Business of Tax - Q1 - Mar 2019 by Mediaplanet UK&IE

Q1 / 2019

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Get better control of your finances by going digital THERESA MIDDLETON Director Making Tax Digital (MTD), HMRC

ntegrating business records and taxes into digital formats is an important step forward in giving businesses more control over their finances, allowing them to spend more time focusing on what they do best - business, innovation, expansion and the creation of jobs. In less than a month, most businesses above the VAT (Value Added Tax) threshold will need to keep their records digitally and submit their VAT return direct from their software package as part of Making Tax Digital (MTD). MTD begins in April 2019 The new process starts for VAT return, periods commencing on or after 1 April, so, for the majority of businesses making quarterly returns, it will be August when they will need to make their first return under MTD.

others who have already signed up. For most businesses, their accountant or other tax representative will already be aware and will be preparing to adopt the new service for their clients. For many already using software, it will then just be a case of enabling MTDcompatible software as part of an update from their provider. Those businesses who are not represented by an accountant and/or don’t already use software will need to select software and sign-up to MTD. Our gov.uk web pages provide information on a wide variety of products, from free software for businesses with more straightforward tax affairs, to increasingly sophisticated paid solutions. There are also bridging products, which can be used with a spreadsheet.

Businesses will need software that is MTDcompliant The service is open now to everyone who will need to use it from April, and we’ve been encouraging all businesses to join the thousands of

£9bn tax gap due to errors We know that the vast majority of people want to pay the right tax, but some struggle to do so, with errors accounting for a large proportion of the tax gap figure – over £9 billion in 2016-2017 – money that could be spent

It is important that businesses and individuals have the skills and confidence they need to seize the opportunities digital technology offers. In a world where customers and suppliers are already banking, paying bills, and shopping online, it makes sense for HMRC and businesses to bring tax fully into the 21st century. In less than two months, most businesses above the VAT (Value Added Tax) threshold will need to keep their records digitally.” on improving public services. Requiring businesses to keep their records digitally and send HMRC their VAT return data direct from their software will reduce the opportunity for these types of mistakes. HMRC’s aim is that filing taxes will feel like a by-product of running their business’s finances, helping them to be more effective and efficient, allowing them and their agents to devote more time and attention to more important matters. Anyone exempt from online returns will be exempt from MTD We are not forcing businesses to go digital for their VAT returns if they are genuinely unable to do so. Anyone who is already exempt from online filing of VAT due to factors such as

age, disability, location or religion will remain so under MTD. There is a process being piloted now for claims from those who are unable to meet the requirements of MTD. We recognise that businesses will require time to become familiar with these new requirements. Therefore, during the first year of mandation, HMRC will not pursue filing or record-keeping penalties where businesses are doing their best to comply with the law. Those businesses that are registered for VAT but are below the VAT threshold are not required to use the MTD service but can choose to do so. What businesses should do now We want to help business and their agents be ready for when MTD affects them after April. They can start preparing now by: • Checking whether they are mandated from April or from October, and finding out what they need to do to if they are (including finding out which is their first return period under MTD)

• If they use an accountant or other agent to manage their tax affairs, they should talk to them about how they are preparing for Making Tax Digital • If they currently use software, they should speak to their provider about when their software will be MTDcompatible • Those who are agents will need to sign up for an agent services account1 • Becoming an early adopter and joining the Making Tax Digital VAT pilot. We’ve published a VAT Notice2 that explains the rules for Making Tax Digital for VAT and about the digital information that must be kept • Consulting our easy-to-use guide for businesses, agents and others including easy-to-follow advice3 • Engaging with our webinars and videos for Making Tax Digital4

1: WWW.GOV.UK/GUIDANCE/GET-AN-HMRC-AGENT-SERVICES-ACCOUNT 2: WWW.GOV.UK/GOVERNMENT/PUBLICATIONS/VAT-NOTICE-70022-MAKING-TAX-DIGITAL-FOR-VAT 3: WWW.GOV.UK/GOVERNMENT/PUBLICATIONS/MAKING-TAX-DIGITAL-FOR-BUSINESS-STAKEHOLDER-COMMUNICATIONS-PACK/MAKINGTAX-DIGITAL-FOR-BUSINESS-STAKEHOLDER-COMMUNICATIONS-PACK 4: WWW.GOV.UK/GUIDANCE/HELP-AND-SUPPORT-FOR-MAKING-TAX-DIGITAL

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Q&A: How will accountants benefit from Making Tax Digital?

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SIAN KELLY Managing Director, Inform Accounting

Accountants have to get on board the Making Tax Digital train. When they do, it’ll revolutionise their business, says Sian Kelly, Managing Director of Inform Accounting. Byline: Tony Greenway

What does Making Tax Digital (MTD) mean for the future of tax? Making Tax Digital is going to affect VAT-registered companies first; but it will affect all businesses at some point. The deadline might move, but it is coming. And although it's not completely clear yet, it will mean quarterly reporting for everyone. In other words, it's going to force non-VAT-registered businesses to work like VAT-registered businesses. It's going to be a big cultural change for them. What does MTD mean for accountants? MTD is good for our business, because it's forcing our customers to be on the same digital path as us. Not all accountancy firms are ready for the change, though. I've asked some people if they've heard from their accountants about MTD and they said: 'no', which is worrying. Does MTD mean the services that accountants offer their clients will have to change? It depends. Most of our clients are already on our cloud-based accounting software platform, which is HMRC-compliant; so, they're all automated and ready to go. We'll just keep on doing what we're doing for our VAT-registered clients. The bigger change for us will come when personal tax and corporation tax goes quarterly. On the other hand, I suppose it will affect accountants who aren't using compliant software. They may have to pay for bridging software, which means they might increase their fees. What are the benefits of MTD for accountants? It's going to increase the volume of work for us as an industry, but I do wonder how firms who aren't ready for it are going to cope. There's always a volume of clients who will give us their self-assessment tax returns in December or January, making it a really busy time for us. Having them go digital means we'll be able to work with them through the year, we can see their numbers at a glance and give them more information and advice. MTD adds to the portfolio of services we offer clients, so I see it as a positive. How does digitisation impact your way of working? I've grown my business down the digital route. I've always been very 'tech-y' and I wanted efficient processes and good information from the very beginning; whereas businesses that were established on old desktop-based systems may find MTD a huge change. We find the whole MTD process really easy. The software is very intuitive and all the young staff I have pick it up very easily because they're used to the digital/mobile era. Has digital software increased your productivity and minimised mistakes? Yes. With old accounting packages you'd have to sit there with printed bank statements, matching line items. Digital platforms link to bank feeds and everything is in one place — so we haven't got to mess around trying to get bank statements from the client and we don't have to sift through shoeboxes full of receipts. And because we can see everything online regularly, if there's a repeated error it's easier to pick up. Read more at businessandindustry.co.uk

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Why businesses will have to ‘go digital’ when paying their tax DAMON ANDERSON Director of Partner and Product, Xero

VAT-registered businesses will have to file their returns using HMRC-compatible software from April. It’s part of the government’s Making Tax Digital initiative — and, soon, it’s going to affect everyone. Byline: Tony Greenway

re you ready for the biggest ever shake-up of the UK tax system? If you're a VATregistered business earning above the £85k threshold, you'll need to be. And very soon. That's because from April of this year you'll be required – by law – to go digital and file your VAT returns using HMRC-compatible software. This initiative is called Making Tax Digital (MTD) and, according to the government, will “make it easier for individuals and businesses to get their tax right and keep on top of their affairs.”

If you can use Facebook or Twitter, you’ll be able to use this.” A third of businesses aren’t ready to go digital The problem is, some businesses seem to have been caught on the hop. Last October, a survey carried out by YouGov, Xero found that despite fewer than half of accountants being prepared for the change, almost one third (30%) of those surveyed said they expect digital tax to increase their firm’s productivity, with

51% admitting that online software is already improving collaboration with clients, as well as increasing speed (46%) and reducing the amount of errors to fix (28%). When it comes to small business owners, one quarter (25%) admitted they are completely unaware of the upcoming legislation. In short: if you've never heard of MTD, you need to get on top of it. Now. “The idea behind Making Tax Digital is to create the world's most digitallyadvanced tax system,” says Damon Anderson, Director of Partner and Product at Xero, a company that offers MEDIAPLANET

Q&A: “I’ve transformed my business by getting my finances online” ANNE-MARIE SIMPSON Owner and Director, Simpsons Gin Bar Byline: Tony Greenway

Anne-Marie Simpson, Owner and Director of Simpsons Gin Bar in Sutton Coldfield, thought that Making Tax Digital would be expensive to implement. In fact, it saved her business money. Can you describe your business? We're an independent, family-owned bar with a focus on quality and creating a fantastic, relaxing experience for our guests, based in Sutton Coldfield. We've been open for two years and trying to serve a need that wasn't previously being catered for by the town's leisure industry. It's one of a number of businesses we run. What did you know about Making Tax Digital (MTD)? We were getting emails from our former accountant saying: 'This is coming in April 2019. You need to prepare yourself for it.' But other than that, not a lot. My thought was that it probably meant we'd need to ensure that our invoices and receipts were scanned — and I had some concern about how much extra work that would entail.

a cloud-based accounting software platform for small businesses. “What MTD does is mandate businesses to use software to electronically file their returns. “Gone will be the days of maintaining records on paper and, at best, plugging data into the HMRC portal. Instead, people will use HMRCcompatible software that offers a beautiful customer experience and makes filing returns seamless and efficient.” Finding the right software for your business SMEs below the VAT-registered threshold can't afford to ignore Making Tax Digital as, sooner or later, these changes will affect every business (including sole traders) paying income or corporation tax. However, this hasn't been mandated yet and will only commence from April 2020 at the very earliest. So watch this space. If all of this sounds worrying, Anderson says it needn't be. The first thing small businesses need to do is consult the HMRC website to find out which providers offer HMRCcompatible software. The good news is that SMEs might already be using HMRC-compliant software for other business applications; in which case there may be no additional cost from their provider when it comes to filing returns. MEDIAPLANET

Synchronising financial data between businesses and bank accounts “For the approximately 400,000 businesses in the UK that aren't already using HMRC approved software, they'll need to find it and, typically, they'll have to pay for it,” says Anderson. “But the big plus is that all their tax information will be easily captured and synced with their bank accounts, which makes it simple to file returns.” Benefits for businesses and their accountants The more financial data a business plugs into the software, the more benefits they'll reap. For instance, they'll be able to gauge their profitability and see trends and cash-flow at a glance, using the data to inform their decisions and grow their business. MTD also offers efficiencies for accountants who have SME clients. “One software platform will give accountants greater visibility across their entire client base,” says Anderson. “It will also save them time, because they won't have to manually filter through a client's paperwork anymore.” The set-up process is easy, too. “You simply go onto a provider's website, sign up and you can be 'live' within minutes,” says Anderson. “Free trials are also available. It's all based in the cloud, which is a big plus for businesses

because they don't have to think about server rooms or IT contracts.” It's also easy to use. “If you can use Facebook or Twitter,” says Anderson, “you'll be able to use this.” Digitalising tax will be a game-changer Making Tax Digital is only the beginning of the digital transformation journey for SMEs. “HMRC has been struggling to get access to business data, while businesses have been struggling to keep it effectively,” says Anderson. “Now there is a huge opportunity to help businesses move away from the old, manual process. Yes, there's always a fear of change. But when customers try MTD, they realise how easy it is — and that it's a game changer for their business.”

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Xero Get ready for Making Tax Digital at xero.com

What has MTD meant for your business? We changed accountants and now have one that is geared up for digital and a big believer in using IT in business accountancy. We use book-keeping automation software, so our receipts are scanned in from phones very easily. We're also using a cloud-based accounting software platform that aligns with our bank feed and makes us more effective and efficient. For example, it means I can immediately look at stock costs and salaries, across months or weeks. Everything works more smoothly. Has new software meant extra costs for you as a business? We've found that it's cheaper to rent the software we need and employ a digital accountant. Put it like this: previously, we were paying just short of £15,000 a year on accountancy fees across four business heads. We're now paying around £5,000 a year. What did your previous filing process entail? We were giving our former accountant lots of paperwork. He was having to scan everything in, manually check each receipt and categorise them in terms of business expenditure. Then he would calculate the VAT element and submit a claim. We were getting a huge bill from him because of all that, so I started doing some of the leg work to save money. But that was very labour intensive and because it took me away from concentrating on progressive areas of the business such as promotion and growth, I grew to resent doing it. So, going digital has been transformational because it's given us more control over our business. Was technology already a significant part of your business? Well, I've always liked to use technology to minimise processes where I can. But was our business set up with a big tech element to it? No, I wouldn't say it was. So, if Making Tax Digital is doable for me, it should be doable for most people. What advice would you offer to anyone only just thinking about MTD? It's going to come in and you can't avoid it, but it's not as scary as it sounds. Embrace it and use it to make yourself more efficient and effective. Get a good software package and start early so that you're fully prepared. Read more at businessandindustry.co.uk BUSINESSANDINDUSTRY.CO.UK

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Push for transparency in trusts HELEN THORNLEY Technical Officer, Association of Taxation Technicians

Do you have a trust in your life? While you may not be the fortunate beneficiary of a long-established family trust, the chances are that you will have contact with some form of trust in your personal finances. Trusts are embedded in our legal system, in the ownership of property, the structure of investments and even in commercial transactions.

n recent years, there has been increasing public concern that trusts, particularly in the off-shore arena, are open to abuse and may be used to facilitate tax evasion. To tackle these concerns, a growing raft of transparency measures has been introduced. Of these, the most significant is the creation of the UK Trust Register. Since July 2017, a trust that incurs a UK tax liability must record on the register the details of both its major players (settlor, trustees, beneficiaries) and the assets it acquired at commencement. This information is available to HMRC and law enforcement agencies. In a recent government review of trust taxation, respondents were asked how to further enhance trust transparency. In the Association of Taxation Technicians (ATT) response, we highlighted how trustees can currently end up reporting the same information to HMRC twice. For example, the register requires great detail on the initial assets placed into a trust - information that rapidly goes out of date and is reported elsewhere for tax purposes. Yet, at the same time, the data on the trust’s major players is only updated if and when the trust incurs a further UK tax bill. Nor does the register contain, as the regulations demand, details of all advisers to the trust. Our proposal is that the register should look more like the Companies House Register, with changes in key players – such as trustees – being updated as they happen, but reduced disclosure where information has already been provided elsewhere. Our aim is to balance the reporting burden on trustees by ensuring that the register holds relevant information. We also propose that the data held should be used to support trustees in meeting their tax obligations, which would provide a benefit to both trustees and HMRC. Subject to Brexit, further EU regulations will significantly increase the scope of the register next year, with trusts that are part of day-today personal finances – such as life policies or jointly held property – potentially becoming reportable. In addition, the data held on the register will be opened up to anyone with a ‘legitimate interest’. At that point, the issue of trust transparency will start to affect many more people and, while it is one thing being transparent with the State, widening transparency of trusts with the world at large could pose some interesting challenges. Read more at businessandindustry.co.uk

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Tax in a digitalised economy PASCAL SAINT-AMANS Director, OECD Centre for Tax Policy and Administration

Digitalisation is transforming our everyday lives, as well as the way our economy and society is organised and functions. The breadth and speed of the change brought about by the digital transformation is notable, and raises a large number of public policy challenges.

he key features of digitalisation – mobility, reliance on data, network effects, the spread of multi-sided business models, a tendency towards monopoly or oligopoly, and volatility – have important implications for public policy, including in deciding how companies should be taxed. One thing is clear, there is no such thing as a “digital economy” as opposed to a “regular” economy, but rather it is the economy itself that has become digitalised. The issues are not just about social networks or search engines, but relate to all types of businesses and how they are able to interact with users and consumers all over the world. Increasing transparency of tax across borders The OECD/G20 Base Erosion and Profit Shifting (BEPS) Project was designed to stop countries and companies from competing on the basis of a lack of transparency, artificially locating profits where there is little or no economic activity, or the exploitation of loopholes or differences in countries’ tax systems. The work on tax and digitalisation has been a key aspect of the BEPS Project since its inception. While great progress is already being made in the implementation of the BEPS measures generally, preventing companies from being able to avoid paying corporate tax in line with

The issues are not just about social networks or search engines but relate to all types of businesses and how they are able to interact with users and consumers all over the world.” where their real, substantial activities are conducted, the work on tax and digitalisation has been moving ahead on a more cautious track. The debate raises questions of where tax should be paid – and, if so, in what amount – in a world where enterprises can effectively be heavily involved in the economic life of different countries without any significant physical presence and where new and often intangible value drivers more and more come to the fore. Bringing traditional taxing regulations into the 21st Century At the same time, the features of the digitalising economy exacerbate some of the risks of base erosion and profit shifting, and enable structures that shift profits to entities that escape taxation or are taxed at only very low rates. Where the main BEPS work is in deciphering how to make the existing rules work better. The debate on tax and digitalisation is about how to change a set of highly complex, international tax rules that

have been in place for most of the past one hundred years to reflect today’s realities. Now, the OECD/G20 Inclusive Framework on BEPS, which counts 128 member countries on an equal footing, has agreed a policy note – Addressing the Tax Challenges Arising from Digitalisation – that has built concrete proposals around which a world-wide consensus can be based. This is a two-pillar approach, which recognises that the digitalisation of the economy is pervasive, raises broader issues, and is most evident in, but not limited to, highly digitalised businesses. These fundamental questions require detailed technical work and the input of all stakeholders. The Inclusive Framework will continue to work out the details of the proposals, through a public consultation, with the aim of agreeing a global, longterm solution by the end of 2020. The stakes are very high, but the spirit of compromise and unity that have been the foundation for the OECD/G20 Inclusive Framework’s accomplishments to date provide great reason for optimism that a long-term, consensus-based solution will be achieved that can ensure fair international taxation rules for the 21st century. Read more at businessandindustry.co.uk

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The devolution debate gathers pace The UK has traditionally had one of the most centralised tax systems in the developed world, but 20 years of devolution is changing this.

lthough most of the levers of powers remain at Westminster, the decentralisation of tax-setting powers to Scotland and Wales – along with mounting calls for the English regions to have greater power – is altering the country’s fiscal dynamic. There are signs that businesses are already getting to grips with the change that is unfolding. 2019 is likely to be the year this debate becomes more prominent. The taxation of people and property are areas where devolution is having the greatest impact. Yet it might surprise you to note that the most visible of these – income tax – is not completely devolved.

Devolution of tax yet to impact income tax This is because collecting and administering all aspects of income tax remain the responsibility of HMRC. This includes those parts of income tax that are devolved to Scotland and Wales, being nonsavings and non-dividend income (i.e earned and rental income). The UK, meanwhile, continues to set the personal allowance and decides the tax base (what should be taxed). The Welsh will remain aligned with England and Northern Ireland for the next year at least, but the Scottish system has taken on a distinctly different look, with the introduction of new rates and bands.

Tax competition between Scotland and the rest of the UK This has prompted discussion around the potential impact of tax competition on Scotland and the rest of the UK. This situation could be particularly relevant to Wales and its porous border with England. Residency, the criteria for deciding whether you pay devolved rates of income tax, may come into sharper focus given the steady flow of workers between nations within the UK. Businesses with a pan-UK presence will want to know the additional costs they potentially face, such as increasing salaries to compensate for higher tax burdens.

ALEXANDER GARDEN Chartered Institute of Taxation (CIOT), Scottish Technical Committee

Devolved taxes for income from property Property taxes are diverging between the nations of the UK, both for commercial and residential purchases. Two more tax authorities – Revenue Scotland and the Welsh Revenue Authority – are responsible for administering the fully devolved taxes. Questions are also being asked about whether more can be done to devolve taxes in England. The rise of combined authorities calls for the devolution of stamp duty, reform of council tax and business rates, all of which pose questions for the capacity of the current system to drive the localism agenda. Until now, it may have felt that

tax devolution has been an exercise in tinkering around the edges. However, the trend towards greater – not less – devolution is gathering pace. Devolution is radically altering the UK’s tax landscape. While these issues will rise in prominence in 2019, the discussion still has a long way to go.

Read more at reg.tech/en/fitax

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How can smaller firms avoid a mammoth tax bill?

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BRIAN PALMER Tax Policy Expert, AAT (Association of Accounting Technicians)

Small businesses are largely responsible for the UK’s tax gap. However, with more tax knowledge, they could save themselves thousands of pounds and gain finance skills along the way.

any small businesses are losing substantial amounts of money each year due to their failure to accurately report taxes. While tax is a complex business, it shouldn’t be so complex that your business suffers as a result. SMEs top the tax gap tables The UK is the envy of the world for its low tax gap, the difference between the tax HMRC estimates is due and that collected. However, it could still be cut more if help was on hand to enable small and medium-sized enterprises (SMEs) to navigate the inherent complexities associated with achieving tax compliance. Those at the smaller end of the SME spectrum are responsible for 41% (£13.7 billion) of the gap (HMRC, June 2018). In contrast, large companies are responsible for just £7 billion. It is a given that large firms have access to the professional and financial expertise required to ensure they precisely pay the right amount of tax owed… not a penny more, not a penny less. In contrast, four out of five SMEs cannot access that level of expertise, resulting in them losing around £15,000 a year off their bottom line, on average (Association of Accounting Technicians research, April 2018). Furthermore, failure to report accurate tax liabilities can lead to regulatory fines, which can prove crippling for smaller firms. Small businesses are the backbone of the British economy; it’s vital that they aren’t disadvantaged when engaging with the tax system. While AAT tirelessly campaigns for a simpler and fairer tax regime, ultimately it remains the responsibility of each and every business to ensure they are playing by the rules. Support for submitting tax returns isn’t hard to find Fortunately, a solution is at hand. The recent proliferation of highlyautomated cloud accounting software is making it easier for small businesses to automate their record keeping. As a result, accurate accounting and tax information can be accessed at the touch of a button. Production of high-value, real-time reports can even reduce the need for a finance expert. With Making Tax Digital now looming large, it’s a perfect opportunity for SMEs to modernise their accounting systems, harness the power of artificial intelligence and machine learning – or risk falling behind. There are, of course, thousands of qualified accountants throughout the country who daily provide expert advice for SMEs keen to ensure they pay their taxes correctly, but not become too burdened with the administration and compliance involved themselves. In How you can learn addition, there’s plenty of information available both from HMRC and more from AAT Informi, who provide expert advice and guidance for small businesses, on AAT is running a series of submitting company tax returns. Tax Updates throughout Finally, if you run or work for a small March and April, at which business yourself, why not consider accountants and business getting yourself trained? There’s a owners can boost their variety of courses available that can knowledge of the latest boost your knowledge of tax and other taxation changes and how finance requirements for business. they will be affected. To Often, you’ll gain new qualifications, book at one of our many meaning you’ll have professional locations, including London, recognition for your expanded skillset. Birmingham and Newcastle, The UK tax gap is one of the lowest please visit eventsforce.net/ in the world, with the current gap aatevents/208/home standing at just 5.7%. Small businesses should receive all the support they Read more at can in leading the charge to drive it businessandindustry.co.uk down even further. 1: www.gov.uk/government/publications/issue-briefing-calculating-the-2016-to-2017-tax-gap/hmrc-issue-briefing-calculating-the-2016-to-2017-tax-gap 2: www.startupdonut.co.uk/news/find-your-hidden-accountant-aat-tells-smes

6 BUSINESSANDINDUSTRY.CO.UK

5 steps to get ready for digital tax reporting The dos and don’ts of Making Tax Digital according to the Federation of Small Businesses Policy and Advocacy Chairman, Martin McTague.

MARTIN MCTAGUE Policy and Advocacy Chairman, Federation of Small Businesses

pring should be an optimistic time for small business owners. Shoppers are shaking off the January blues, the days are getting lighter and the start of a new financial year marks an ideal moment to reflect and plan ahead. However, this year, come the end of March, small firms will not only have Brexit day to worry about, but also increased pressure on wages, higher auto-enrolment contributions and further business rates hikes. Added to the mix is HMRC’s overhaul of its submission interface: Making Tax Digital. We’ve successfully fought for delays to, and exemptions from, MTD. But its initial launch will soon be upon us. Here are five ways to make ready for the imminent roll-out. Check if you are affected MTD applies from 1 April 2019 and, for now, affects businesses that are VAT-registered and have a taxable turnover above £85,000. For certain businesses – such as trusts and some not-for-profit organisations - MTD has been deferred until October 2019. Some entities are exempt altogether. These include those defined as digitally excluded or who cannot comply on the basis of age or disability. If you feel you should be exempted but have not received confirmation from HMRC, contact them well before 1 April to obtain a ruling.

Assess how compliant you are already While a large proportion of small business owners use digital means to record business transactions, many also record some manually as well. From April, they will all need to be recorded digitally. Lots of businesses will already be using MTD-compliant software. Speak to your existing provider about whether your accounting software is enabled for MTD. If it is not, you will need to upgrade it or get a new system. HMRC has listed scores of products to choose from on its website. Find the right software for you Every business is different, so you will need to consider which system suits you best. Be sure to consider cost, compatibility with your existing systems and ease of use. You could opt for a single software product – which can both keep your digital records and send your VAT returns – or different products that link together digitally. Some can be accessed remotely from smart phones and tablets, while others are installed directly. If you stick with using spreadsheets, you will need to arrange MTDcompliant bridging software to export information directly into HMRC's new systems. Aim to start using any new software before 1 April 2019 to get a feel for the new way of doing things.

Speak to those in the know If you haven't done so already, speak to your accountant about Making Tax Digital and consult our dedicated Making Tax Digital hub. FSB has its own dedicated Legal Advice Line and HMRC has its own VAT consultants. It’s also useful to speak to business owners in a similar position to yourself to get a sense of different approaches to the roll-out. Seek to embrace change MTD presents challenges: not only is there the need to invest in and learn about new software, there’s also the requirement to keep full digital records. However, MTD holds a lot of potential if executed effectively by HMRC. Coupled with Open Banking, it could facilitate massive efficiencies within your business. Taken together, these two initiatives may create an environment where banking, tax and invoice data can seamlessly interact with one another and be brought together in one place. That would mean an unprecedented level of one-click oversight. Spring means rebirth and new cycles. Naturally that can mean big challenges and big upheaval. But it can also mean opportunities and, ultimately, brighter futures.

Read more at businessandindustry.co.uk MEDIAPLANET

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Q&A: Making Tax Digital – and life easier for accountants

Byline: Tony Greenway

Cloud-based technology will make life easier for accountants as the Making Tax Digital roll-out gets under way. Q: How much of a change is Making Tax Digital (MTD) for accountants? MTD is probably the most fundamental change to the tax system in a generation. The government's idea is to make it easier for businesses and individuals to get their tax right and to keep on top of their affairs. It applies to VAT-registered firms from this April but, ultimately, every business will be filing quarterly returns at some point. That means accountants are going to have to do four to five times more work for every client, which raises a question about how they can continue to make the kinds of profits they made previously. The answer hinges upon them embracing technology — and particularly cloudbased technology — as they move forward, giving them the freedom to scale up and down and access their working data from anywhere in the world.

Q: In your experience, are most accountants supportive of these new digital changes? Forward-thinking accountants who embrace technology and are moving MEDIAPLANET

to cloud-based digital platforms are at ease with MTD. The ones who haven't embraced the cloud yet might be more apprehensive about it. But if they haven't done so already, now is the time for them to realise that technology is out there to help them deal with the digital future.

Q: How should accountants be preparing for Making Tax Digital? Two things, first and foremost, accountants need to think about taking a whole product approach to software rather than a shortterm bridging solution or VAT filer. By sourcing the right software to meet and address the needs of MTD it will introduce a smarter way of working in the long-term and reduce the expected congestion MTD will bring. The second thing, start educating existing customers about the changes that will be taking place. That can be a positive thing, because if accountants are communicating the MTD message through their websites, newsletters, social media and webinars, etc, it'll show that they are MTD-ready and ahead of the curve. And that will give potential new customers confidence in their services.

Q: What are the benefits of cloud-based MTD software? Our three core principles to software development have always been: Capture, Connect, Collaborate — a way of working that aims to make accountants' lives easier. So, if all of the major services that an accountant requires can be found on one system in the cloud, they'll be better able to connect and collaborate with their end customers on an ongoing basis — i.e. business owners — through that system. Seamless integration between the accountant and their customers gives the accountant faster access to data, which speeds up their processes and saves them a lot of time. It also allows them to move away from a paperbased environment. And because the information is based in the cloud, they can access it on the go from anywhere in the world.

Q: Is it going to cost accountants more to move to digital? There's a lot of scare-mongering going on within the industry about how much it will cost. It boils down to the accountant doing a deep dive into the software market to find out about the kind of technology available — and

TUSHIR PATEL CEO, Capium

what the best options are for them and for their customers. In some cases, an unlucky few accountants may find themselves falling victim to archaic, rigid and costly cancellation clauses of up to 90 days, but short-term pain is still profitable in the long-run.

their field and are the cornerstone for the SME, so the SME can concentrate on what they do best. AI and automation are strategies to help make tax digital but, ultimately, it is down to the expert to leverage these technologies and ensure continuing compliance.

Q: Will the move to MTD help businesses?

Q: Do you think most accountants are ready for Making Tax Digital?

Yes, because an accountant's customers will have real-time visibility over their own accounts and feel more connected to what's going on with their businesses. Also, the accountant has the ability to set up different access rights on the system and therefore tailor it to a business's individual expectations and needs. If MTD is implemented correctly, with robust and scalable software, it should streamline practice processes, increase profitability and create efficiencies.

Q: Are accountants concerned that technology such as AI and automation will ultimately put them out of business? Will MTD only exacerbate these concerns? There will always be a requirement for accountants - they are the expert in

Towards the latter part of 2018, I think there was still an idea that it might not happen, what with Brexit around the corner and increased market uncertainty. But the government is beginning to roll it out. So, face it: MTD is here — and it's not going away.