HMRC’s Making Tax Digital consultation papers are now going through the consultation process and we are starting to know more about what they are envisaging. Some sceptics would say a conspiracy is afoot between HMRC and the software providers to elbow the traditional accountant out of the picture.
I am all for a change in procedures which streamline the tax return process and move operations into real time using cloud software. Having worked in industry, this is how things work in the real world. Yes – the traditional accountant will have to rethink procedures going forward but anything which empowers taxpayers to be able to take control is a good thing. Most tax returns are very straightforward and sometimes people are happy to do it themselves with the reassurance of having a tax accountant in the background to identify problems or make suggestions.
Accountants will find it hard to give up their old ways. At a networking meeting I was discussing this with a colleague who was horrified at the idea that under the proposed regime people would be preparing accounts which may not have prepayments in them. I would argue it is not the end of the world – this would usually be a minor accounting adjustment and the tax effect would catch up next time as the adjustment is effectively a timing difference. From the Treasury’s point of view, this would be a small price to pay for the benefit of the improved cash flow resulting from the processes being proposed.
More automation will mean accountants can spend more time being business advisers rather than just being bean counters.