In some respects, Making Tax Digital opens up a whole raft of new compliance activity for accountants: business owners will be challenged by the quarterly filing process and will possibly be dismayed by HMRC’s reaction at their attempts at compliance.
What is more, these quarterly underplayed uploads will start to create future liabilities that are going to be displayed on the digital tax accounts.
Will they turn in desperation to their advisors for assistance?
Will their decision be based on the cost?
At a recent House of Lords finance committee review of MTD it was suggested that HMRC’s glib estimate of compliance costs for smaller businesses was hopelessly underestimated. HMRC’s cost work out, per business, at less than £10 for each visit to the upload process. A more realistic figure (checking data and adjustments) might be nearer £300, and perhaps more.
How will clients view these on-costs, whatever their true financial impact?
Clients with a thriving business might be inclined to take a somewhat cynical point of view and absorb the costs, getting on with what they like to do best, making money. Others, probably the majority of smaller businesses, will baulk at the expense, and will likely shop around to see who is prepared to do the job for the lowest fee.
Accountants, desperate to hang onto (or improve) their margins, may be faced with hard choices. To act or not to act?
The key, could be to wrap the MTD compliance into a package with other planning services so it is easier for clients to perceive value.
April 2018 is barely a year ahead. Better get into planning mode if we are to survive the more for less culture.
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