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Will digital tax accounts see the end of the annual compliance headache?

written by Editor, 6 May 2016

Guest blog by, Mark  Purdue, Product Manager – Tax products

Annual compliance headache

Busy season – How was it for you?

We teamed up with AccountingWeb recently to survey over 500 UK accountants to see how busy season 2016 had gone for them and their practices. The survey revealed the mood was sombre…

Even after 20 years, it seems the burden of self-assessment remains. Over a third of respondents (34 per cent) reported busy season was worse than last year. This figure has more than doubled since AccountingWeb carried out similar surveys in 2013 and 2014. Another third (32 per cent) said the 2016 tax season was the same as usual.

Just a lucky 14 percent of respondents said the process had gone smoothly.

So who’s to blame?

A staggering 85 per cent of respondents said lazy or late clients were the main culprits for the heavier January workload – 48% of the total number of returns were submitted during January. When asked what they would do differently in future, the most popular planned resolutions were:

• Chase clients early – 46 per cent
• Increase fees – 39 per cent
• Organise practice staff better – 32 per cent
• Sack clients – 32 per cent
• Introduce a cloud portal – 12 per cent

So why are clients persistently handing in their information at the eleventh hour? Maybe it’s because they assume the work can be done instantly – much like downloading music or doing their online banking. Maybe it’s just habit – it’s what they have always done and you have coped with it. That’s why it is vital you educate your clients to start preparation early to ensure you’re not sitting at your computer until midnight on 31 January next year.

Annual compliance headache

Of course, practices can usually cope with a small number of stragglers, but if the majority of your client base doesn’t send their information in until November/December, things are going to get even worse when quarterly reporting and digital tax accounts arrive.

Digital tax accounts – Education! Education! Education!

Whether you like it or not, you need to get on board with the imminent approach of digital tax accounts and make sure your clients are ready for 2018. Many clients think: “It’s two years away. I don’t have to worry about it yet!” They will be looking to you to tell them if this is not the case and you need to start educating them now – especially the disorganised ones or the ones who don’t want to take it on board. Digital tax accounts are coming. We can’t ignore them so everyone needs to get on the digital train before it’s too late.

The current process of submitting to HMRC is quite rigid and there are quite a few steps, so the key is to automate as much as possible with user-friendly products. Portals, online apps, electronic signatures and online storage, for example, are all simple ways to speed up the process.

The best way forward is to implement these things a stage at a time. For example, introduce book-keeping followed by digital signatures. Better to take it a step at a time rather than overwhelming your clients early on. It’s a good idea to choose a key member of staff who wants to take this project on board. For example, a forward-thinker who can implement all the right tools and products and evangelise the changes, to set your clients off in the right direction.

A whole new world

We believe this new way of working, particularly quarterly reporting, will offer great opportunities for you to build closer relationships with your clients and get much more involved with their businesses – improving loyalty and client retention.

You will be able to give clients advice throughout the year to mitigate problems before it is too late. Real time data is going to be helpful as they will know what their tax bill is going to be each quarter so they can plan and save with no surprises.

The introduction of digital tax accounts is a real opportunity to change how everyone works. It’s an opportunity for software providers to develop new products, and it’s an opportunity for practices to become more efficient and make more money.

Yes, of course, there will still be a compliance process but it will be lot more simplified. And, if we carry out the same survey in 2018, we think the results will look very different indeed…


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