Thomson Reuters survey finds business progress slow on Making Tax Digital (MTD), despite opportunity to embrace digital tax compliance
London, UK, December 6, 2018 – A recent Thomson Reuters® survey of UK tax professionals’ attitudes and readiness for Making Tax Digital (MTD) for VAT has revealed companies are still unsure how to prepare for the deadlines. MTD for VAT is the latest step in HMRC’s aim to move towards a digital relationship with customers and become “the most digitally advanced tax administration in the world”.
Asked about the status of their MTD for VAT implementations, 70% of the 146 tax and accounting professionals surveyed stated they had developed plans, but not started implementation. The survey also found that 37% of respondents will now hold fire on changing policies until they hear more from HMRC about the revised October 2019 MTD for VAT deadline for “businesses with complex requirements”.
Paused or poised on MTD?
Nearly three quarters of respondents (72%) in the November 2018 survey stated that concerns about software and digital records maintenance are their greatest worries in preparing for MTD. The decision to delay implementation means many will miss out on the benefits digital tax reporting can bring. This could potentially lead to a greater risk of businesses needing to take a “sticking plaster” approach to meet the deadlines.
When asked, 62% of respondents admitted VAT processes are still tracked manually, despite 80% saying they use the HMRC portal to submit VAT returns, compared with 53% in summer 2018. Increased use of the portal is positive, but it is clear that finance departments are unsure on the technological and process changes they need to make moving forward.
Breaking out of the spreadsheet – seize the opportunity
When storing VAT data, 55% of accountants said they use spreadsheets, with 23% preferring other in-house software, up from 30% in summer 2018. Post implementation, a third (34%) believe that they will still use Excel to store digital records relating to VAT, suggesting they are considering a “quick fix approach to MTD for VAT”. However, choosing a complete tax compliance software platform gives companies access to features such as exception reporting, full data audit trails including manual adjustments, group and divisional reporting, as well as being ready for future digital tax requirements, such as corporation tax submissions.
Kim Hau, senior proposition manager for ONESOURCE Indirect Tax at Thomson Reuters said, “There is a real opportunity for tax accountants to embrace software that does much more than simply file a return. By accepting the inevitable move towards digital tax reporting, companies can use the new October 2019 deadline to implement indirect tax compliance software that will bring benefits such as automation, reporting, cost savings and improved compliance. It will mean businesses are ready for 2019, 2020 and other future tax changes, rather than taking a quick fix ‘sticking plaster’ approach.”
Increasingly accountants are relying on technology partners to keep them informed on Making Tax Digital – 40% reported this to be the case, up from 16% in summer 2018. Asked how MTD was being communicated within their organisations, 44% stated it had been communicated at an organisational level, but not to them personally. This suggests that training is yet to start within teams on how processes and individual responsibilities may change in respect of VAT.