70% of accountants not prepared for MTD ITSA, says ICAS

A majority of accountancy firms (70%) reportedly feel they are not well prepared for the introduction of Making Tax Digital for Income Tax Self Assessment (MTD ITSA), according to the annual ICAS Practice Survey 2022. 

It is reported that the survey of ICAS practice firms from across the UK found that only 53% of firms have already adopted software for MTD ITSA. 

In addition, the survey also found that balancing workload, compliance and regulation, as well as economic uncertainty are the top challenges facing chartered accountants in the year ahead.

However, the 2022 survey reportedly showed no significant change in the top issues facing accountants compared to the 2021 survey, despite ongoing economic uncertainty.

In addition, the survey revealed that some of the anticipated impact on profits were due to increased investment in software and technology (50%), training (24%) and recruitment (18%), while staff costs as a percentage of turnover over the past year have been more or less stagnant.

David Menzies, director of practice at ICAS, said: “With only 18 months until MTD ITSA becomes a requirement, the state of unpreparedness can be largely attributed to the slow progress of HMRC’s MTD ITSA pilot project, which remains open to only a very small number of individuals. 

“Technical difficulties and a lack of expansion are hampering firms and taxpayers who will ideally want to have a full year bedding in period before the mandatory implementation date.”

He added: “Overall, the survey indicates the ICAS practice community is resilient and responsive to change. Underlying this is a multiplicity of performance, attitude to technology and demand for talent. The ICAS practice community is complex but also reassuringly stable, ensuring clients are supported in a way which is appropriate to them.”