We all know that Making Tax Digital is coming into force in April 2019 and that this will have ramifications for businesses that are VAT registered and who are operating at or beyond the VAT threshold.
I saw some data recently which said that 880,000 businesses are not yet prepared for Making Tax Digital. Perhaps they are using a spreadsheet or an old version of an accounting software that won’t be Making Tax Digital compliant and therefore they will need a solution – either a MTD compliant software or use of a spreadsheet bridging software.
As bookkeepers, we have heard many accountants say that they are talking to their clients about Making Tax Digital but there aren’t a lot of clients who are yet inclined to take action now and they are concerned that it will be left to the last minute.
So, why is that?
- Are people thinking it’s not really going to happen?
- Are clients putting it off as it’s not on their urgent list?
- Do clients not really understand the implications?
- Are we not being assertive enough with the clients to get action to be taken?
When it comes to it in April when those first VAT returns need to be done through MTD compliant software, what will clients be expecting from their accountant and how will it affect your accountancy practice and your resources?
I guess it depends really on what solution you are looking at providing for clients. Are you going to allow clients to continue on spreadsheets and use a bridging software? Or are you going to encourage clients to move to a cloud based software for their bookkeeping which will have so many more benefits in their day to day financial management than just being compliant with Making Tax Digital?
If there isn’t a lot of action being taken now then I can imagine that for some practices it’s going to be a pretty tricky time. Following the workload created by the self assessment deadline in January, there isn’t going to be a lot of time then in February and March for accountancy practices to get clients ready for Making Tax Digital.
So, to answer the question in the title of this blog as whether there is a magic solution. I’m not sure there is but I am convinced that if we don’t lead our clients down a route that is right for them as early as possible, that it is going to be a real challenge in April next year. They may not really want to talk to us about Making Tax Digital yet but it is our responsibility I think to keep communicating with them about this and to put the solution in front of them for them to grasp and take forward.
As bookkeepers who specialise in Xero accounting software, we are committed to helping small businesses get to grips with Making Tax Digital. We can also help accountants by providing resource to do Xero set ups, Xero training and Xero bookkeeping. If you think you may want to use our services to help your clients prepare for Making Tax Digital, then we have more favourable rates in October and November only and so it’s definitely worth us talking now and helping your clients get ready as early as possible.