IFA panel: Digital self-assessment is bigger than MTD

SPONSORED: Is MTD overly influencing decisions for your firm? Following several insightful IFA panel discussions, Anish Mehta, Chief Product Officer at APARI Pro, outlines why the practices that will be best placed for future changes to the Self-Assessment system are the ones that eliminate manual data entry and paperwork from their processes.

by | 3 Jul, 2023

people at a conference, the room is lit with bright purple lights. They are all listening to an IFA presentation

Having recently participated in the IFA MTD panel discussions in Manchester, London and Birmingham, we’ve put together this article to bring the unique insights from the panel discussions to a wider set of IFA members.

The conferences were an ideal way to kickstart APARI Pro’s new strategic partnership with the IFA as well as talk to accountants in practice to fully understand the challenges they face and explore the opportunities ahead of them.

When the IFA invited us to run a session in each region, our team’s focus was on positioning the MTD delay as an opportunity rather than a setback, therefore reframing the topic of digitalised Self-Assessment and presenting it in a new – and positive – light.

Matt Barton, IFA Technical Manager and Chair of the panel discussions, summarised the conversations:

“The MTD panel discussions, as well as providing stimulating conversation on the future of MTD, showed clearly the central place digitalisation has in the future of the accountancy profession. Freeing up resources through automation can give accountants time to add value to their clients and their own practice, so the IFA continues to encourage our members on their digital journey – whatever the future holds for MTD ITSA.”

The MTD context

APARI Pro is the longest standing MTD ITSA product, and has supported more taxpayers in the HMRC pilot than any other software provider. This meant that our team’s unique background and knowledge on the topic allowed us to share valuable insights with the audiences in attendance, and to answer challenging questions.

Following the delay announced in December 2022, there was a general consensus amidst the panel that the credibility of the programme is under threat until the other side of an election and the commitment of a new government.

The overall uncertainty surrounding the topic has certainly caused many accountancy practices to be reluctant to invest in digitalisation.

It is worth pointing out that MTD is still a key component in the UK Government’s Tax Administration Strategy, which aims to create a more resilient and modern tax system, as well as contribute to reducing the tax gap. MTD follows the rising global trend towards digitalisation, highlighting the value of keeping digital records and its ability to solve a number of problems for accountants and their clients.

However, the way we do Self-Assessment – particularly for the high-volume, low-fee clients – needs to change now if accountants are to future-proof their firm. Crucially, accountancy firms should make changes and investments into their practice that do not depend directly on the details of MTD.

Digitalisation is bigger than MTD

The panellists were also unified in their view that digitalisation is essential for small accountancy firms: it benefits both accountants and clients. HMRC’s view is that errors in Self-Assessment stem from poor record-keeping, which means that, with or without quarterly submissions, digital record-keeping will be the way forward for taxpayers.

The emphasis MTD has placed on the value of digitalisation has spurred software innovation. There is more focus on sole traders and landlords, rather than the approach of traditional software which ignores the simpler needs of clients that are cash-basis, below the VAT threshold or without employees.

The IFA panel members agreed that software created for larger businesses is over-engineered for the smallest clients, and therefore unsuitable. It’s those clients that create disproportionate amounts of paper, leading to stress and anxiety each January, while being unable or unwilling to pay for advice to complement routine compliance.

Thankfully, there are now alternatives to spreadsheets, paperwork and email attachments.

We offered the audiences the example of a simple tool for analysing bank statements: essentially an ongoing feed of bank transactions synchronised automatically with bookkeeping software. This is particularly well suited to cash basis clients, with the Open Banking infrastructure providing comprehensive coverage of banks and credit cards and security safeguards from the FCA’s strong regulation of the system.

At APARI Pro, we are always keen to emphasise that our software that can only read transactions and can’t initiate payments, and gives the user controls to choose which bank(s) – and which specific accounts within those banks – to connect. Users are in control of the feed of data, choosing the start date for pulling in banking transactions and having access to easy tools to exclude private transactions.

Overall, accountants shouldn’t look at MTD as something to wait for before making the necessary changes. Digitalising practices now means having a longer time to explore new avenues to maximise profits and efficiency, support business goals and ensure the long-term value of the firm.

Start future-proofing your firm

Digitalisation offers incredible opportunities for accountants, allowing you to save 70% of your workload on client bookkeeping, and future-proof your engagement with clients.

Digitalisation will continue to grow at a staggering pace as it has in recent years, and accountants are developing awareness of its value and the substantial advantages it brings about for low-fee clients.

The sooner changes that involve eliminating manual data entry and processes are implemented, the sooner accountants will be able to reduce paperwork, spread the workload and increase margin on those high-volume clients.

Anish Mehta is Chief Product Officer at APARI Pro.

APARI Pro is the creator of a digital Self-Assessment solution that is revolutionising the tax landscape. To learn more about how APARI Pro can help you take back your January, please visit: www.apari.pro/accountants or follow APARI Pro on LinkedIn: https://uk.linkedin.com/company/apari-digital

 

 

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