Who will benefit from Making Tax Digital (MTD)? Well, there’s an obvious answer…but I thought it a good idea to do a quick check.
Using LinkedIn’s clever polling tool I put the question out there: ‘who will benefit the most from the introduction of MTD for the remaining self-assessment taxpayers?’. The options were: accountants; bookkeepers; clients; or HMRC. You can see the poll, and some of the commentary it created, by clicking here.
Six out of ten respondents chose HMRC as their option. It’s unsurprising that an HMRC-driven project, which aims to both improve and increase the data it receives from sole traders, landlords and partnerships, would be flagged up as one in which they get the best results. It’s fair to point out that increasing the number of filings that the smallest businesses are making five-fold makes them a difficult choice among the other options. Indeed, only 11% picked them as the main beneficiary.
There are, too, big questions about how HMRC can utilise the data effectively, if at all. Some see it simply as a stepping stone towards an increase in the number of tax filings these taxpayers make. In other words, HMRC ultimately looking to get cash quicker.
But three in ten think that accountants and bookkeepers will fair best out of Making Tax Digital. Many accountants will shake their head at this – seeing benefits for bookkeepers to drive more regular client number-crunching but little for the accountant to benefit from.
Making Tax Digital for self-assessment tax doesn’t, in itself, ‘create’ better data. But it will push end clients in a direction to use software to manage their expenses and invoicing. MTD doesn’t ‘create’ better bookkeeping, but they might find a way to standardise their workflows so that most of their clients do things in the same way.
Making Tax Digital doesn’t ‘create’ a better accounting practice, but there’s absolutely no doubt that firms’ workflows and processes need to be polished, reliable and backed up with transparent information about their clients’ filing status.
If I was to be mischievous, I wonder if HMRC might benefit the least. Perhaps the tidying up of micro businesses’ books, alongside what I imagine would be more communication between client and accountant, might see this tranche of taxpayers able to better mitigate their tax.
It is, therefore, conceivable that all parties may find benefits from this digitisation movement.
Vipul Sheth is MD and founder of AdvanceTrack Outsourcing. If you’d like to speak to Vipul and his team about improving your practice’s processes and workflow, contact him here.