New research from Intuit QuickBooks reveals that while two fifths (38%) feel the legislation is an opportunity to drive positive change within the industry, only 20% feel prepared
New research released today by Intuit QuickBooks, the world’s leading online accounting software provider, has found that while the majority (75%) of UK accountants have heard of the upcoming Making Tax Digital (MTD) legislation, nearly a third (30%) of this group are unclear about what it means for their practice, revealing a disconnect between awareness of the legislation and an understanding of its implications.
Making Tax Digital (MTD) is part of the UK tax authority’s plans to transform its tax administration. The proposal aims to implement digital record keeping and introduce quarterly updating for all but the smallest businesses. Commonly known as Making Tax Digital for Business (MTDfB), it encompasses the self-employed and landlords who pay tax on their profits under Income Tax Self-Assessment (ITSA), entities who are registered for Value Added Tax (VAT) and companies who pay Corporation Tax (CT) on their trading profits. It will mean the end of the annual tax return for those in business, and ultimately for individuals as well.
Underpinning MTD is the shift to digital record keeping and online tax filing. According to the research, on average, a third of accountants’ clients (33%) already use cloud accounting software, but nearly one quarter (23%) say that none of their clients use cloud accounting software. Migration to digital accounting is in fact the top concern stemming from MTD.
One-third (34%) of accountants cite changing client behaviour, such as online software training and digital recordkeeping, as their top concern in the lead up to MTD, followed by educating staff on its implications (24%). Despite these challenges, nearly two fifths of respondents (38%) see MTD as an opportunity rather than a threat. When asked, faster and more efficient workstreams on the cloud (24%) was cited as the most valuable opportunity stemming from MTD, closely followed by the opportunity to build a more digitally-forward practice (22%).
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“Accounting has historically been an exercise of looking in the rearview mirror, but cloud technology empowers accountants with real-time insights that can be used to transform their role from bookkeeper to financial advisor,” said Nick Williams, Head of Business Development, Accountants, Intuit QuickBooks. “Introducing new client behaviour, educating staff and taking a proactive approach to forthcoming legislation isn’t always easy, but the time to get ahead is now.”
Accountants indicate that both government and industry have a role to play on the journey toward Making Tax Digital. Nearly half (47%) of respondents expect some level of support from software vendors, and nearly the same percentage (40%) expect some level of support from government.
Respondents indicate that software training for themselves and/or staff (36%), proactively sharing the latest updates from HMRC (35%), and software training for clients not currently managing accounts online (33%) are the areas software companies can best lend support.
As part of its ongoing efforts to offer customers a fast, simple solution to digital tax filing, Intuit QuickBooks recently completed its first MTD VAT filing to HMRC through QuickBooks Online for accounting firm Sagars, marking a major milestone toward MTD general availability.
“It’s important for us to understand our customers’ pain points, and organise our efforts around their needs,” said Nick Williams “With the official roll-out of MTD fast approaching, we want to support our customers and make their journey to digital tax filing as straightforward as possible.”