New research highlights the Making Tax Digital (MTD) state of play
New research from IRIS Accountancy Solutions has found accountancy practices have become the conduit for MTD as their clients’ grapple with the move to digital bookkeeping.
Research among 385 practices during November 2018 found that moving clients to bookkeeping software continues to be the greatest business challenge (66%), with four out of five (78%) practice clients using spreadsheets. As a result, three out of five practices (60%) will continue bookkeeping services for clients.
The dilemma has seen practices compromise; preparing digital records on behalf of their clients and using ‘bridging software’ as an interim MTD for VAT solution. Nick Gregory, Chief Product and Marketing Officer for IRIS Accountancy Solutions believes firms are the lynchpin during the move to digital tax. “Practices are fully aware of the efficiencies digital bookkeeping can provide but are struggling to move clients to these platforms. The compromise is to use bridging software such as IRIS VAT Filer, which enables them to make the submission to HMRC.
“Compliance services will continue and while revenue can be generated from these areas, forward-thinking practices are being more assertive with clients and moving them to bookkeeping software and other collaboration platforms. This enables them to focus on the more lucrative advisory services.”
The industry has been using technology to collate information from data sources as well as communicate with clients. Over recent months, IRIS has seen its collaboration tool, IRIS OpenSpace used by over 425,000 accountants and their clients, providing a simple and secure way for accountants and their clients to work together online.
The reticence among businesses to step into technology has caused further discord within the practice landscape as IRIS has found conflicting sentiment with HMRC’s MTD pilot. The business is receiving over 100 requests a week for its ‘bridging software’ but the results of the research have found nearly half of respondents (47%) are not willing to join HMRC’s MTD pilot.
Nick Gregory continues, “Practices are using bridging software as an interim MTD for VAT solution while they continue to provide compliance services to help clients during the initial timeframe. Those not willing to join the HMRC’s MTD pilot are holding off to see if there will be any further changes to the timeframes. This is concerning as MTD for VAT is happening. If practices do not make changes until the legislation comes into force, they are likely to face even greater issues.
“However, accountants are robust. The industry has been through several legislative changes over the years and for many, there is now light at the end of the MTD tunnel. The challenge now is to bring clients into the world of digital bookkeeping, so everyone can thrive in the digital economy.”
In a bid to unravel the process, IRIS has created a five-step MTD programme to help accountancy professionals prepare their practices for all types of client without too much disruption. IRIS is taking the programme across the country in its forthcoming, free of charge roadshows which will detail the implications for practices and their clients, as well as demonstrate how MTD can be turned into a profitable revenue stream.