With the government’s flagship policy to digitise tax – Making Tax Digital (MTD) – delayed until 2020, many firms and practices will welcome the extra time to prepare.
The fact is that the MTD initiative represents the biggest and most comprehensive tax reform for more than a generation. Millions of businesses across the country will be required to submit their tax digitally every quarter to HMRC, rather than a single annual tax return.
While it cannot be denied tax going digital presents a huge opportunity for firms to streamline processes through digital systems, and for accountancy practices to leverage technology to deliver deeper insight, such a tremendous reform to the tax process will not be without complications.
For many of these businesses, some very much accustomed to paper-based processes, shifting to new digital infrastructure is a major challenge. They have legacy systems and in-house software that they have become reliant upon – and fully embracing digital infrastructure means overhauling current processes.
You may be in this position – but it’s important to appreciate the simple truth that the world is quickly becoming digital-first.
Old paper-based processes are no longer sufficient in an accounting world where cloud-based software and IoT-enabled devices are leading the charge. Firms and accountants must adapt the way they work if they are to remain competitive; for accountants the ability to adapt and to meet the demands of the client hinges on embracing new technologies, processes and techniques that will drive efficiency.
Not only will digitalisation of infrastructure streamline the tax submission process – and potentially, automate it in the future – it will also enable businesses to lay the foundation for future tax-based technologies to help improve performance. For example, analytics systems could plug directly into your MTD-compliant software to assess data at scale, deliver insights and provide a more detailed picture of activity. Cloud-based software can reduce the burden placed by in-house technology and hardware on the business, allowing accounting firms to redistribute resource and focus on other value-adding services for clients.
How will tax going digital impact the role of accountants?
With this kind of technology, the role of the accountant and auditor moves from just ‘looking at the numbers’ to analysing the numbers, providing advice and delivering more value to clients. The reality is that customers expect to communicate with accountants and auditors regularly and in real-time – and that activity is increasingly done online. Without the online infrastructure to facilitate such engagement, accounting firms run the risk of losing out to digital-first competitors.
Ultimately, it’s about seeing the bigger picture. Instead of looking at tax going digital as a challenge for your business, it’s an opportunity to start incorporating new technology that will not only enable regulatory compliance but also improve efficiency at every stage of the process.
MTD is an opportunity to start thinking seriously about the future of your accounting practice and the way you wish to engage with clients in the digital-first era.
In our eBook, ‘How to digitally future proof your Accounting Practice’, we take a look at how you can prepare your practice for a ‘digital future’ and the benefits going digital can bring.