Last week, I attended a meeting chaired by FST Mel Stride to discuss making tax digital (MTD). The meeting brought together software developers, business representative bodies and the HMRC team heading the project.
There was a candid exchange of views and some clear themes emerged. Everyone agreed that digital technology has the potential to transform tax compliance, but there was also consensus that we should be thinking more broadly about the potential that accounting software and apps hold for businesses. Businesses must see clear commercial benefits in moving to digital, not feel that they are being forced into something that only benefits HMRC.
And there are commercial benefits. Apps and software are delivering ever more sophisticated means of capturing, recording and analysing information. The pace of change is greater than I have seen at any time in my 37 years in practice. The challenge for businesses and their advisers is to harness that potential and use it to deliver greater efficiency and better management information. Arguably, some of the greatest potential is for the very smallest businesses.
Take a sole trader who currently sends in their business records once a year and for whom the accountant prepares accounts and a tax return. The accountant is providing a necessary but reactive service based on old information. An app that captures images of purchase invoices in real time, paired with software that draws data from the business bank account, can take us to a very different place. If the technology is cloud based, the accountant can view data through the year rather than many months after the year end and give advice closer to real time, perhaps prompting the client to raise invoices to head off a cash flow pinch. It would be impossible to deliver that kind of relationship – let’s call it a virtual FD service – for such a small business without digital technology.
Many accountants have already embraced digital technology to offer such a service. Demand will drive more to do so, as business owners will expect their accountant, their bank and their software to offer increasingly connected services. Data capture, analysis and interpretation will improve as artificial intelligence further accelerates the transformation from reactive to proactive.
For some, this digital revolution will be daunting, perhaps too daunting. For increasing numbers, however, it will quickly become the norm.
Better tax administration will be a natural by-product, but it should not be the driving force: better information, greater efficiency and market demand should be the drivers of change.
Last week’s meeting with the minister had a real sense of shared vision and shared enthusiasm for digital. With the launch of MTD for VAT registered businesses a little over a year away, it is vital that we keep the dialogue going. To achieve success, all stakeholders must feel they are gaining.
Last week, I attended a meeting chaired by FST Mel Stride to discuss making tax digital (MTD). The meeting brought together software developers, business representative bodies and the HMRC team heading the project.
There was a candid exchange of views and some clear themes emerged. Everyone agreed that digital technology has the potential to transform tax compliance, but there was also consensus that we should be thinking more broadly about the potential that accounting software and apps hold for businesses. Businesses must see clear commercial benefits in moving to digital, not feel that they are being forced into something that only benefits HMRC.
And there are commercial benefits. Apps and software are delivering ever more sophisticated means of capturing, recording and analysing information. The pace of change is greater than I have seen at any time in my 37 years in practice. The challenge for businesses and their advisers is to harness that potential and use it to deliver greater efficiency and better management information. Arguably, some of the greatest potential is for the very smallest businesses.
Take a sole trader who currently sends in their business records once a year and for whom the accountant prepares accounts and a tax return. The accountant is providing a necessary but reactive service based on old information. An app that captures images of purchase invoices in real time, paired with software that draws data from the business bank account, can take us to a very different place. If the technology is cloud based, the accountant can view data through the year rather than many months after the year end and give advice closer to real time, perhaps prompting the client to raise invoices to head off a cash flow pinch. It would be impossible to deliver that kind of relationship – let’s call it a virtual FD service – for such a small business without digital technology.
Many accountants have already embraced digital technology to offer such a service. Demand will drive more to do so, as business owners will expect their accountant, their bank and their software to offer increasingly connected services. Data capture, analysis and interpretation will improve as artificial intelligence further accelerates the transformation from reactive to proactive.
For some, this digital revolution will be daunting, perhaps too daunting. For increasing numbers, however, it will quickly become the norm.
Better tax administration will be a natural by-product, but it should not be the driving force: better information, greater efficiency and market demand should be the drivers of change.
Last week’s meeting with the minister had a real sense of shared vision and shared enthusiasm for digital. With the launch of MTD for VAT registered businesses a little over a year away, it is vital that we keep the dialogue going. To achieve success, all stakeholders must feel they are gaining.
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