You’ve no doubt been keeping up with the latest changes to the roll out of Making Tax Digital, announced in the Spring Budget and elsewhere. These included a defirment threshold to the VAT limit and eliminating the requirement for digital record-keeping.
These changes have softened the introduction of Making Tax Digital and will, to some extent, take the pressure off small businesses and their accountants in adapting to a radically different way of reporting to HMRC.
The voice of the practitioner
HMRC clearly listened to the concerns raised within the profession during the consultation process, and we’d like to think that IRIS customers played no small part in this!
We conducted two online surveys, in November and March, which netted over 1,500 responses, and presented the collective responses to HMRC. If you took part in the surveys, many thanks for your contribution.
You can see in the table below how HMRC responded to specific concerns.
So far, so good…
While all of this is good news, accountants are still worried about the additional workload that Making Tax Digital will surely create. A stand-out finding of our March survey was that over 71% of respondents feel their compliance workload will increase with Making Tax Digital if their clients continue to work as now, using spreadsheets. They are rightly concerned that the extra burden will divert practice teams from higher value activities, such as delivering business advisory services.
Many survey respondents are already taking steps to avert this risk. While digital record-keeping will no longer be obligatory under Making Tax Digital, more than half (57%) say that they will encourage their clients to move away from paper-based processes to using bookkeeping software.
This, of course, is where KashFlow, our online bookkeeping solution for accountants and their clients, can make everyone’s life easier. It’s designed for small businesses – exactly those who will struggle most to comply with Making Tax Digital. Not only does it simplify and streamline the client’s bookkeeping processes, it integrates with IRIS accounts production software, ensuring a steady flow of data into practice systems and enabling the accountant to keep a watchful eye on the client’s business.
There’s no need to dread the thud of boxes of receipts and lever-arch files landing on your desk four times a year once Making Tax Digital comes into force. If your smaller clients use KashFlow to manage day-to-day business transactions such as invoicing and payments, you will already have everything you need for the new quarterly submissions.
|IRIS survey respondents asked for…||HMRC responded…|
|A 12-month delay in implementation.||The majority of smaller businesses (over 3.1m self-employed people, small businesses and landlords) will not be required to file until April 2019.|
This represents an effective 12-month delay from the initial proposals.
|Higher qualification thresholds – 65% of respondents wanted the|
qualification threshold to be at the VAT levell.
|From April 2018, only business above the VAT threshold (currently £85,000)|
will come within the Making Tax Digital remit.
|Flexibility on digital record-keeping – 22% of respondents’ clients use no|
software and 25% use Microsoft Excel.
|Spreadsheets can be used for record keeping, whiile storing receipts and invoices|
in digital format will not be mandatory.
|Time to adapt to the new changes.||There will be a 12-month soft landing before any penalties are applied.|| |