{"id":945,"date":"2019-03-20T16:17:14","date_gmt":"2019-03-20T16:17:14","guid":{"rendered":"http:\/\/www.withcreative.co.uk\/dev\/is-making-tax-digital-set-to-make-fools-of-us-all\/"},"modified":"2021-01-14T23:39:08","modified_gmt":"2021-01-14T23:39:08","slug":"is-making-tax-digital-set-to-make-fools-of-us-all","status":"publish","type":"post","link":"https:\/\/dev.withcreative.co.uk\/langricks\/is-making-tax-digital-set-to-make-fools-of-us-all\/","title":{"rendered":"IS MAKING TAX DIGITAL SET TO MAKE FOOLS OF US ALL?"},"content":{"rendered":"
\n

Mike Bowker, Partner at Langricks says not, but says the path to digitisation has been something of a shock to business owners. He talks here about the journey accountants are on with their clients to move tax reporting to a modern day platform.<\/em><\/p>\n

While Britain holds its breath on Brexit another seismic cultural shift is quietly taking place in the world of tax, affecting 1.2million businesses in the UK who have a\u00a0taxable turnover\u00a0above the VAT threshold\u00a0(currently \u00a385,000).<\/p>\n

On April Fools\u2019 Day \u2013 and without a trace of irony \u2013 HMRC will introduce its sweeping\u00a0digitisation programme<\/a>, starting with VAT, which will change the way we report into the Revenue forever.<\/p>\n

We at Langricks, like thousands of other chartered accountancy professionals, are navigating clients through the implications of the first phase of changes and at times dealing with the backlash from disgruntled business owners who are facing increased costs and 24-month contract tie ins with new software companies that only appear to be benefiting the tax man.<\/p>\n

Partner at Langricks Mike Bowker acknowledged the challenges. He said \u201cFor clients\u00a0with non-compliant software, or who use Excel or basic book-keeping methods, they are having to upgrade to an MTD-compliant software provider and take on a monthly subscription model.<\/p>\n

\u201cTo be fair this is not completely unprecedented. Companies like\u00a0Quickbooks<\/a>\u00a0and\u00a0Xero<\/a>\u00a0moved the market into the monthly subscription model some time ago. But for some businesses this is new territory requiring more investment than anticipated. Plus they are needing quite a lot of advisory support from us and in some cases training on the software itself.\u201d<\/p>\n

According to\u00a0recent media reports<\/a>\u00a0take-up has been slower than expected. By this stage over 400,000, or around a third of businesses were expected to have signed up but HMRC itself has revealed that the true figure is just 30,000, or 2.5 per cent.<\/p>\n

In light of this the\u00a0British Chambers of Commerce<\/a>\u00a0have even gone as far as calling for a delay to making tax digital, an opportunity the Chancellor of the Exchequer did not take up \u2013 as advised \u2013 in his\u00a0Spring statement<\/a>\u00a0last week.<\/p>\n

Speaking to the Daily Telegraph Suren Thiru, Head of Economics at the\u00a0British Chambers of Commerce<\/a>, said that although the idea to modernise the UK\u2019s tax system was a good one, the timing “couldn\u2019t be much worse”. He said: “In the current environment, it is an added cost and administrative burden and there still isn\u2019t adequate understanding or preparation among businesses to make its rollout a success right now.<\/p>\n

“HMRC\u2019s already stretched resources will be focused on Brexit and changes to tax and customs process, so there is a heightened risk for confusion and disorder.\u201d<\/p>\n

At Langricks Mike and his team are continuing to advise clients to get geared up for the change and do so by the deadline.<\/p>\n

He continued: \u201cDelaying compliance with the HMRC directive in this matter is not an option. We\u2019ve now taken 30 or so clients through the process of software upgrade and familiarisation and most recognise that in the longer-term keeping digital records will help their businesses run more efficiently.\u201d<\/p>\n

Mike does expect to be assisting clients again in August. \u201cOnce the 1st<\/sup>April milestone has passed compliant businesses will be using the software and then will have until 7th<\/sup>August to submit the first April-June quarter figures digitally.\u00a0\u00a0We do expect a few clients will need some further support at this stage.\u201d<\/p>\n

He concluded: \u201cBy inputting, recording and ultimately reporting to the HMRC digitally businesses will have more accurate, up to date information, more immediately available. And that will benefit business owners in the long-term. Anything that can help companies get a firmer grip on the financials \u2013 especially around tax issues \u2013 will impact favourably on business performance.\u201d<\/p>\n