT and submit their next VAT quarter using compatible software. Three years on from the initial launch (for those with a turnover of £85,000 and above), this requirement will have been front of mind for accountancy firms with smaller clients for many months.   

Making Tax Digital (MTD) represents HMRC’s ambition to make the UK one of the most digitally advanced tax services in the world. We know that accounting professionals are already playing a critical role in achieving this: our research suggests accountants have been spending an average of seven days getting each client compliant with MTD VAT legislation. This time will have been spent discussing the necessary steps with small business clients, as well as helping them get set up with the right financial management software for their needs.

Now, accountancy firms are about to reap the rewards of their initial time investment. MTD was introduced primarily to make tax administration more efficient, more effective and easier to get right. Of the accounting professionals we researched, three quarters agreed that the new rules will save or are already saving them time, while a similar proportion said they will reduce or have already reduced errors in their clients’ tax returns.

Unfortunately, not all eligible businesses have expert partners to guide them through the process. Despite the requirement being right around the corner, we know that there are many businesses yet to comply and are still unaware of the impending changes. For firms able to access these businesses, there is an opportunity to make a real difference by helping them to get compliant and becoming a trusted business partner.  

Even amongst existing clients, there is work to be done in changing clients’ perceptions of MTD from an obligation to an opportunity. The importance of this for MTD to succeed shouldn’t be underestimated – especially as we look ahead to the mandation of Making Tax Digital for Income Tax (MTD for ITSA) in 2024. 

According to HMRC, an estimated 4.2 million UK taxpayers will be eligible for MTD for ITSA, making this an even more wide-ranging piece of legislation that will impact how those eligible complete their self assessment tax returns. 

QuickBooks was one of the first major software providers to announce MTD for VAT capability. We’re now delighted to be one of the very first major accountancy software providers to be granted production credentials for MTD for ITSA.The software, once fully developed, will be compatible with all the MTD ITSA legislation requirements.

We’ve been working alongside accountants (as well as businesses, individuals and HMRC) to develop this and once launched, firms will be able to use our new software to make the MTD ITSA transition smooth, simple and accurate for their clients.

Fortunately, with the extension of the pilot, accounting professionals have two years to prepare for the upcoming changes. But now is the time to have conversations with clients about how digital software can not only make their tax administration quicker and more accurate, but also give valuable insights into their wider financial health. Doing so will lay a successful foundation for the upcoming MTD changes as well as demonstrate accounting professionals broader value as  trusted partners in all areas of their business, not just compliance. 

We know our accountancy partners play an important role in helping small businesses to prosper. We’re committed to helping meet accountancy professionals’ needs, so as well as providing guidance to help facilitate conversations about MTD with clients, we’re inviting accountants to test our upcoming MTD ITSA software to ensure it’s as effective as possible. If you’d like to register for the pilot programme, please contact mtdtest@intuit.com


By Pauline Green, Head of Product Compliance & Programs at Intuit QuickBooks 

Show More
Back to top button