Making Tax Digital: The death of the accountant?

With any automated process which was once done solely by humans, there will always be the concern amongst those within the industry that they are at risk of being ousted in favour of robots or technological advancements. It is no different in Accountancy, and with Making Tax Digital (MTD) firmly on the map and due to evolve once more in April 2024, the question is being asked: Is MTD going to be the death of the accountant? What is MTD? After years of paper tax returns and physical filing causing havoc and a multitude of errors, costing the government nearly £35bn, HMRC designed an online process for tax returns which aimed to be more effective and efficient, helping taxpayers avoid unnecessary hiccups. Marketed as a process to make the lives of its users easier, many business owners have fallen into the trap of thinking that MTD = no need for an Accountant. Now, I may come across as biased, but this really is not the case. Where the technology cannot aid its users is in the years of expertise accountants hold, the understanding of tax nuances and the face-to-face reassurance accountants can give in those tricker, more stressful times. Here are three reasons why MTD isn’t the time to let go of your accountant. MTD isn’t 100% error-free While the technologies and software used for MTD pride themselves on being straight-forward to use, which most are, they cannot, and should not, replace the expertise of an accountant. The reason why accountants train for such a long time is to ensure that every niche within the tax system is learned comprehensively , that necessary compliances are met and that exemptions within the system are understood. This knowledge is what ensures, even in the virtual world of MTD, that customers avoid errors and potential inaccuracies that might prompt a time-consuming and very stressful HMRC investigation. It’s not easy to break habits MTD for some is not only a brand-new system, but it’s a completely different way of working. If you are accustomed to a certain system, whether that be excel spreadsheets or the old-fashioned pen and paper, then moving to something completely online, and cloud-based, can be a source of anxiety. Accountants are fully trained and prepared for the changes MTD will bring and should be knowledgeable of most approved compatible software. Your accountant will be able to support you through the changes and ensure any worries you have are answered. Using MTD data effectively MTD is an opportunity to strengthen your business – especially via the brilliant financial insights it provides. Through the updated quarterly filing system, you can work with your accountant to understand your incomings and outgoings on a far more granular detail than previously. Here, you can work together to understand peaks and lulls in trading, plan forward for more expensive months, avoiding potential cash flow issues, as well as identify how much you have available for savings or investments. MTD was brought in to make the lives of taxpayers easier when it comes to filing their tax returns. And while, in principle, the technology is going to streamline the process for all, there are certain pitfalls of MTD that must be observed and approached with caution. With the helping hand of an accountant, you can ensure you are making the most out of this regulatory change and reaping its intended benefits. By Kat Wellum-Kent, director at Monahans