As the UK and Europe reel from the shock result of Brexit, it’s hard to see what the future holds in most areas. One question that has loomed over many firms is the Making Tax Digital (MTD) initiative. Speculation started after the Institute of Chartered Accountants in England and Wales (ICAEW) postponed its MTD consultation event with HM Revenue & Customs (HMRC) earlier this summer, followed by the long awaited documents intended to assess the implication of MTD being deferred for the third time after the referendum and change of Prime Minister. Soon afterwards, the Chief Digital Officer at HMRC resigned from his position, causing further speculation about the initiative.
With all of this uncertainty that has plagued the industry over the course of the summer, what do we now know for certain now the Making Tax Digital consultation documents have been released, and how can firms best support their clients?
The change will have a significant impact on businesses and firms as they will need to begin to upload their quarterly business income and expenditure to their Digital Tax Accounts. This means both businesses and firms will have to make allowances for how much additional time will be required each year and will no doubt mean businesses have to seek more regular support and advice from firms to ensure that they are following any new regulations correctly.
A huge question around MTD is whether or not the process itself will be simplified. As it currently stands, the UK tax system is far too complicated to allow for such a system to be used easily, without expert advice – will we see a simplification of the existing system when the concrete plans for MTD are announced? With proposed changes to the basis period rules and the extension of the ‘Cash Basis’ threshold things could be moving in the right direction but this won’t be set in stone until after 7 November 2016 when HMRC end the consultation period on these documents.
An absolute certainty is that in order to be able to tackle the changing times ahead successfully, every practice needs to be prepared and able to take on the challenges. This means recruiting talented staff and in order to do that, firms need to ensure they are attractive to these individuals. From flexible working to using the latest software, getting the right recruitment and retention strategies in place today is essential and firms are competing to offer the best benefit packages to candidates.
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There has also been a growing trend towards specialisation among tax practices – will our market transform to a point where we have specialised practices working together as a network? It may well be a good time to start talking to practices with complementary skillsets, or identify your niche in the market if you haven’t already.
Finally, there’s the new Chancellor who no doubt will want to make his mark, especially in the wake of Brexit. As a result, there is a high chance we will see tax form at least one of his focus areas, with the possibility of a barrage of reforms that will set him apart from his predecessor.