This month Mel Stride, Financial Secretary to the Treasury, announced that for smaller companies full reporting will not become mandatory before ‘at least 2020’. For larger businesses – those above the VAT threshold (currently £85,000) – the roll out has been pushed to April 2019 for VAT filing purposes only.
This has been hailed as a success for many businesses who, to quote Mr. Stride, were “worried about the scope and pace of reforms” of MTD. Indeed, for many accountants and tax advisors this will have come as a relief as it buys more time to address digitalising the tax system and for updating their systems.
At Ecovis, we support the delay for the most part but are hoping it doesn’t force companies back into the bad habits many of them have broken away from in recent months.
In anticipation of MTD we’ve spent time with many our clients assisting them in getting their systems, reporting and management information ready in advance of MTD so that – when the day finally comes for more frequent reporting to HMRC – their systems are ready to go. And what we’ve found has been a surprisingly positive byproduct of these preparations, Directors of smaller companies that were previously reliant on ‘shoe boxes’ of information at year end have been forced to do things a little differently…and they’re loving it!!
One client we met with recently, who had always prepared their year end tax and statutory filings at the last minute on a manual system, remarked on how easy the new system is, how good the quality of information they have is and… crucially… the fact that they haven’t got this hideous administrative burden sat in the back of their mind. It comes to light that they were almost fearful of filing deadlines and a call from their tax advisor! An all-too-familiar fear I’m sure!
By putting some simple systems in place for them for example, a mobile phone app for expenses and automated bank feeds into a Cloud bookkeeping system – they have been able to make their lives much easier, our lives (mercifully!!) much easier and they’re also gaining valuable insights from current information that would otherwise have been sat upon until it became a matter of the past, not the present.
So, whilst we’re not at all surprised by HMRC’s delay in MTD we’re not holding back on our advice to the SME market – get on top of your finances now, make the most of the information you already have to your finger tips and make accounting less daunting and more rewarding (well, as far as is possible if you’re not a bookkeeper!).
For more information on Digital Accounting products and how Ecovis can assist your business with Making Tax Digital please contact our Director of Online Services, Jamie Allen (email@example.com or 0207 317 0958).