Day: December 21, 2021

Evan Jones is Lead Technology Product Manager at Wolters Kluwer Tax & Accounting UK

When we think of Making Tax Digital (MTD) for Income Tax, the obvious association is tax and regulation, but the reality is that MTD in any form is less about either of the above and more about how practices need to evolve as organisations, and how they might encourage their clients to begin to operate in a digital way.

When it comes to practices making as smooth a transition as possible for their clients, there may be a certain amount of expectation setting and education that make MTD for Income Tax a streamlined process rather than the burdensome task many practices fear. There is a real opportunity to transform customer interactions across the entire journey into a seamless, client-focused end-to-end digital experience.

Evolving as Digital Organisations

A shift in mindset to encompass digital working is needed among both practices and their clients as we edge towards the deadline for implementing MTD for Income Tax in April 2023. In their preparations, many practices have begun to explore technology solutions, and it’s often left to the tax department to assess these and lead the way.

However, the reality is that most of the job of MTD for Income Tax will not involve the tax department, and rather, will fall on the department already doing the bookkeeping or VAT. The fundamental principle in MTD for Income Tax is that the record keeping needs to be digital and recorded as close to real time as possible, but understandably, ‘Making Bookkeeping Digital’ probably doesn’t have quite the same impact!

In recognising the true nature of the requirements, what practices will no doubt soon realise is that MTD for Income Tax is less about regulation and tax, and more about preparing clients to work digitally as soon as possible. In fact, it’s also less about specific technology, and more about being comfortable with digital workflows and new ways of working, particularly when preparing clients to make the transition from annual bookkeeping, to quarterly bookkeeping.

Setting Expectations

Most practices have wanted their clients to use digital bookkeeping products for some time now and MTD for Income Tax and its quarterly reporting requirement may just be the catalyst they need.

The upside is that these practices will then be able to have sight of the client data they need, and to keep tabs on it throughout the year without the rigmarole of sending backups via email and ensuring clients don’t work on it at the same time.

However, the complexity is that these increased checkpoints have the potential to change relationships with clients around areas of responsibility and expectation. Just because an advisor has 24×7 access to a digital bookkeeping solution and a client’s data, doesn’t mean that there is a constant human audit service ready to flag when figures aren’t correct.

It’s important to prepare clients for this change in the relationship and set expectations by working with them more digitally now. This may help to address the fear than many practices have, which is that they will be experiencing a large extra burden that they are unable to charge for.

Making it Personal

As practices make the digital mindset shift, there’s often a fear that these new digital processes, including automation applied to what may have traditionally been manual, will affect advisor’s ability to provide a personal service to their clients.

However, if implemented correctly and appropriately, technology should inspire innovation and help practices to build stronger relationships. Sharing information digitally and having more transparency can often introduce more touchpoints, and the move to digital absolutely does not need to replace personal relationships.

Digital should actually enable practices and their clients to have more meaningful relationships, as the rather mundane necessity of constantly requesting information to be sent back and forth can be removed. Just having that data on tap will allow advisors to work more closely with their clients, and move beyond the administrative, operational tasks to dig down into what value add services they may be able to offer.

These are just a few of the mindset changes we’ll begin to see practices make with their clients as we begin the two-year countdown to MTD for Income Tax. While it may seem a daunting process, remember that it’s not the first regulatory hurdle that practices have had to overcome in the past, five, ten or even twenty years. Like all regulation, it’s a chance to adapt and to work smarter, and with the right approach to digital, practices may just find MTD for Income Tax is a new opportunity to have better, more meaningful and more profitable relationships with clients.

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Wolters Kluwer Tax & Accounting were the sponsor of the Accountex Spotlight Day on 12 August, which focussed on Making Tax Digital and featured 3 free webinars with members of the HMRC MTD team. All are available to watch on demand now.

The post Making Tax Digital is less about tax and regulation than you may think appeared first on Accounting Insight News.

Did you miss our previous article…
https://www.digital-accountants.com/?p=692

Do you guys remember those after school specials of the 80s that made it seem like drug dealers hiding around every corner offering free drugs was going to be something one would have to be concerned about as we got older? I imagine I’m not the only one who was tremendously disappointed to find out there are no such drug dealers. Having to pay for our drugs aside, there was a lesson in there somewhere: the grown-ups were warning us to be cautious because kids are dumb and impressionable and people who want to take advantage of that will be lurking around every billboard and TV commercial.

Well, in the spirit of gettin’ em started when they’re young, a pair of senators have introduced a new bill that hopes to get kids hooked on accounting in grade school. Let’s check it out:

Today, U.S. Senators Jacky Rosen (D-NV) and Susan Collins (R-ME) introduced their STEM Education in Accounting Act, bipartisan legislation that would designate accounting as a STEM (science, technology, engineering, and math) subject, strengthening education and career pathways for the accounting profession and promoting diversity within the field.

The bill would amend the Every Student Succeeds Act to add accounting education programs as an allowable use of K-12 grant funding and promote high-quality accounting instruction for members of groups underrepresented in accounting careers. This bipartisan legislation comes at a time when the accounting profession, like many sectors of the economy, is struggling with a shortage of talent to fill available jobs. While the pandemic has exacerbated the problem in many sectors, the accounting profession has long faced such a shortage.

The Every Student Succeeds Act replaced the notorious No Child Left Behind law of the Bush era and was signed into law by President Obama in 2015. Here is a thorough read on what it means for K-12 public education in the United States should that be something you’re interested in learning more about on a quiet Monday before Christmas.

Including accounting in STEM education is a no-brainer according to Senator Collins because math. You know, the M in STEM. Also known as that thing most of you never do at work but whatever, let’s roll with it anyway.

“Mathematics is a critical skill that can help students unlock countless doors to high-paying, in-demand fields. One of those doors leads to the accounting profession whose work plays a key role in providing capital markets with confidence and assurance in financial reporting,” said Senator Collins. “Our bipartisan bill would designate accounting as a STEM subject. I encourage all of my colleagues to join me in promoting accounting education, improving students’ finance skills, and strengthening the pipeline of future accountants, who play such a vital role in our financial system.”

High-paying you say? That’s about as believable as the lie about shady drug dealers passing out joints on the playground. But I digress…

You’ll note the accounting pipeline shout-out at the end there. Which leads us to this comment from the AICPA gleefully rubbing their hands together at the idea of exposing kids to accounting:

“For years, the AICPA has championed the inclusion of accounting in STEM programs and we are grateful to Senators Collins and Rosen for their leadership in recognizing the connection between accounting and technology,” said AICPA President & CEO Barry Melancon, CPA, CGMA. “The technological skills CPAs learn help them make informed decisions, solve complex problems and enhance the delivery of services throughout the audit, finance and tax arenas. As the profession continues to evolve its services in areas like cybersecurity, information integrity and systems controls and its use of emerging technologies and techniques, such as blockchain and data analytics, the integration of this knowledge with quantitative reasoning skills enhances accountants’ value to their clients, to the profession and to the finance and tax industries. This bipartisan legislation is a recognition of the value the accounting profession provides and will help to diversify and expand the profession.”

Comments like these are exactly why the ‘Smithers Fetch Me the CGMAs’ meme exists.

As fun as it is to point and laugh at the AICPA’s desperation to stuff the pipeline with warm bodies, there’s nothing wrong with introducing kids to accounting when they’re young. Surely there are worse things to expose them to. Like… you know what, let’s not go there.

A similar bill was introduced in the House earlier this year. We’ll keep you posted on any developments. Personally I’m looking forward to the potential for T account coloring pages!

Further reading:
AICPA Supports STEM Education in Accounting Act [CPA Practice Advisor]

The post A Pair of Senators are Trying to Get the Kiddos Hooked on Accounting in Grade School appeared first on Going Concern.

Did you miss our previous article…
https://www.digital-accountants.com/?p=683